Bulls Burned as US-Israel Strikes Iran 02/03/202

HOT stories for today

Market wrap:

• The S&P 500 slid Friday and ended February in the red, with fresh turbulence ripping through artificial-intelligence and software stocks as investors debated whether rapid AI adoption will undercut incumbent software vendors. Concerns that automation could hollow out business models and accelerate layoffs have further dented risk appetite, reviving worries about knock-on effects for the broader economy. Those anxieties intensified early Monday. Stock futures sank after the US and Israel struck Iran over the weekend, sending oil sharply higher and adding a newly volatile Middle East to a growing list of headwinds for investors. The joint operation killed Supreme Leader Ayatollah Ali Khamenei, a watershed moment for the Islamic Republic and among its most consequential episodes since 1979. President Donald Trump said US military operations in Iran are “ahead of schedule” in an interview with CNBC’s Joe Kernen, but markets are bracing for a prolonged conflict regardless.
• The large-scale assault was launched overnight Saturday after Iran rejected US demands to curb its nuclear program. Iranian officials vowed a forceful response, stoking fears the confrontation could widen across the region. “The tail risk of a sustained conflict is higher than in 2024 or 2025, though we don’t see this war escalating to a point where it drastically changes the US outlook,” Barclays’ Ajay Rajadhyaksha wrote. Still, he added, early this week, “is too early to buy any dip,” particularly for investors accustomed to quick de-escalation. US crude surged as much as 8% in early trading on concerns the clash could spill into a broader war that disrupts supply. Iran is OPEC’s fourth-largest producer, and uncertainty is building over who ultimately governs amid a widening leadership vacuum. In Asia, stocks fell as traders returned to markets amid escalating tensions over the Iran conflict.

US-Israel Strike on Iran Jolts Markets as Oil Risk Looms

• The Middle East has lurched into a more dangerous phase after the US and Israel launched their most aggressive joint strikes yet on Iranian targets, killing Supreme Leader Ayatollah Ali Khamenei and prompting Tehran to unleash a broad retaliatory barrage across the region. Iranian missiles and drones targeted Israel and several Gulf states hosting US military bases, with explosions reported from the UAE to Saudi Arabia and damage and injuries reported at major airports in Dubai and Abu Dhabi. 
• The rapid escalation is setting the stage for a risk-off tone when global markets reopen, with investors closely watching energy prices as the primary transmission channel. Early signals from round-the-clock venues showed crude-linked contracts jumping about 5% and gold moving higher, while Bitcoin whipsawed before stabilizing. With Iran a key OPEC producer and the conflict now touching multiple energy hubs, traders are increasingly focused on the potential for supply disruptions. Former White House energy adviser Bob McNally said crude futures could rise by $5 to $7 a barrel at the open if there are no clear signs of de-escalation.

Stocks on the move:

• Netflix (NFLX), Paramount (PARA), Warner Bros. Discovery (WBD): Netflix jumped 10% after the streamer declined to raise its bid for Warner or match a fresh offer from Paramount/Skydance. Warner slipped 2%, while Paramount surged 18%.
• Bank stocks: Several lenders fell Friday on worries they could face losses tied to the collapse of UK mortgage provider Market Financial Solutions. Bloomberg reported Barclays (BCS), Jefferies (JEF), Santander (SAN), Wells Fargo (WFC) and Apollo Global’s Atlas SP Partners (APO) are among MFS’s lenders, compounding investor anxiety about exposure to private-credit markets. Barclays slid about 4%, Jefferies sank nearly 8%, Wells Fargo lost 5% and Apollo dropped 7%.
• Duolingo (DUOL): Shares tumbled 14% after the language-learning app issued first-quarter and full-year 2026 guidance that fell short of expectations. Duolingo sees Q1 revenue around $288.5 million versus the $291.4 million FactSet consensus, and full-year revenue of roughly $1.197 billion to $1.221 billion, below the $1.26 billion estimate.
• Block (SQ): The payments company rallied 14% after saying it will cut more than 4,000 roles — about half its workforce — while fourth-quarter results, revenue and first-quarter guidance topped analyst estimates.

Watchlist: XOM, CVX, SATS, VG, NCLH, NVDA, COIN, NFLX, AAPL

Key Economic Events Today:

EST time

09:45 am: USD Final Manufacturing PMI
10:00 am: USD ISM Manufacturing PMI, Prices


Earnings

BMO (Before Market Open): Echostar Corp. (SATS), Venture Global (VG), Norwegian Cruise Line (NCLH), AAON Inc. (AAON)

AMC (After Market Close): AST SpaceMobile (ASTS), MongoDB (MDB), Credo Technology (CRDO)


The TEFS Analyst team wishes you a successful day!