MARKET COMMENTARY

Last week, U.S. markets faced a difficult combination of forces: an oil shock from the war in Iran and the effective closure of the Strait of Hormuz, a job market showing cracks, and inflation data that, while recently contained, is now under pressure from rising energy costs. 

Stocks came in wounded from the prior week and stayed under pressure as oil swung sharply between $88 and $120 a barrel. The growing fear is that a prolonged supply disruption could drive energy prices meaningfully higher just as the economy softens. 

Here's how the major indices ended the week.

Stock Index Performance 

• The S&P 500 declined 1.60%.
• The Nasdaq 100 retreated 1.06%.
• The Dow Jones Industrial Average lost 1.99%.

Macro Snapshot

• Inflation: Good news, with a catch. February's inflation report was the most encouraging in years, with prices up 2.4% annually and underlying inflation steady around 2.5%. But that data predates the conflict in Iran. The oil spike that followed could lift energy and headline prices considerably higher in the months ahead.
• Oil is the wildcard. Iran's threats to block the Strait of Hormuz have rattled energy markets and pushed average U.S. gas prices up over 20% since this time last month. Analysts see a wide range of outcomes for where oil prices will land, ranging from a retreat if disruptions ease to steep increases if the conflict persists. 
• The Fed is stuck in the middle. With inflation still above target, jobs softening, and an oil shock in the mix, the Federal Reserve faces an uncomfortable set of choices. Rate cuts are harder to justify if energy prices re-accelerate, but rate hikes would pressure an already slowing economy. The Fed is still set to hold rates at 3.50% to 3.75%, and markets now expect just two small cuts by year-end. 

The Week Ahead 

• The market•s focus shifts to the Fed's March 17•18 meeting, the first of 2026 to include updated economic projections. The real question is what the Fed signals about the path ahead. Will the committee still pencil in multiple cuts this year, or shift toward higher for longer, given rising energy costs and a weakening job market?
• The conflict in Iran remains the other major unknown. The turmoil has already taken an estimated 20% of regional crude and gas supply offline, triggering the largest weekly oil price jump since the early 1980s. Markets will be watching whether tanker attacks intensify or ease and how quickly Gulf producers can restore flows. Escalation could push crude toward $150 or beyond, while a cooling of tensions could bring some relief at the pump.

Between a Fed meeting, an active conflict reshaping global energy flows, and an economy sending conflicting signals, the week ahead will demand patience.