Dow Tumbles 800 Points and the S&P 500 Posts Its Fifth Straight Weekly Loss: What Investors Need to Know About the Worst Streak Since 2022

The Dow Jones Industrial Average lost nearly 800 points today, and the broader benchmark **S&P 500 **Index just posted its fifth straight weekly loss, marking its worst streak since 2022.

The culprit is the war in Iran, which has spread to other parts of the Middle East and lifted crude oil futures back over $99 per barrel, as of this writing.

The market started the week on a promising note, as President Donald Trump publicly said the U.S. had a strong intent to reach an agreement with Iran and end the conflict. The U.S. reportedly sent Iranian officials a 15-point plan to end the war.

However, mixed signals persisted all week, with Trump suggesting a deal was close, while Iran, through its state media and its foreign minister, said it had no plans to negotiate with the U.S. Meanwhile, the U.S. deployed troops to the Middle East, leaving some wondering if further escalation is ahead.

Image source: Getty Images.

Today, media outlets reported that U.S. Secretary of State Marco Rubio told the G7 foreign ministers that the war with Iran is likely to continue for another two to four weeks, stoking concerns about a prolonged conflict.

As recently as today, Iran’s Revolutionary Guard Corps said that the Strait of Hormuz, through which one-fifth of the world’s oil flows daily under normal circumstances, will remain closed to any ships that don’t have approval to pass from Tehran.

Here’s what else investors need to know.

The longer the war lasts, the more strain on the economy and market

From an investor’s perspective, the longer the war in Iran lasts, the tougher it will be on the economy and stock market.

That’s because, due to issues in the Strait of Hormuz and potential damage to energy assets in the region, oil prices will remain elevated or even rise further. This will add to inflationary pressure and likely lead to higher bond yields, which the market has been quite sensitive to in recent years.

As of this writing, investors betting on the federal funds rate now see the Federal Reserve making no changes to interest rates until late 2027, with a rate hike in December 2027. Keep in mind, though, that these probabilities are constantly changing.

The longer interest rates remain elevated, the more likely the U.S. economy will tip into a recession. The labor market has already been showing signs of weakness, while economic growth has been slowing.

The other thing investors should understand is that even if the war ended tomorrow, it would still likely take months for oil prices to come down.

That said, the market is simply looking for clarity here. If it becomes clear that the war is coming to an end, oil prices should come back down, and the market can rebound.

Investors will need to see much more proof from both the U.S. and Iran that an agreement can be reached.