Wall Street ended sharply lower Friday after Iran launched missiles at Israel in response to intensive Israeli strikes aimed at crippling Tehran's ability to build nuclear weapons.

Explosions were heard and seen over Tel Aviv and Jerusalem as sirens sounded across Israel following what the country's military spokesman said was the firing of missiles from Iran. That came after Israel struck nuclear facilities and missile factories in Iran, escalating tensions in the Middle East and undermining global investor confidence.

Oil prices surged nearly 7% on fears the conflict could disrupt crude supply from the Middle East. U.S. energy stocks rose in tandem, with Exxon and Diamondback Energy both rallying.

“It looks as though we could be in for a full-blown military conflict," Elias Haddad, senior markets strategist at Brown Brothers Harriman, said earlier on Friday. "If it ends up closing down the Strait of Hormuz, where a third of global oil supply goes through, this could have some pretty nasty effect on global markets."

Airline stocks fell on fears that fuel costs could climb.

Defense stocks climbed, with Lockheed Martin, RTX Corporation and Northrop Grumman all gaining.

According to preliminary data, the S&P 500 lost 68.92 points, or 1.14%, to end at 5,976.34 points, while the Nasdaq Composite lost 254.13 points, or 1.29%, to 19,407.49. The Dow Jones Industrial Average fell 768.73 points, or 1.79%, to 42,198.89.

Photoshop maker Adobe fell as concerns that the pace of the company's AI adoption was too slow overshadowed an increased annual revenue forecast. Oracle jumped to a record high, rallying for a second day after the technology company gave an upbeat forecast driven by demand for its AI services.

Visa and Mastercard both fell after The Wall Street Journal reported that major retailers are exploring cryptocurrencies that could eliminate the need for payment intermediaries.

A tame consumer price report, softer-than-expected producer price data and largely unchanged initial jobless claims earlier this week helped calm investor jitters around tariff-driven price pressures.

U.S. Federal Reserve policymakers are widely expected to keep interest rates unchanged at their meeting next week.

With investors betting the United States will reach trade agreements that reduce President Donald Trump's steep trade barriers, the S&P 500 is now trading just below its February record highs.

The University of Michigan's Surveys of Consumers showed consumer sentiment improved for the first time in six months in June amid trade uncertainty.