U.S. stock futures fell sharply after the United States launched military strikes against Iran, escalating tensions in the Middle East and pushing oil prices higher. The strikes were directed at radar and air defense facilities along the Strait of Hormuz, according to U.S. Central Command, which described them as a proportional response to what it called unjustified Iranian aggression.

The escalation followed an incident in which a U.S. Army Apache helicopter went down off the coast of Oman. President Trump said Iran was responsible for downing the aircraft, though a U.S. official told Reuters the helicopter collided with an Iranian drone and it remained unclear whether the collision was intentional. The two crew members were rescued in what the military described as an unprecedented drone boat rescue operation.

Iran responded with retaliatory strikes on Wednesday morning, launching long-range missiles and drones at targets including U.S. bases in Jordan, Kuwait, and Bahrain. Iranian officials said they targeted F-35 fighter jet hangars and command-and-control centers. U.S. officials told Reuters that nearly all Iranian missiles and drones were intercepted, with Jordan's armed forces saying they shot down five missiles.

The market reaction was swift and severe. The Dow Jones Industrial Average dropped more than 900 points in what became the worst trading day of 2026. Technology stocks led the decline, with semiconductor companies experiencing particularly steep losses. Futures for the S&P 500 and Nasdaq also traded lower.

Oil prices climbed as traders assessed potential disruptions to global energy supplies from the widening conflict. Energy costs have been a significant driver of inflation, which reached a three-year high as consumer prices rose at their fastest pace since 2023. This inflation surge has put pressure on household budgets as wages fail to keep pace with rising prices.

The market turbulence reflects mounting concerns about both geopolitical risks and domestic economic challenges. Consumer confidence has fallen to historic lows. The combination of military escalation abroad and inflation pressures at home has created uncertainty for investors evaluating the economic outlook for the remainder of 2026.

Despite the escalation, Trump has signaled openness to negotiations with Iran. He previously said there was "a good chance" of signing a deal within "two or three days," though he did not provide details. He has also suggested that continued bombing could be avoided if a diplomatic resolution were reached.

Iran's foreign minister Abbas Araghchi responded to the U.S. strikes by warning that Iran "will leave no attack or threat unanswered" and telling the U.S. to "leave our region if you want to be safe." The helicopter incident threatens what was already a shaky ceasefire announced between the countries in April.