Coinpaper
March 3, 2026 5:35 PM UTC

SPY Stock Forecast: Drops Over 1.4% After Strait of Hormuz Immediate Closure

SPDR S&P 500 ETF Trust (SPY) trades at $677.68 as of writing, down $9.47 or 1.4% on the session. Sellers took control early and never eased pressure. The ETF now trades near the lower end of its intraday range between $669.66 and $678.45, and below its previous close of $686.38. Wall Street faces a sharp reversal. What looked like a routine dip on Monday turned into aggressive liquidation on Tuesday. Traders who stepped in to buy weakness now reassess that move. Did they underestimate how quickly geopolitical risk could escalate? The broader market reflects that shift. The Dow Jones Industrial Average plunged 1,098 points, or 2.25%, to around 47,665. The S&P 500 dropped 190 points to 6,710. Meanwhile, the Nasdaq Composite fell over 1.5% to 22,125. Small caps suffered deeper losses, signaling that investors rapidly pulled back from higher-risk assets. Strait Of Hormuz Closure Hits Energy Markets The catalyst arrived from the Middle East. An Iranian Revolutionary Guard commander declared the Strait of Hormuz effectively closed and threatened vessels attempting passage. That statement rattled global energy markets within minutes. Brent crude futures surged past $85 per barrel for the first time since July 2024. Traders reacted to the possibility that roughly one-third of seaborne crude exports could face disruption. Oil’s sharp move fueled inflation concerns and lifted Treasury yields, which now flash warnings about renewed price pressure. Energy volatility often spills into equities. This time proved no different. Rising oil prices raise input costs for companies and squeeze consumer spending power. Investors quickly recalibrated growth expectations. Could this become more than a short-term shock? From Dip-Buying To Liquidation Monday’s rebound now appears fleeting. Both the S&P 500 and Nasdaq erased steep intraday losses and traded marginally higher before the close. That bounce encouraged traders who rely on historical patterns, showing that geopolitical conflicts rarely derail bull markets for long. However, Tuesday’s action tells a different story. The conflict entered its fourth day with no visible path toward de-escalation. As headlines escalated, risk appetite evaporated. Investors sold equities, trimmed bond exposure, and rotated into defensive assets. Market psychology shifted fast. When uncertainty rises, traders often reduce exposure first and ask questions later. That approach dominated today’s session. What Technical Levels Should We Watch Next? SPY now tests a critical technical zone. Price approaches a double support area formed by a horizontal support level and an ascending trendline that guided the recent uptrend. This confluence could stabilize price and invite buyers back toward recent highs near $697. Source: TradingView Yet the market demands confirmation. If buyers defend this area, SPY could attempt another push higher. If selling pressure overwhelms support, the chart opens room toward the $600 level. That scenario would mark a significant retracement from recent peaks. Will support hold and restore confidence? Or will geopolitical stress overpower technical strength? SPY’s next move likely depends on developments in the Strait of Hormuz and whether markets see signs of stabilization.