Weekly Commentary (3/1/26) - The Iranian Conflict

Weekly Commentary (3/1/26) The Iranian Conflict
Wall Street wrapped up a volatile week as tariff threats, tensions between the United States and Iran, a hot inflation report, and concerns about AI disruption worried investors.
The S&P 500 declined 0.4 percent last week, the Dow Jones Industrials slid 1.3 percent, and technology stocks were under pressure as the Nasdaq fell 0.9 percent. Risk off positioning lifted consumer staples and utilities by 2.7 percent and 3.0 percent, respectively. Foreign developed markets represented by EAFE rose 1.2 percent, and emerging market equities were buoyed by a volatile dollar and gained 2.8 percent. Gold increased 1.2 percent and oil prices jumped 3.4 percent because of tensions with Iran.
Corporate earnings have been strong and continue to support the broader market. Most companies in the S&P 500 have reported fourth quarter results, posting earnings growth of 14.6 percent compared to the same quarter last year, according to FactSet. So far, 66 percent have beaten revenue estimates and 74 percent have exceeded earnings expectations. Artificial intelligence is creating a divide between fear and optimism. Some worry about job displacement, while others point to productivity gains and stronger long-term profitability. The pace of adoption and the ability to monetize these investments remain closely watched.
On the economic front, inflation came in hotter than expected. The Producer Price Index rose 0.8 percent for the month, the largest increase since last July. On a year over year basis, core wholesale prices increased 3.6 percent, the highest level since last March. Despite these concerns, demand for United States Treasuries remains firm, with yields at their lowest levels in four months. The 10-year Treasury declined to 3.97 percent from 4.1 percent the week prior. Geopolitical tensions increased as Iran responded to President Trump’s comments with threats of its own.
This week the focus will turn to developments involving Iran and to labor market data, including Wednesday’s ADP employment report for February and Friday’s United States jobs report.
Events like this tend to create short term volatility, but history suggests the market’s reaction is often temporary. Investors are best served by staying focused on long term goals. Periods of uncertainty are expected, and diversification remains important. Market leadership continues to broaden beyond large technology companies and the Mag 7, with capital rotating into other sectors and markets that appear more reasonably valued.
“March is the month of expectation, the things we do not know.”
Emily Dickinson