US stock futures sold off on Tuesday after Israel and US jets launched new strikes on Iran, as the widening conflict stoked worries about a drawn-out regional war.

Contracts on the S&P 500 (ES=F) and on the Dow Jones Industrial Average (YM=F) dived 1.4%, while those on the Nasdaq 100 (NQ=F) led the retreat, dropping roughly 1.8%, as oil prices continued to rally on concerns about blocked supply.

The fresh wave of Israeli-led attacks has jolted markets that on Monday mostly managed to shake off the initial shock of the outbreak of US-Iran hostilities. The major US gauges staged a comeback from that day's steep intraday losses to close mostly higher, as dip-buyers stepped in.

The air strikes on Iran and Lebanon intensify a conflict that Wall Street expects to pressure global markets. The focus is now on Tehran's response after Iran targeted oil infrastructure and other targets across a huge swathe of the region, with at least nine countries reporting hits.

President Trump fueled fears that the US would be drawn into a prolonged war, as he refused to rule out putting American boots on the ground. “Whatever the time is, it’s OK — whatever it takes,” Trump said. “Right from the beginning, we projected four to five weeks. But we have the capability to go far longer than that.”

Crude prices (BZ=F, CL=F) continued to rise on concerns of disruption to key supply routes, up over 6% as inflation worries grew. Meanwhile, gold (GC=F) prices turned lower after a four-day rally, slipping 2%.

Beyond geopolitics, investors are watching corporate earnings. Shares in Target (TGT) rose in premarket after the retail giant posted lackluster holiday and full-year sales that met Wall Street estimates. Results from Ross Stores (ROST), AutoZone (AZO), and Best Buy (BBY) are also on Tuesday's docket.

Best Buy (BBY) stock jumped as much as 12% in premarket trading despite the retailer reporting a surprise sales slump in its key holiday shopping season.

Same-store sales declined 0.8% in the fourth quarter, the company said Tuesday. Wall Street had hoped for a 0.2% increase after two straight quarters of positive growth.

"Our data sources show our overall market share was at least flat, pointing to slightly softer customer demand for our industry during the holiday quarter," Best Buy CEO Corie Barry said in the release.

Best Buy expects first quarter same-store sales to return to growth, rising 1%.

Revenue for the fourth quarter totaled $13.81 billion, less than the $13.88 billion Wall Street had expected, per Bloomberg consensus data. Adjusted earnings per share came in higher at $2.61, more than the $2.46 the Street predicted. Best Buy stock is down more than 30% in the past year.

For the full year, revenue came in at $41.69 billion, just below the $41.76 billion Wall Street predicted. Adjusted earnings per share came in at $6.43, $0.12 above Wall Street's estimates for $6.31.

For the year, same-store sales grew 0.5%, less than the 0.9% increase Wall Street was looking for.

Bloomberg reports:

Read more here.

There will be a lot of pomp and circumstance for Target (TGT) today. At the same time as the retailer puts out its earnings release, it’s holding its annual investor day in its backyard of Minneapolis.

I think the company — now led by a new CEO, Michael Fiddelke, and an almost entirely new leadership team — will hype its store investment plans and say that 2025 results will be a low-water mark.

Execs will probably use today’s earnings beat and call out of positive sales in February to help their pitch to Wall Street (and investors more broadly, who have been burned badly by the stock in the past five years).

All of that said, I am not taking the bait, and you shouldn’t take it either. Target should stay in the penalty box and is a "prove it" stock. That means until it starts stacking positive quarters, you just don’t buy the stock and continue to favor Walmart (WMT) or Costco (COST) on pullbacks.

Here’s what I didn’t like from Target’s quarter to underscore my point:

Markets provided an initial response to the war in Iran, with the impact on oil prices and inflation at the forefront, writes Yahoo Finance's Hamza Shaban.

He writes:

Here are the three biggest questions about the Iran conflict.

Shares in Target (TGT) popped before the bell after the retail giant's Q4 and 2025 sales dropped, but met Wall Street expectations.

Yahoo Finance's Brooke DiPalma reports:

Read more here.

US Treasurys followed other bond markets lower, with traders retreating from bets for interest-rate cuts in response to the potentially inflationary impact of an escalating Iran war.

Bloomberg reports:

Read more here.

From Bloomberg:

... The Trump administration will soon roll out a program to help mitigate rising energy costs, Secretary of State Marco Rubio told reporters in Washington before heading into a briefing for US lawmakers. He said the campaign would only intensify.

“I’m not going to give away the details of our tactical efforts, but the hardest hits are yet to come from the US military,” Rubio said.

Read more here.

Iranian drone strikes forced QatarEnergy to halt production at Ras Laffan and Mesaieed, effectively taking one-fifth of global LNG export capacity offline in a single geopolitical event.

From Oilprice.com:

Read more here.

As I mentioned in a prior post, keeping market history in mind during war situations is important.

While the spike in oil (BZ=F, CL=F) prices looks painful (and it is), we haven't seen a worst-case scenario.

That was called out in this chart Deutsche Bank:

You may be wondering why we are seeing Ford (F) and General Motors (GM) sell-off more than the broader market this week. Sure, there is the thinking that with stocks down and with us at war, people put off buying the more expensive cars and trucks each automaker continues to hawk.

But keep this mind. Both automakers have made a hard pivot away from electric vehicles and passenger cars, each being ideal in an environment of sustained higher gas prices (which we may be looking at). Ford especially is really playing up its pickup truck bonafides.

Another surge in oil prices (CL=F, BZ=F) isn't helping market sentiment this morning.

But remember in this backdrop, markets will tend to take their initial cues from the leaders running point on the war (Trump, Hegseth, and so on)

Helpful assessment of this from Mizuho today:

Good point by JP Morgan this morning on bank stocks: Look for a first quarter lift to banks' trading business from increased volatility across many markets from the war on Iran

JPMorgan says (emphasis added):

Their top US names to trade off this prospect include Goldman Sachs (GS) and Morgan Stanley (MS), given their outsized trading operations.

Goldman Sachs is calling attention to a pickup in inflation coming soon, given that oil prices are surging.

Its team notes that a 10% increase in crude oil prices typically raises "core" inflation — which strips out volatile energy and food prices — by 4 basis points and headline inflation by 20-30 basis points.

It's good in these moments, when the market has been punched in the face, to level-set a bit.

Pullbacks on developing war news are normal. But just keep this chart from Keith Lerner at Truist in mind.

Since 2009, the S&P 500 (^GSPC) has seen more than 30 pullbacks of greater than 5%. That suggests stocks can end up resilient in the face of bad news.

Crude oil futures (BZ=F, CL=F) continued to rise on Tuesday as fresh Mideast strikes spurred concerns that hostilities could disrupt key supply routes and reignite inflation pressures.

Bloomberg reports:

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Bloomberg reports:

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Bloomberg reports:

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Reuters reports:

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