Russell 2000 Enters Correction as Iran War Drags On
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- Russell 2000 closed in correction territory on Friday — a 10%+ drop from a recent high — the first major US index to do so, after the small-cap gauge had been 'riding high' until the US and Israel first struck Iran in late February 2026.
- Nasdaq Composite briefly looked headed for correction as well before paring losses, finishing down 2% — its biggest single-day percentage-point drop since Feb. 12 — and now sits 9.7% below its record close from four months ago.
- Brent crude finished the week above $110 a barrel for the first time since 2022, as the S&P 500 notched a fourth consecutive losing week and the index closed at 6,506.48, its lowest level since September.
- President Trump told reporters outside the White House he would oppose a cease-fire with Iran, saying Israel would agree to end the fighting 'when the U.S. decides it is time'; the Pentagon's deployment of additional Marines to the region added to Friday's market anxiety.
- S&P 500 closed below its 200-day moving average on Thursday, snapping a 214-session streak above it, while only 18% of its components finished Friday above their 50-day moving average — the lowest breadth reading since April 21.
- Hedge funds dumped $9.6 billion in US stocks on a net basis on Thursday, the largest single-day outflow since 2022, according to Goldman Sachs' trading desk.
- Ed Yardeni, president of Yardeni Research, told clients he expects the Iran war to deliver a 10% to 15% pullback in stocks — a drop he characterized as 'a great buying opportunity.'
Why it matters: With the Russell 2000 already down 10% and the S&P 500 breaking a 214-session trendline on the same day Brent crude topped $110 for the first time since 2022, the market is pricing in a prolonged Iran conflict rather than a quick de-escalation. The simultaneous collapse in market breadth — only 18% of S&P 500 stocks above their 50-day moving average — means the damage is broad-based, not a narrow small-cap story, leaving the Nasdaq and Dow one bad session away from joining the Russell in correction territory.
