The U.S.-Iran war handed energy markets their most violent week in years, WTI crude exploded +28% to flirt with $89, a catastrophic jobs print came in at −92,000, and equity markets somehow refused to fully crack — the Nasdaq gave back just ~1% while the Dow absorbed the real punishment. It was the week the market decided defense, chips, and software matter more than geopolitics. We're not sure that bet ages well.
* Friday close estimates — verify against Yahoo Finance. Week began Mon March 2 from SPX ~6,882.
Three forces collided this week and none of them were gentle. The U.S.-Iran war — which opened with Operation Epic Fury on the last day of February — didn't shake markets Monday the way you'd expect. The S&P 500 finished nearly flat, recovering from a 1.2% intraday hole as dip-buyers piled into Nvidia, Lockheed Martin, and Northrop Grumman like it was 2003. That buy-the-conflict reflex held for exactly one day.
Tuesday reality arrived. The Dow plunged more than 1,200 points at the open — its worst intraday print in months — as reports filtered through that Iran wasn't going quietly. Hezbollah struck Tel Aviv. The Strait of Hormuz started choking. Tanker traffic ground to a halt. Oil surged past $77 WTI and kept climbing. By Thursday it had cracked $81 after Iran directly targeted a tanker. By Friday morning it was approaching $89, with Qatar's energy minister warning oil could double to $150 if the war drags into weeks.
The second hit came Friday morning: nonfarm payrolls fell by 92,000 in February — a number that missed the consensus of 50,000 by a mile in the wrong direction. A Kaiser Permanente strike in California and Hawaii pulled roughly 31,000 healthcare workers out of the count during the BLS survey week. Winter weather did additional damage. But even stripping out those temporary headwinds, economists weren't calling it clean. The third miss in five months is a pattern, not noise. Unemployment ticked to 4.4%. The Fed now has a real problem: inflation risks are up from energy prices, and the labor market is wobbling. They can't cut into that. Not yet.
Defense & Energy. Lockheed, Northrop, Palantir, and the XLE sector led markets. Oil majors quietly printed one of their best weeks in years as WTI surged 28%. Defense was the only sector the war actually rewarded.
The Dow industrials. Boeing, Caterpillar, and companies exposed to global supply chain slowdowns led the index down more than 3.5% on the week. The Dow was the canary — industrials don't like $90 oil.
Software held. The IGV tech-software ETF gained roughly 7% on the week. ServiceNow, Intuit, Salesforce all rallied hard. The market found a rotation: if geopolitics breaks global capex, software becomes the safe tech trade.
Bitcoin above $70K. Crypto cracked through a two-week consolidation range as investors debated whether it functions as a wartime safe haven. It's off 40%+ from its $126K October high — but the flows are real.
Not everything was noise. A few signals carried genuine signal this week worth noting heading into next.
ADP came in soft but not catastrophic. Private payrolls showed a gain of 63,000 in February — below expectations but marginally less alarming than the official BLS print. The divergence between ADP and NFP is worth watching in March. If ADP tracks higher next month and the BLS headline recovers, the jobs panic fades. If they both roll over further, the Fed's paralysis problem gets worse.
ISM Manufacturing was solid at 52.4. February factory activity held in expansion for the second straight month. That matters. If manufacturing is still growing, the war impact hasn't hit supply chains in the data yet. The March reading — out in early April — is the one to watch for war-related disruption.
Wages were the one hot data point. Average hourly earnings rose 0.4% for the month and 3.8% year-over-year — a tenth above forecasts in both cases. That's not disinflationary. That's stagflationary. Soft jobs + sticky wages + $90 oil = a Fed that cannot move in either direction comfortably.
