The situation in Iran has taken a new turn. Iran's Supreme National Security Council issued a statement in the early hours of the 18th, confirming the death of its secretary, Ali Larijani, in an airstrike. According to reports, the US Central Command announced that several hours earlier, US forces successfully used multiple 5,000-pound deep-penetration munitions to destroy fortified Iranian missile launch sites near the Strait of Hormuz. The US military stated that anti-ship cruise missiles at these positions posed a threat to international shipping in the strait. Iran has not yet responded to the incident.
Additionally, on the 17th, the Speaker of Iran's Islamic Consultative Assembly stated on social media that the Strait of Hormuz will not return to its pre-war condition. French President Emmanuel Macron indicated that France would participate in escort operations in the strait once the situation becomes "calmer." US President Donald Trump again expressed dissatisfaction with NATO allies for not joining the US-proposed escort mission in the Strait of Hormuz, stating he was "disappointed" with NATO. Trump claimed it would "not be long" before the strait is safe for passage and added that the US is not yet ready to end the conflict with Iran but will "leave in the near future."
According to reports, the Pentagon is deploying additional troops to the Middle East, with the USS Tripoli, an amphibious assault ship stationed in Japan, heading toward the region.
On Tuesday, the three major US stock indices experienced a pullback after initial gains. At the close, the Dow Jones Industrial Average edged up 0.10%, after rising nearly 1% intraday. The Nasdaq and S&P 500 indices rose 0.47% and 0.25%, respectively. Large-cap tech stocks were mixed: Google and Amazon gained over 1%, while Nvidia and Facebook fell 0.70% and 0.76%, respectively. Chip stocks also diverged, with Micron Technology surging over 4%, Qualcomm up 1.70%, and Intel declining nearly 4%.
Notably, the situation in Iran has dampened sentiment among US retail investors. A recent JPMorgan report indicated that as tensions escalated, retail investors ended their previous strategy of buying on dips, showing signs of persistent fatigue. During the week of March 5–11, weekly purchases by US retail investors fell nearly 30% compared to the previous week. Concurrently, net inflows into retail ETFs decreased by 22%, breaking a three-month trend of consistent buying.
In related developments, Iran’s Supreme National Security Council confirmed that Larijani was killed in the airstrike. According to the Tasnim News Agency, Larijani died on the morning of the 17th, along with his son, security deputies, and several aides. The statement emphasized that Larijani had long been committed to Iran's development and called for national unity against external threats.
The Israeli Defense Forces claimed responsibility for the airstrike near Tehran, describing Larijani as one of Iran's most senior leaders and a close associate of the late Supreme Leader Khamenei. Following Khamenei’s death in a US-Israeli airstrike on February 28, Larijani reportedly led operations against Israel and the US.
Meanwhile, Iran’s new Supreme Leader issued his first statement on March 13, vowing to continue blocking the Strait of Hormuz. The Islamic Revolutionary Guard Corps has repeatedly stated that the strait remains under its tight control and that the US and its allies have no right of passage.
President Trump reiterated his disappointment with NATO during a meeting with the Irish Prime Minister, calling the alliance’s stance a "very stupid mistake." He suggested that the US did not need NATO’s support but expected it nonetheless. Trump also claimed that US spending on NATO contributed to its fiscal deficit but said there were no immediate plans to reassess the relationship.
The conflict, which began with a large-scale US-Israeli military operation on February 28, has led to Iran retaliating against Israeli and US targets in the Middle East. Shipping through the Strait of Hormuz has been largely suspended as a result.
According to JPMorgan, the outbreak of war in Iran broke retail investors’ year-long habit of buying during market dips. In the week of March 5–11, retail investors reduced weekly ETF inflows by 22%, with total inflows dropping to $6.7 billion, below the 12-month average of $7.1 billion. While ETFs remained popular, accounting for $6.3 billion of inflows, individual stock purchases fell to $400 million.
The report noted that retail investors are scaling back purchases of both ETFs and individual stocks, with a particular decline in interest in equities adding pressure to already moderate flows. Despite an overall reduction in positioning, retail investors showed a clear preference for large-cap tech stocks with strong earnings, such as Oracle, while reducing exposure to energy stocks.
Last week, retail investors continued buying tech and consumer discretionary stocks, including Nvidia, Broadcom, Oracle, Microsoft, Tesla, and PLTR. JPMorgan compared this behavior to patterns seen during the initial weeks of the Russia-Ukraine conflict in 2022, where retail investors initially bought energy stocks and ETFs, briefly turned negative, and resumed net buying as the situation evolved.
Amid rising Middle East tensions, oil prices climbed toward $120 per barrel recently. Retail investors have been buying defensive stocks like aerospace and airline companies while selling sectors such as financials, healthcare, communications, and materials. The US Oil Fund (USO), which tracks WTI crude prices, has gained popularity, while the Energy Select Sector SPDR Fund (XLE) has seen outflows.
Caution remains elevated in certain market segments. Nomura strategist Charlie McElligott noted that options traders appear to be hedging against potential "disaster" in large-cap tech and Nasdaq 100-tracking ETFs, creating a one-sided trading environment that may present opportunities for contrarian investors.
Retail investors have become a significant force in the market since the 2020 pandemic, when many were confined to their homes. Citadel Securities’ equity and derivatives strategist Scott Rubner recently described retail investors as "the strongest player in the equity market," citing record inflows in January. Although February flows were lower, they still ranked as the fifth-largest monthly net buying period on record and the strongest in five years.
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