US shares fell, with the Dow Jones Industrial Average down about 380 points (0.8%), the S&P 500 down 0.9%, and the Nasdaq Composite down 1.3%. The Dow opened above 46,800, broke below its 200-period moving average, and closed near 46,300.
Moves were driven by headlines before a 00:00 GMT Wednesday deadline set by President Trump for Iran to agree to reopen the Strait of Hormuz. Reports said US forces carried out overnight strikes on Kharg Island, while a New York Times report said Iran had stopped negotiating a truce with the US.
Oil rose, with WTI up 3% to above $116 a barrel and Brent above $110. The Strait of Hormuz carries about a fifth of global oil supply, while gold traded near $4,660.
Broadcom rose 3% after reporting expanded AI partnerships with Google and Anthropic. Broadcom will supply Google TPU and networking through 2031; Anthropic will access about 3.5 gigawatts of TPU compute from 2027, and reported a $30 billion revenue run rate, up from $9 billion at end-2025, with 1K customers spending over $1 million a year.
Durable goods fell 1.4% month-on-month versus -0.5% expected, led by a 5.4% drop in transport, while ex-transport rose 0.8% and core capital goods rose 0.6%. The VIX closed near 24, versus 60 a year ago, with FOMC minutes due Wednesday, GDP and PCE Thursday, and CPI Friday.
We should remember how the market reacted to the Iran deadline in 2025, when the Dow dropped nearly 400 points as risk sentiment collapsed. That event serves as a clear blueprint for how quickly geopolitical flare-ups can dominate trading, pushing aside even strong underlying economic data. With the Cboe Volatility Index (VIX) currently trading near 15, well below the 24 level seen during that period, markets appear less hedged for a sudden shock.
The surge in WTI crude to over $116 a barrel last year highlights the risk associated with energy chokepoints like the Strait of Hormuz. We saw similar, though less severe, supply chain concerns during the Red Sea disruptions of late 2023, which impacted shipping costs and added to inflationary pressures. Traders should consider using call options on oil futures or energy sector ETFs as a cost-effective way to protect against a repeat of that price spike.
Even as the broader market sold off during the 2025 scare, Broadcom stock rallied on news of its AI deals, a trend that has only strengthened into 2026. This shows that secular growth stories, particularly in artificial intelligence, can remain resilient during macro-driven downturns. A potential strategy is to hedge broad market exposure with index puts while maintaining upside exposure to key technology leaders through individual stock calls.
Last year, the market’s biggest fear was that the oil shock would drive up the February PCE and March CPI inflation reports, forcing the Fed’s hand. That experience taught us that the central bank pays close attention to how commodity spikes translate into core inflation, a dynamic that has kept policy tight. Any new geopolitical tension today would likely be viewed through that same hawkish lens, making options on interest rate-sensitive instruments a key tool for positioning.
