Stocks Wipe Out Gains, Brent Rises as War Rages On: Markets Wrap
(Bloomberg) — Volatility gripped Wall Street, with stocks wiping out gains and Brent topping $100 as the war in Iran showed no signs of easing. Bond traders revived bets on policy easing after sluggish economic data.
The S&P 500 erased a nearly 1% advance on a news report the Pentagon is moving additional Marines and warships to the Middle East, with Iran stepping up its attacks on the Strait of Hormuz. Concerns about the inflationary impacts of higher energy costs weighed on Treasuries, but short-dated notes outperformed as traders saw higher odds of a Federal Reserve rate cut in 2026. A gauge of megacaps extended a plunge from a record to 10%. The dollar climbed toward its highest since December.
The US stepped up strikes on Iran to unprecedented levels as both sides threatened to escalate a conflict hitting its two-week mark and upending global markets. While recent comments from President Donald Trump and Iran’s new leader have suggested there will be no letup in the conflict soon, pressure is building for a de-escalation amid surging oil prices.
“There are two paths at this time for markets and the better outcome is a shorter war,” said Chris Zaccarelli at Northlight Asset Management. “Likewise, if the length of the military conflict stretches out much longer than expected, we could see even more negative impacts on the markets.”
The US issued a second authorization letting countries buy more Russian oil that’s stuck on tankers due to sanctions, part of the White House’s push to prevent prices from surging.
Defense Secretary Pete Hegseth said Friday marked the largest attacks against the Islamic Republic, putting the total number of targets hit by the US-Israeli alliance since the beginning of the war at around 15,000. Iran’s new supreme leader is wounded and likely disfigured, he noted.
“It will likely continue to be a ‘headlines-driven’ market,” said Matt Maley at Miller Tabak. “Investors are starting to worry that the situation in the Middle East could drag on for a long enough period of time for it to have an impact on the economy.”
In the countdown to the Fed decision, traders kept a close eye on a slew of economic reports. Consumer spending barely rose in January after gross domestic product was weaker than previously reported at the end of last year, suggesting the economy lost some momentum before the war.
Job openings rose and layoffs fell, signaling demand for workers was improving before the labor market showed signs of weakness. The core personal consumption expenditures price index — the Fed’s preferred inflation gauge — matched estimates. Consumer sentiment hit a three-month low.
Fed officials are widely expected to hold rates steady next week, and traders will focus on any potential change in the central bank’s outlook to incorporate the impacts of the war.
Underlying inflation pressures will continue to boil under the surface, impacted by the conflict, according to Jeffrey Roach at LPL Financial.
“We expect the Fed to highlight the uncertainty on both sides of the mandate,” he added. “Inflation will be impacted by the war and unemployment will be impacted by the disruptions in the labor market. Expect to see some important revisions in the upcoming Summary of Economic Projections next week.”
The spike in oil prices and growing concerns around private credit are causing market activity to resemble the lead-up to the global financial crisis, according to Bank of America’s Michael Hartnett.
He flagged how oil doubled to $140 a barrel by August 2008 from $70 in July 2007, accompanied by the start of the “subprime tremors” that engulfed the likes of Northern Rock and Bear Stearns.
Corporate Highlights:
Charles Schwab Corp. expects revenue growth of around 16% for the first quarter as retail investors remain engaged despite uncertainty about the direction of the economy and the war. Boeing Co. is repairing damaged wiring in as many as 25 undelivered 737 Max jets, disrupting near-term deliveries of the aircraft, people familiar with the matter said. Apple Inc. is lowering the fees it collects from app developers in China, a major concession in a hugely lucrative market where the company faced the risk of antitrust intervention by local regulators. Adobe Inc. slipped as Chief Executive Officer Shantanu Narayen will resign from his position atop the creative software giant amid deep skepticism about the company’s ability to thrive in the AI era. Carvana Co.’s board approved a 5-for-1 stock split, a move to bring down the automotive retailer’s lofty share price following a staggering multiyear rally from the depths of the pandemic. Ulta Beauty Inc. sank after the cosmetics retailer offered guidance for the current year that was toward the low end of Wall Street’s expectations. What Bloomberg Strategists say…
“Stocks have recently shifted into a ‘good-data-is-bad-news’ regime, not because they’re reacting to the economic news necessarily, but instead because they’re anticipating a worsening ahead.”
—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.4% as of 1:22 p.m. New York time The Nasdaq 100 fell 0.5% The Dow Jones Industrial Average was little changed Currencies
The Bloomberg Dollar Spot Index rose 0.5% The euro fell 0.6% to $1.1441 The British pound fell 0.7% to $1.3246 The Japanese yen fell 0.2% to 159.65 per dollar Cryptocurrencies
Bitcoin rose 2.5% to $71,946.6 Ether rose 3.5% to $2,134.52 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.28% Germany’s 10-year yield advanced three basis points to 2.98% Britain’s 10-year yield advanced five basis points to 4.82% Commodities
West Texas Intermediate crude rose 1.2% to $96.91 a barrel Spot gold fell 0.5% to $5,056.32 an ounce ©2026 Bloomberg L.P.
