The S&P 500 Index ($SPX) (SPY) on Friday closed down -1.33%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.95%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.51%.  March E-mini S&P futures (ESH26) fell -1.39%, and March E-mini Nasdaq futures (NQH26) fell -1.58%.

Stock indexes fell sharply on Friday, with the Dow Jones Industrial Average posting a 3.5-month low amid concern that the war in the Middle East will keep pushing energy prices higher, sparking inflation. Qatar’s energy minister told the Financial Times on Friday that the war in the Middle East could “bring down the economies of the world,” and predicted that all Gulf energy exporters would shut down production within weeks if the war drags on, driving crude oil prices to $150 a barrel.

Stock losses accelerated on Friday on comments from President Trump, who said the US doesn’t want to negotiate an end to the war with Iran, and that “there will be no deal with Iran except unconditional surrender,” fueling concerns the US may be girding for an extended conflict.

Stocks also retreated on Friday after US employers unexpectedly cut jobs last month and the unemployment rate rose, raising doubts about the health of the labor market.

US Feb nonfarm payrolls unexpectedly fell by -92,000, weaker than expectations of a +55,000 increase and the biggest decline in four months. The Feb unemployment rate unexpectedly rose +0.1 to 4.4%, showing a weaker labor market than expectations of no change at 4.3%.

US Feb average hourly earnings rose +0.4% m/m and +3.8% y/y, stronger than expectations of +0.3% m/m and +3.7% y/y.

US Jan retail sales fell -0.2% m/m, a smaller decline than expectations of -0.3% m/m,  Jan retail sales ex-autos were unchanged m/m, right on expectations.

US Jan consumer credit rose by +$8.05 billion, weaker than expectations of +$12.65 billion.

Fed Governor Christopher Waller said, "Thinking about monetary policy going forward, the Iran war is unlikely to cause sustained inflation.  That's one reason the Fed doesn't look at energy prices but looks at core prices, excluding energy, as core is a better predictor of future inflation."

Cleveland Fed President Beth Hammack said, "Under my base case, I think policy should be on hold for quite some time as we see evidence that inflation is coming down and the labor market stabilizes further."

Boston Fed President Susan Collins said, "My baseline features a still-uncertain inflation picture, with continued upside risks. This, combined with recent evidence suggesting a relatively stable labor market, in my view, argues for maintaining policy rates at their current, mildly restrictive levels for some time."

WTI crude (CLJ26) surged by more than +12% Friday to a 2.5-year high, adding to this week’s surge, as the war rages on in the Middle East for a seventh day.  Iran fired a barrage of missiles and drones targeting a number of Gulf countries overnight, while the US and Israel maintained airstrikes on Iran.  Key energy facilities in the Middle East have been struck by Iranian drones or forced to shut as storage tanks have filled up, as the closure of the Strait of Hormuz has halted energy exports. 

The Strait of Hormuz remains closed due to the war against Iran, halting most energy shipments from the Persian Gulf.  Iran's Islamic Revolutionary Guard Corps has warned ships not to sail through the passageway, saying that vessels "could be at risk from missiles or rogue drones."  The closure of the Strait of Hormuz, which handles a fifth of the world's oil, has curbed exports and forced Gulf producers to stockpile the crude locally in storage tanks.  Goldman Sachs estimates the real-time risk premium for crude oil at $18/bbl, corresponding to its estimate of the impact of a six-week full halt to tanker traffic in the Strait of Hormuz. 

In addition, damage from an intercepted Iranian drone caused a major fire on Tuesday at the United Arab Emirates' major oil-trading hub, Fujairah, one of the largest oil storage centers in the Middle East.  European natural gas prices surged to a 3-year high on Tuesday after Qatar shut its Ras Laffan plant, the world's largest natural gas export facility, after it was targeted by an Iranian drone attack.  The Ras Laffan plant accounts for about 20% of the global liquefied natural gas supply.  On Thursday, China told its largest refiner to suspend exports of diesel and gasoline due to the escalating conflict in the Persian Gulf, which will tighten global fuel supplies and push fuel prices even higher. 

Q4 earnings season is nearing its end, with more than 95% of the S&P 500 companies having reported earnings results.  Earnings have been a positive factor for stocks, with 74% of the 492 S&P 500 companies that have reported beating expectations.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting a 5% chance for a -25 bp rate cut at the next policy meeting on March 17-18.

Overseas stock markets settled mixed on Friday.  The Euro Stoxx 50 tumbled to a 3-month low and closed down -1.09%.  China’s Shanghai Composite closed up +0.38%.  Japan’s Nikkei Stock 225 closed up +0.62%.

Interest Rates

June 10-year T-notes (ZNM6) on Friday closed up by +4 ticks.  The 10-year T-note yield fell by -0.5 bp to 4.131%.  June T-notes recovered from a 3-week low on Friday and moved higher, and the 10-year T-note yield fell from a 3-week high of 4.175%. 

T-notes recovered from early losses on Friday and moved higher after the weaker-than-expected US Feb payroll report bolstered the outlook for the Fed to cut interest rates.  T-note prices also found support today on comments from Fed Governor Christopher Waller, who said the Iran war is unlikely to cause sustained inflation. In addition, Friday’s stock slump boosted safe-haven demand for T-notes.

