U.S. stock index futures tumbled after Iran launched missiles at American bases in Iraq, escalating tensions in the Middle East that threatened to upend the global economy.

Contracts on the S&P 500 Index slid 1.3% as of 10:15 a.m. in Tokyo, after the Pentagon said Iran fired a series of rockets at two airbases that housed American troops early Wednesday morning Baghdad time. Futures on the Nasdaq 100 Index dropped as much as 1.7% and those on the Dow Jones Industrial Average declined 1.4%.

The sell-off shattered the uneasy calm that had prevailed on American equities markets this week even as Iran repeatedly threatened to retaliate after the U.S. killed a top general Friday, an attack that briefly roiled financial markets. Wednesday’s escalation rekindled the flight to safety after a two-day reprieve, sending gold above $1,600 an ounce and rattling equity markets around the globe. Oil surged.

“The market didn’t price the chance of a major conflict high enough when the U.S. drone strike happened,” said Max Gokhman, the head of asset allocation for Pacific Life Fund Advisors. “Now it’s more clear the situation won’t de-escalate and fear is replacing hope in investors’ minds.”

It wasn’t immediately clear if there were casualties or major damage, but the strikes heightened fears that the situation will widen into a broader conflict that could ripple across global financial markets. U.S. President Donald Trump had vowed a quick and overwhelming response to any Iranian attacks.

“It is important to note that President Trump was very clear that the U.S. would deliver a heavy-handed response to any Iranian retaliation,” Michael O’Rourke, JonesTrading’s chief market strategist, wrote to clients. “Futures should not only be reacting to the Iranian attack, but also to the clear escalation that will be the impending U.S. escalation.”

The S&P 500 is coming off one of its best year’s of the bull market, rising 29% in 2019 amid a cooling of trade tensions, signs of rising global growth and concerted central bank easing. Risk markets had looked past geopolitical tensions, from North Korea to the Middle East, on speculation central banks stood ready to continue supporting growth. Volatility that had remained tepid throughout the latter part of the year is now likely to spike higher.

“Clearly a myriad of uncertainties remain around a potential U.S. counter strike and any further reprisals which will subdue risk appetite and see volatility whipsaw markets once again,” said Eleanor Creagh, a strategist at Saxo Capital Markets.