Last week, both the Nasdaq Composite and the Dow Jones Industrial Average officially entered correction territory, having declined more than 10% from their recent highs as markets bear the weight of the escalating Iran war. The Nasdaq is down about 12% and the Dow is down about 10% from their all time highs.
The primary driver has been the Strait of Hormuz. Iran has effectively shut down shipping traffic through the strait, which the International Energy Agency has called the largest supply disruption in the history of the oil market.On Thursday, President Trump extended his pause on U.S. strikes against Iranian energy infrastructure to April 6th, citing ongoing negotiations.
What we're witnessing is a broader repricing of risk. Equity valuations are built on assumptions, like stable energy supply, contained inflation, and predictable geopolitics. All three are now in question simultaneously, forcing investors to reassess what risk premiums are appropriate across asset classes. Nowhere is that reassessment more visible than in the bond market, where the 10-year Treasury yield has swung from as high as 4.48% on Friday to 4.36% today.
This is not the first time that either index is in correction territory in recent memory. Both lost more than 10% in April of 2025 and the Nasdaq fell 10% from its highs near the end of 2023.
For investors, the path forward hinges on two questions: When will the war be over and when will the Strait of Hormuz reopen? The longer the war drags on, the more uncertainty in the markets and the greater likelihood we continue to see the equity markets slide.
Sources: Bloomberg
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