Oil Rally and War Risks Keep Markets on Edge

Stocks churned and closed mixed as escalating Iran-related tensions overshadowed otherwise benign inflation data, while oil extended its rally despite the IEA’s record reserve release. Higher crude and persistent uncertainty weighed on sentiment, pushed Treasury yields higher, and reinforced expectations the Fed will remain cautious on rate cuts even as pre-conflict inflation trends showed modest improvement.

Key Headlines & Market Movers:

Geopolitics and Energy Drive Macro Narrative: Markets remained anchored to developments around the Iran conflict, with crude climbing above the mid-$80s despite coordinated emergency reserve releases and shifting headlines around Strait of Hormuz risks and ceasefire prospects. Investors increasingly view the energy shock as a key upside risk to inflation and a constraint on Fed easing.

• Inflation Data Offers Limited Relief: February CPI came in broadly as expected and confirmed easing underlying pressures before the conflict, but the backward-looking nature of the data and the sharp move in oil muted its market impact. Rates moved higher and pricing shifted toward fewer cuts this year as investors reassessed the inflation outlook.

Corporate and Sector Moves Mixed: Oracle rallied on strong AI-driven demand and upbeat guidance, Nvidia’s planned investment in Nebius underscored ongoing data center momentum, and Salesforce’s bond sale drew softer demand amid leverage concerns. Elsewhere, JPMorgan tightened lending to private credit funds and a cyberattack disrupted Stryker operations, highlighting broader credit and operational risks.

S&P 500 Sector Performance

Looking Ahead

Markets remain highly sensitive to geopolitical developments and energy prices, with near-term focus shifting to the Fed’s preferred inflation gauge later this week and any signals on shipping disruptions or ceasefire progress; sustained strength in oil would likely reinforce cautious policy expectations and keep cross-asset volatility elevated.

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