Week Ending March 7, 2026
DJIA
47,501.55
-453 (-0.95%)
S&P 500
6,740.02
-91 (-1.33%)
NASDAQ
22,387.68
-361 (-1.59%)
U.S.-Iran war drives oil to biggest weekly surge since 1983 as economy sheds 92K jobs; Dow posts worst week since April
U.S. stocks suffered their worst weekly losses since April as investors confronted a toxic combination of deteriorating labor markets and an energy shock driven by the escalating conflict with Iran. The Dow Jones Industrial Average plunged 453 points (-0.95%) Friday to close at 47,501.55, capping a 3.0% weekly decline—its steepest since the April 2025 tariff crisis. The S&P 500 fell 1.33% Friday to 6,740.02 (down 2.0% for the week), while the Nasdaq Composite dropped 1.59% to 22,387.68 (down 2.5% weekly). The Russell 2000 collapsed 2.7% Friday, closing the week down 3.2% as small-cap domestic companies faced the dual threat of rising input costs and slowing consumer demand. Volatility spiked with the VIX closing above 23—its highest since the February correction—as $1.8 trillion in market capitalization evaporated.
Jobs report signals labor market deterioration: Friday’s February employment report delivered a shocking contraction, with nonfarm payrolls falling 92,000—the first monthly decline since December 2024 and a dramatic miss versus the 50,000-60,000 gain expected. The unemployment rate ticked up to 4.4% from 4.3%, while January’s initially strong 130,000 gain was revised down to 126,000 and December swung from +50K to -17K. With these revisions, 2025 recorded five months of labor market contractions—the first time since 2010. Healthcare shed 28,000 jobs due to the Kaiser Permanente strike (over 30,000 workers sidelined), while the household survey showed an even bleaker picture with 185,000 fewer people reporting employment. Average hourly earnings rose 0.4% monthly (3.8% YoY), suggesting wage pressures persist even as hiring freezes, complicating the Fed’s stagflation calculus. Labor force participation fell to 62.0%—its lowest since December 2021.
Energy shock: Oil posts largest weekly surge on record: West Texas Intermediate crude soared 36% this week—the largest weekly gain since WTI futures began trading in 1983—closing Friday at $90.90/barrel after surging 12.2% intraday. Brent crude jumped 27% to $89/barrel. The catalyst: the U.S.-Israeli military campaign that killed Iranian Supreme Leader Ayatollah Ali Khamenei on February 28 triggered Iranian retaliation, missile barrages across the Gulf, and a near-total halt of shipping through the Strait of Hormuz (20% of global oil supply). Qatar’s energy minister warned Gulf exporters could shut down production within weeks, potentially driving crude to $150. President Trump demanded “unconditional surrender” from Iran Friday, dashing hopes for near-term de-escalation. Diesel surged 27% and gasoline jumped 11% in four days—the sharpest spike since 2005. Energy stocks rallied: XLE +15% for the week, with Exxon, Chevron, and Occidental hitting 52-week highs.
Stagflation fears grip bond markets: Treasury yields whipsawed violently as investors weighed slowing growth against oil-driven inflation. The 10-year yield jumped 18bp to 4.14% (briefly touching 4.17% Thursday)—its largest weekly surge since April—before pulling back Friday to 4.11% on the weak jobs data. The 2-year rose 14bp to 3.55%, while the crucial 5-year TIPS breakeven inflation rate spiked 22bp to 2.71%, pricing aggressive tariff/oil pass-through. The 2s-10s spread widened to 58bp, suggesting bond markets expect inflation before eventual recession. Gold rallied 2.2% to $5,159/oz despite Friday’s pullback, while silver plunged 9.6% to $84.31—its first weekly loss in four weeks—as industrial demand fears offset safe-haven flows. Bitcoin remained range-bound near $68,000, failing to act as a risk-off hedge.
WEEKLY PERFORMANCE
| Index | Close | Weekly %Chg |
|---|---|---|
| Dow Industrials | 47,501.55 | -3.0% |
| S&P 500 | 6,740.02 | -2.0% |
| Nasdaq Comp | 22,387.68 | -2.5% |
| Russell 2000 | 2,603.48 | -3.2% |
TREASURY YIELDS
| Maturity | Yield | Weekly Chg (bp) |
|---|---|---|
| 2-Year | 3.55% | +14 |
| 10-Year | 4.11% | +18 |
| 30-Year | 4.74% | +11 |
COMMODITIES & CRYPTO
| Asset | Friday Close | Week Change |
|---|---|---|
| Gold (spot, oz) | $5,159 | +2.2% |
| Silver (spot, oz) | $84.31 | -9.6% |
| WTI Crude Oil | $90.90 | +36.0% |
| Bitcoin | $68,000 | +2.5% |
WEEKLY MOVERS
| Stock | Week % Change |
|---|---|
| Exxon Mobil (XOM) | +18.5% |
| Chevron (CVX) | +16.2% |
| Boeing (BA) | +2.5% |
| United Airlines (UAL) | -12.3% |
| Caterpillar (CAT) | -9.8% |
SECTOR ROTATION
| Sector | Week %Chg |
|---|---|
| Energy (XLE) | +15.0% |
| Utilities (XLU) | +2.8% |
| Materials (XLB) | -7.0% |
| Financials (XLF) | -4.2% |
| Technology (XLK) | -2.8% |
WEEK AHEAD
- CPI Inflation (Wed): February data expected +0.4% MoM headline, +0.3% core. Energy component critical after oil surge.
- Retail Sales (Fri): January data due after weak December. Consumer resilience test amid gasoline price shock.
- PPI (Thu): February wholesale inflation. Watch for tariff/energy pass-through acceleration.
- Fed Speak: Multiple officials including Daly, Waller comment on stagflation risks. Markets pricing July cut (48% odds).
- Iran War Developments: Strait of Hormuz closure continues. Gulf production shutdown risk escalates if conflict extends beyond “one month” market expectation.
TERM OF THE WEEK
Stagflation: An economic condition characterized by simultaneous stagnant growth, high unemployment, and elevated inflation—rendering traditional monetary policy tools ineffective. The term originated during the 1970s oil shocks when supply disruptions (OPEC embargo) drove inflation while GDP contracted, creating a policy dilemma: tightening to combat inflation risked deepening recession, while easing to support growth risked embedding inflation expectations. The 2026 variant differs: instead of OPEC-driven supply shocks, today’s stagflationary pressures stem from tariff-induced cost-push inflation, geopolitical energy disruptions (Iran war), and AI-driven structural labor displacement occurring alongside persistent nominal wage growth. Current manifestations include: (1) Negative supply shocks raising production costs while constraining output—evidenced by this week’s simultaneous job losses and accelerating wages, (2) Treasury market confusion as yields surge on inflation fears despite weakening employment, and (3) The Fed’s impossible choice between supporting a deteriorating labor market or fighting oil-driven inflation. Asset allocation in stagflation historically favors real assets (commodities, TIPS, infrastructure with pricing power) and short-duration credit, while punishing long-duration growth stocks and conventional bonds. This week’s market action validated the playbook: Energy +15%, Utilities +2.8%, but Materials -7%, Financials -4%, Tech -3%. The critical difference from the 1970s: modern economies are less energy-intensive (energy spending now ~4% of GDP vs. 8% in 1980), but global supply chains are more fragile and monetary policy is already constrained by elevated debt levels, limiting the Fed’s ability to deploy the Volcker-style rate shocks that ultimately broke 1970s inflation.
