Markets Slip, Oil Surges After Iran Attacks Israel

Gains in oil ETFs accelerated, broad markets slumped further and volatility surged after reports that Iran had attacked Israel with ballistic missiles raised fears of a wider Middle East war.

Shortly after 12:30 New York time, the Israel Defense Forces said Iran began launching what amounted to more than 100 missiles aimed toward Tel Aviv and other regions, according to published reports. No injuries were immediately reported.

The attack was in retaliation for Israel's assassination of longtime Hezbollah leader Hassan Nasrallah, Iran said, according to reports.

Oil ETFs in particular jumped over the fears about the Middle East conflict. Israel-focused ETFs also dropped, with the iShares MSCI Israel ETF (EIS) losing 3.5%.

The ProShares Ultra Bloomberg Crude Oil (UCO) added to earlier gains after the attacks were reported, rising 7.4% in early afternoon trading. The United States Oil Fund LP (USO) rose 4.8%. BNO, the United States Brent Oil Fund LP rose 4.5%. 

Volatility spiked, as measured by the ProShares VIX Short-Term Futures ETF (VIXY). That fund jumped 8.2 to its highest point since early September.

Declines in broad markets accelerated with the SPDR S&P 500 ETF Trust (SPY) losing 1.3% and the SPDR Dow Jones Industrial Average ETF Trust (DIA), which tracks the 30 largest NYSE companies, sliding to an 0.8% drop.

Energy ETFs soared Tuesday as tensions in the Middle East escalated, with the White House stating it believed that Iran would attack Israel in retaliation for the killing of Hezbollah leader Hassan Nasrallah. 

XLE, the Energy Select Sector SPDR Fund jumped nearly 2%. Oil ETFs in particular jumped over the fears about the Middle East conflict.

UCO, the ProShares Ultra Bloomberg Crude Oil jumped 6.6% Tuesday shortly after noon. USO, the United States Oil Fund LP rose 4.2%. BNO, the United States Brent Oil Fund LP rose 4%.

Oil ETFs have struggled over the past three months; USO is down 12% over the past 90 days.

Natural gas ETFs were mixed. BOIL, the ProShares Ultra Bloomberg Natural Gas pared its gains, dropping 0.7% after earlier adding more than 1.2%. UNG, the United States Natural Gas Fund LP lost 0.2% after earlier gaining half of a percentage point.

Broad market funds struggled Tuesday on the news. SPY, the SPDR S&P 500 ETF Trust sank 1%, while the tech-heavy Invesco QQQ Trust (QQQ) slid 1.7%. 

The broader DIA, the SPDR Dow Jones Industrial Average ETF Trust which tracks the 30 largest NYSE companies, fell 0.5%.