Market Commentary
For the week ending 3/6/2026
March came in like a lion for the resilient financial markets as they reacted to some disappointing economic reports and an escalating conflict in Iran. While major U.S. indexes saw sharp intraday swings and significant early-week losses, Wednesday’s rebound briefly helped stabilize performance as energy prices moderated and domestic economic data remained resilient. However, oil prices surged higher again on Thursday and Friday, and significant economic data impacted Friday’s results as well.
All three major U.S. indices closed down on Friday as the equity markets closed out a turbulent week.
The main trigger for the turbulence happened on Saturday, Feb. 28th as US/Israeli-led strikes on Iran led to the death of Iranian Supreme Leader Ayatollah Ali Khamenei and triggered war escalations. Iran immediately retaliated by launching missiles at Israel and at U.S. military bases and their allies throughout the region including Saudi Arabia, Qatar, Bahrain, and the United Arab Emirates. The Ayatollah’s death ended his 36-year reign and sparked an opportunity for regime change in Iran. President Trump said the US military intends to sustain an assault for “four to five weeks,” but that he is prepared “to go far longer than that.” Trump said Friday that there will be no end to the war with Iran without ‘unconditional surrender.’ Remaining leadership in Iran seemed unlikely to negotiate a ceasefire last week.
These geopolitical tensions had an immediate impact on the energy and safe-haven sectors. Crude oil prices surged throughout the week from $67 (before strikes on Iran) to above $92 a barrel, the first time they have hit that mark since 2023. Oil prices seem to be most directly connected to increased concerns over disruptions in the Strait of Hormuz, which handles 20% of total global oil consumption. Tanker traffic through the Strait has ground to a halt for now as it is essentially closed. Trump announced that the U.S. Navy could escort tankers through the Strait of Hormuz if necessary and that the U.S. can provide insurance to carriers operating in the Persian Gulf after private insurers pulled coverage.
Safe havens performed well this week, specifically gold stabilized at above $5,100 an ounce and continued to see strong demand as investors sought protection against risks.
Global economists predict an inflation surge from the war in Iran, driven by rising energy costs. Each additional day oil prices push higher, the risk grows that the move begins to feed through to transportation costs, input prices, and ultimately inflation readings. Sticky domestic inflation has complicated the Federal Reserve’s rate path. Several Fed officials signaled a continued pause on interest rate cuts, citing the new inflationary risks posed by the Middle East conflict and existing trade tariffs.
A rare bright spot in last week’s economic news was the February ISM Manufacturing report, which unexpectedly rose to 52.4, signaling the sector’s first expansion in 12 months. However, prices also jumped higher and economists continue to cite tariffs as impacting acquisition costs and purchasing decisions. February’s ISM Services report also beat expectations as new orders spiked and its employment measure expanded for the third straight month. Services prices fell last month, contributing to a generally stable and positive outlook. Headline January retail sales declined -0.2% month-over-month, though control group sales were 0.35% higher month-over-month.
February’s ADP payroll report came in ahead of expectations in the best monthly showing since July. However, February’s nonfarm payrolls report unexpectedly declined by 92,000 jobs, far below the expectation of gaining 60,000 jobs. The unemployment rate ticked higher from 4.3% to 4.4%. The results of this jobs report disappointed Wall Street and put extra pressure on the market on Friday, as this suggested the labor market is no longer as strong as it had seemed based on prior data.
Despite the volatility, markets have shown resilience so far, given the big geopolitical developments in the Middle East and the spike in oil prices. For now, it seems that Wall Street is hoping for a quicker resolution than the four-to-five-week timeframe mentioned by President Trump. Only time will tell if that optimism is justified or misplaced, but eventually the dust will settle, and the market will refocus on the fundamentals of the economy.
For the week, the Dow fell -3.0% to 47,502, the S&P 500 dropped -2.0% to 6,740 and the Nasdaq dipped -1.2% to 22,388.
Oil rose 35.6% to $90.90/bbl. Gold dipped -1.7% to $5,159/oz. and the yield on the Ten-Year Treasury jumped up to 4.13%.
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