Weekly Commentary (3/9/26) – Oil Spike and Weak Jobs Jolt Markets

Last week brought a sharp reminder that geopolitics can quickly overpower otherwise constructive fundamentals. Markets spent much of the week trying to balance solid business-survey data and generally decent earnings trends against a sudden jump in Middle East risk. As hostilities involving Iran intensified and shipping concerns around the Strait of Hormuz grew, oil surged and investors quickly began to reprice inflation risk, growth risk, and the likely path of interest rates. By week’s end, the tone had clearly shifted from complacent to cautious. 
For the week, the DJIA fell 2.92% and the S&P 500 declined 1.99%. The tech-heavy Nasdaq finished lower by 1.22%. International equities also struggled, with the MSCI EAFE Index and MSCI EM down 6.73% and 6.88%, respectively. Small company stocks, represented by the Russell 2000, were down 4.03%. Fixed income, represented by the Bloomberg Aggregate, fell 0.96% for the week as yields moved higher. As a result, the 10 Year U.S. Treasury closed at a yield of 4.15%, up 18 basis points. Gold declined 1.61%. Oil surged 35.63% to $90.90, its highest level in quite some time, as markets assessed the risk of a more prolonged supply disruption and the possibility that higher prices could eventually encourage additional U.S. production.
Last week’s economic news was mixed, but the split was fairly clear. Business surveys were solid: ISM manufacturing remained in expansion territory at 52.4, while ISM services rose to 56.1, showing continued resilience in broad areas of business activity. At the same time, the labor data was softer. February non-farm payrolls fell by 92,000 and the unemployment rate held at a relatively manageable but still elevated 4.4%. That is not an easy mix for the market or for the Federal Reserve. 
Earnings season has been reasonably solid, and valuations have come in a touch lower, but neither has been enough to offset the geopolitical shock. FactSet’s latest work shows the S&P 500 forward 12-month P/E ratio at 21.2, down from 22.0 at year-end, still well above long-term averages but somewhat less stretched than it was. At the same time, analysts continue to look for double-digit earnings growth in 2026, with projected first-quarter earnings growth of 11.5% and full-year growth of 15.0%. In other words, the earnings backdrop is still supportive, but when oil spikes and volatility rise, the market tends to care less about valuation math in the short run and more about whether margins, inflation, and consumer confidence are about to come under pressure. 
This week, inflation data will be watched very closely. Wednesday’s CPI report will get the first and biggest look, and Friday’s delayed PCE report will add another important read on whether price pressures are staying contained or beginning to reaccelerate. Investors will also be watching jobless claims, housing starts and permits, the GDP revision, job openings, and consumer sentiment for signs of whether last week’s weak jobs report was noise or the start of something more meaningful. After last week’s repricing, the market will likely be highly sensitive to any evidence that higher energy prices are beginning to bleed into inflation expectations.
We continue to advise investors to be disciplined in adhering to their investment policy and patient when the markets’ winds are pushing against the planned course.
“Smooth seas do not make skillful sailors.” – African proverb