Stocks slow as Iran war sends oil above $100

The three months to September — the second full quarter of trading since the U.S. and Israel’s war with Iran started — brought more volatility for stocks.

Traders closely monitored headlines around developments in the Middle East, with the conflict lapsing into a standoff as U.S. President Donald Trump vowed to wreak “Economic D-Day” on Tehran and reportedly rejected an Iranian ceasefire proposal.

Wall Street’s major averages ended the third quarter in mixed territory. The S&P 500 index added 2.03%, while the Dow Jones Industrial Average fell 1.9% and the tech-heavy Nasdaq Composite ended the quarter 2.2% higher.

The average change across the three indexes was just 0.6%, marking a slowdown in the rally that saw double-digit gains in the previous quarter.

The slowdown was amid a pivot away from AI, with the sector experiencing bouts of turbulence. July saw routs driven by profit-taking following Samsung‘s record earnings and concerns about competition from China, while AI names saw volatility the following month amid concerns about financing and capital expenditure.

In September, AI and tech stocks struggled amid calls from prominent AI figures — including Anthropic chief Dario Amodei and OpenAI CEO Sam Altman — to slow down how fast the technology is developed amid safety concerns.

South Korea’s tech-heavy Kospi index shed almost 20% over the quarter, while the Philadelphia Semiconductor Index lost more than 11%.

AI heavyweights were also mixed. Nvidia shares gained more than 14%, and Microsoft surged 37.5% over the quarter, as both companies reported strong financials and robust demand, while Oracle and Broadcom both lost more than 6%. Meta stock surged almost 30%, as the company’s Muse AI personal agent was downloaded hundreds of thousands of times in the United States within weeks of launching.

Outside of the U.S., market performance was mixed. Major European indexes posted marginal gains. In Asia, South Korea’s tech-heavy Kospi fell 19.3%, while mainland China’s CSI 300 shed 12.5%, and Australia’s benchmark S&P/ASX 200 was flat.

Emerging markets were also mixed. The MSCI Emerging Markets index fell 1% in the three months ending September. MSCI indexes linked to Nigeria, Bulgaria, Colombia, Poland, Ukraine and Greece all posted double-digit gains.

Bullishness lingered, however, as AI and corporate earnings optimism outweighed headwinds for many investors.

In a Monday note, Mark Haefele, chief investment officer at UBS Global Wealth Management, said his team continues to hold a positive outlook on equities and is positioning for further market gains.

“Investors should consider combining a broadly diversified core…