Wall Street stocks dropped, following a shocking attack by the Palestinian group Hamas and Israel's air strikes on Gaza resulting in the death of 1,500 people on Monday.
At least 1,000 people have been killed on the Israeli side while the death toll in the Gaza Strip has risen to 560 according to the Hamas-controlled health ministry in the Palestinian enclave.
Following the surprise assault, Israel imposed a total siege on the Gaza Strip on Monday.
Shortly after trading started, the Dow Jones Industrial Average slumped 0.1% to 33,379.14.
The broad-based S&P 500 Index lost 0.4% to 4,289.67, while the Nasdaq Composite Index slid 1.0% to 13,295.60.
"War is never a positive. The market doesn´t like uncertainty, and this creates a lot of uncertainty," said Maris Ogg of Tower Bridge Advisors.
But the development could lead the US central bank to hold interest rates at policymakers´ next meeting, she added.
"They´re probably not going to raise rates in the face of what could become a large conflagration here," she said.
Patrick O´Hare of Briefing.com added in a note, "The overarching concern is that the Israel-Hamas War evolves into a wider regional conflict."
Defense companies´ shares rose early Monday, with Lockheed Martin up 7.5% and Northrop Grumman Corp rising 8.2%.
O´Hare added that the conflict is happening while the US House of Representatives lacks a speaker after Republican Kevin McCarthy was ousted last week.
"The House is unable to conduct any business, other than the business of electing a new speaker, until a new speaker is elected — and there is heightened uncertainty about that process," he said.
The Treasury market is closed on Monday for a holiday.
"Continued political instability could prolong any discussions with IMF," says rating agency
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