The divergence in the performance of US stock market indices is becoming evident. Since the day the US-Israel war on Iran began, the Dow Jones Industrial Average has been hit the hardest, leaving companies listed on Nasdaq and S&P 500 relatively unscathed. This divergence is now emerging as a new market theme amid rising geopolitical risks.
The numbers tell the stark story. On February 27, a day before the Middle East war began, the Dow Jones Industrial Average closed at 48,977. On March 11, 2026, the index reached its lowest close of the year at 47,417, representing a 3% decline. In comparison, the S&P 500 is down by 1.5%, and the tech-heavy Nasdaq-100 is trading at the same level, over the same period.
What is evident is that the war has left Dow Jones-listed companies bearing the brunt of the oil price shock. Nasdaq-listed stocks appear to be less affected by the ongoing war. Amidst the ongoing war in Iran, the investors are taking shelter in tech stocks, preferring them over steel and shipping companies, at least till the present uncertainties prevail. The flight to tech is becoming one of the defining market narratives of this conflict.
Dow Jones Industrial Average
What makes the Dow Jones Industrial Average (DJI) or Dow 30 different from other indices is that it represents the companies that are based only in the US. Also, there is another differentiating factor. The Dow Jones Industrial Average is a price-weighted measure of 30 U.S. blue-chip companies, and is not based on market capitalization. The index covers all industries except transportation and utilities.
Unlike other indices, in the Dow 30, the selection is not governed by quantitative rules, but, as per the S&P indices website, ‘a stock is added to the index only if the company has an excellent reputation, demonstrates sustained growth, and is of interest to a large number of investors.’
The index consists of the top 30 blue-chip companies and is a barometer of the US economy, its businesses, and the consumption trends in the country. The exposure to Financials and Industrials companies is nearly 44%, while technology companies have a 17% hold on the index.
This sectoral composition is precisely why the Dow is feeling the oil shock more acutely than its peers. Some of the prominent companies in the 30-stock index are Boeing, Nike, Goldman Sachs, Walmart, Intel, 3M, UnitedHealth Group, Apple, Coca-Cola, McDonalds, Microsoft etc.
Oil Price Impact on Dow
The fortunes of the Dow-30 companies are closely linked to the price of oil. And, the ongoing Iran conflict and rising energy prices are projected to significantly exacerbate inflation in the near future.
The sharp volatility in energy prices has created cost pressures for industrial, manufacturing and logistics-heavy businesses. Brent crude oil prices surged from approximately $70 before the war to a peak of $119, eventually stabilizing around $90, primarily due to new supply dynamics from the US and the Middle East affecting the market.
The Dow is significantly affected by disruptions due to its exposure to companies involved in manufacturing and the movement of goods, building infrastructure, and financing trade. These activities are facing disruptions, ultimately impacting corporate margins and profits. Continuing supply disruptions and geopolitical tensions will likely keep Dow Jones stocks at the mercy of the war till it lasts.