War-Driven Volatility Sends Stocks Lower as Oil Surges Above $100

Heightened geopolitical tensions dominated markets as escalating conflict between the U.S., Israel, and Iran drove oil above $100 and weighed on risk assets. Stocks reversed early gains to finish lower for a third straight week, while Treasuries faded after an initial rally as energy-driven inflation concerns resurfaced. The dollar strengthened, and cross-asset volatility rose as investors balanced softer economic data against mounting geopolitical risks.

Key Headlines & Market Movers:

Geopolitics and Energy Shock: Escalating military action and threats of prolonged conflict lifted Brent above $100, intensifying inflation concerns and pressuring equities. Policy responses aimed at easing supply, including allowances for some Russian oil flows and plans for strategic reserve releases, helped temper fears but failed to offset broader risk aversion.

Economic Data and Fed Outlook: Softer macro signals, including downward revisions to fourth-quarter growth and muted consumer spending, suggested cooling momentum prior to the conflict, while core inflation held steady near expectations. Markets continue to anticipate a pause at next week’s Fed meeting, with attention shifting to updated projections and how policymakers frame war-related inflation and labor risks.

• Sector and Corporate Developments: Mega-cap tech extended declines, with AI-related uncertainty weighing on sentiment, while Adobe dropped following its CEO’s planned departure and Ulta fell on weak guidance. Fertilizer names pulled back after recent gains tied to supply disruptions, highlighting rotation across cyclical and commodity-sensitive sectors.

S&P 500 Sector Performance

Looking Ahead

Markets are likely to remain headline-driven as investors track developments in the Middle East, energy price stabilization efforts, and next week’s Fed decision alongside updated economic projections. Persistent volatility across asset classes suggests positioning remains defensive, with macro uncertainty and inflation risks likely to guide near-term sentiment.

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