Dow drops the most in a month after US airstrike on Iran’s top military leader spooks investors

Stocks fell on Friday after the U.S. confirmed that an airstrike killed Iran’s top military commander, sending oil prices surging and ratcheting up geopolitical concerns.

The Dow Jones Industrial Average closed 233.92 points lower, or 0.6% at 28,634.88 and posted its biggest one-day loss since early December. The S&P 500 also had its worst day in a month, sliding 0.7% to 3,234.85. The Nasdaq Composite dropped 0.8% to 9,020.77. The Dow briefly dropped more than 360 points at the open. The major averages recovered some ground later in the session as oil prices came off their lows.

U.S. crude oil futures settled up 3% at $63.05 per barrel and briefly gained 4.8%, raising concerns about an energy shock on the global economy. Airline stocks fell broadly on the threat of higher oil prices. United, American and Delta all dropped more than 1.6%.

“Global oil markets will be volatile for weeks to come,” said Greg Valliere, chief U.S. policy strategist at AGF Investments, in a note. “There’s a reason, finally, for caution in the stock market.”

“Eventually there will be an uneasy truce ... But that’s a long, long way off; this will get worse before it gets better,” he added.

Energy stocks such as Concho Resources and Apache went up 3.7% and 1.3%, respectively. Devon Energy climbed 1.2%.

A weaker-than-expected reading on the manufacturing economy also weighed on stocks. December’s ISM manufacturing index came in at 47.2, the weakest in a decade and smaller than the 49 reading expected by economists polled by Dow Jones.

Investors largely fled risk assets such as stocks in favor of gold and Treasurys and other traditional safe havens. Gold futures jumped more than 1%. The benchmark 10-year Treasury yield, which moves inversely to the price, dropped to around 1.79%.

The U.S. announced late Thursday that it had killed Iran’s top commander, Gen. Qasem Soleimani, in Baghdad in an airstrike. Soleimani had been a key figure in Iranian politics, and his death has raised concerns over a potential retaliation from the Iranian forces.