The honest read: cautiously bearish on equities over the next two to four weeks, with specific exceptions. The Nasdaq's resilience is impressive but it's not a clean signal — it reflects a rotation into software and AI-adjacent names rather than genuine market health. The Dow's 3.5% weekly loss and small caps' continued underperformance are the more honest reads on what the broader economy is pricing.
| Asset / Sector | Bias | Reasoning |
|---|---|---|
| S&P 500 broad | CAUTIOUS | War uncertainty + stagflation risk + weak jobs = limited upside near-term |
| Nasdaq / Tech | NEUTRAL | Software rotation holding; semis mixed; watch for AI narrative sustainability |
| Energy (XLE) | BULLISH | $90 oil and no sign of war resolution — energy earnings revisions heading higher |
| Defense (ITA) | BULLISH | Lockheed, Northrop, Palantir all bid up on real spending catalysts, not just narrative |
| Industrials (XLI) | AVOID | Boeing, Caterpillar, transports leading Dow lower; supply chain risk not priced |
| Treasuries (TLT) | WATCH | Stagflation keeps yields elevated; but a bad March jobs print could flip the script fast |
| Crude Oil (WTI) | ELEVATED | $100 calls are circulating. Strait of Hormuz disruption is a structural price floor |
S&P 500 — 6,750 is the line. The index is testing levels not seen since early February. A clean break and hold below 6,750 opens a path toward the 6,600–6,620 range. The Monday open matters — if we gap down hard on escalating war news, that level gets tested fast.
WTI Crude — $90 is psychological. We traded close on Friday. A close above $90 into next week brings $95 into the conversation and the market starts repricing airline margins, consumer spending, and Fed expectations simultaneously. Qatar's $150 warning isn't a base case — but it's not ignorable anymore.
10-Year Treasury — 4.25% is the ceiling to watch. If inflation expectations from energy prices start pushing the 10-year above 4.25%, rate-sensitive growth stocks will reprice lower quickly. We're at 4.18% now. That's a narrow gap.
The war is the wildcard that overrides all of the below. If a ceasefire signal emerges — or if Trump announces an escort fleet protecting Hormuz tankers at scale — oil reverses hard and markets relief-rally. If it escalates further into a multi-theater regional conflict, none of the data below will matter.
The February consumer price index. With gas prices surging in the back half of February, expectations for headline CPI are rising. A print above 3.5% YoY would be a genuine shock to the Fed's posture and to equity multiples.
Multiple FOMC members are scheduled next week after Waller's Friday comments. He already floated that bad data could shift his vote. Watch for anyone re-pricing the May meeting odds — futures currently price the next cut for July.
The market is trying to price a 4–6 week conflict with contained damage. Trump's 4-week estimate from Tuesday is the baseline. Any signal of Iranian escalation into Gulf state infrastructure changes that calculus immediately.
U.S. Navy escorts through Hormuz are being evaluated. If the administration commits to full escort operations, Brent could pull back $10–15. If Iran hits another tanker or blocks the strait further, we go to $100.
Trump announces Navy escorts lock down Hormuz tanker traffic. Oil retraces to $75–$78. CPI prints in-line. The jobs weakness gets correctly read as a one-month aberration from strikes and weather. Nasdaq sustains 22,500+. The Dow finds a bid near 47,500.
Iran escalates into Gulf state energy infrastructure. WTI cracks $100. CPI surprises to the upside. March jobs data confirms February wasn't a blip. S&P trades down toward 6,500–6,600. The Fed stays frozen in a stagflation trap. Volatility sustains above 28.
This was a week that tested the market's ability to compartmentalize — and it mostly held, but the cracks are showing in the wrong places. The Nasdaq's relative calm is a rotation story, not a health story. The Dow's 3.5% loss is more honest. What this week confirmed is that the U.S. economy was already decelerating before oil hit $90, before a war opened in the Middle East, and before February shed 92,000 jobs. The Fed is now sitting on a stagflation tripwire. Energy and defense have clear fundamental tailwinds. Everything else should be held with shorter time horizons and tighter stops until we know whether this war runs four weeks or four months. That gap is everything.