Growing inflation fears initially knocked T-note prices lower on Friday after WTI crude oil surged more than +12% to a 2.5-year high, boosting inflation expectations, as the 10-year breakeven rate climbed to a 5-week high of 2.378%. 

European government bond yields moved higher on Friday.  The 10-year German bund yield climbed to a 1-month high of 2.880% and finished up +1.9 bp to 2.860%.  The 10-year UK gilt yield rose to a 4.75-month high of 4.718% and finished up +8.6 bp to 4.627%.

Eurozone Q4 GDP was revised lower to +0.2% q/q and +1.2% y/y from the previously reported +0.3% q/q and +1.3% y/y.

Swaps are discounting a 3% chance of a -25 bp rate hike by the ECB at its next policy meeting on March 19.

US Stock Movers

The weakness in the Magnificent Seven technology stocks was bearish for the overall market.  Meta Platforms (META), Tesla (TSLA), Amazon.com (AMZN), and Nvidia (NVDA) closed down more than -2%.  Also, Apple (AAPL) closed down more than -1%, Alphabet (GOOGL) closed down -0.80%, and Microsoft (MSFT) closed down -0.42%.

Chipmakers and AI-infrastructure stocks retreated on Friday, pressuring the broader market.  Lam Research (LRCX) closed down more than -7%, and Micron Technology (MU), KLA Corp (KLAC),  and Applied Materials (AMAT) closed down more than -6%.  Also, ASML Holding NV (ASML), Intel (INTC), ARM Holdings Plc (ARM), and Western Digital (WDC) closed down more than -5%, and Microchip Technology (MCHP), Analog Devices (ADI), and NXP Semiconductors NV (NXPI) closed down more than -4%.  In addition, Advanced Micro Devices (AMD), Seagate Technology Holdings Plc (STX), and Texas Instruments (TXN) closed down more than -3%. 

Airline stocks tumbled on Friday as crude oil prices surged more than +12% to a 2.5-year high, boosting jet fuel prices and potentially cutting into airlines’ profits.  American Airlines Group (AAL) and Southwest Airlines (LUV) closed down more than -5%, and Delta Air Lines (DAL), United Airlines Holdings (UAL), and Alaska Air Group (ALK) closed down more than -3%.

Cryptocurrency-exposed stocks fell on Friday as Bitcoin (^BTCUSD) dropped more than +4%.  Riot Platforms (RIOT) and Galaxy Digital Holdings (GLXY) closed down by more than -9%, and MARA Holdings (MARA) closed down more than -8%.  Also, Coinbase Global (COIN) and Strategy (MSTR) closed down more than -4%. 

Homebuilders moved lower on Friday as the 10-year T-note yield climbed to a 3-week high, which will boost mortgage rates and weigh on housing demand.  Lennar (LEN) closed down more than -3%, and  Toll Brothers (TOL), PulteGroup (PHM), DR Horton (DHI), and KB Home (KBH) closed down more than -1%. 

Defense stocks moved higher on Friday on speculation that the ongoing Iran war may bolster the US defense funding budget.  AeroVironment (AVAV) closed up more than +3%, and Lockheed Martin (LMT), RTX Crop (RTX), Northrop Grumman (NOC), and L3Harris Technologies (LHX) closed up more than +2%.  Also, Huntington Ingalls Industries (HII) closed up more than +1%, and General Dynamics (GD) closed up +0.75%.

The Gap (GAP) closed down more than -15% after reporting Q4 total comparable sales rose +3.00%, weaker than the consensus of +3.43%. 

Nutex Health (NUTX) closed down more than -14% after reporting an unexpected decline in Q4 diluted EPS of -$1.18, well below the consensus of a $3.19 gain.

Blackrock (BLK) closed down more than -7% to lead asset managers lower after it curbed withdrawals from its $26 billion HPS Corporate Lending Fund after client requests for redemptions spiked.  Also, Ares Management (ARES) closed down more than -6%, and KKR & Co (KKR) closed down more than -4%.

Cooper Cos.  (COO) closed down more than -5% after reporting Q1 net sales of $1.02 billion, below the consensus of $1.03 billion. 

Trade Desk (TTD) closed down more than -1% after Wedbush downgraded the stock to underperform from neutral with a price target of $23.

Marvell Technology (MRVL) closed up more than +18% to lead gainers in the Nasdaq 100 after saying its year-over-year revenue growth rate will accelerate each quarter throughout fiscal 2027.

Samsara (IOT) closed up more than +18% after reporting Q4 revenue of $444.3 million, stronger than the consensus of $422.3 million. 

CF Industries Holdings (CF) closed up more than +4% to lead gainers in the S&P 500, and fertilizer stocks higher on concern that the war in Iran could disrupt supplies as the Gulf region is home to some of the world’s largest fertilizer plants, and the Strait of Hormuz handles about one-third of the global trade for fertilizer.

Boeing (BA) closed up more than +4% to lead gainers in the Dow Jones Industrials after China was said to be in talks to acquire 500 of Boeing’s 737 Max jets. 

Costco Wholesale (COST) closed up more than +1% after reporting Q2 total company comparable sales, including gas and currency, rose 7.4%, stronger than expectations of 6.72%.

Earnings Reports(3/9/2026)

Casey's General Stores Inc (CASY), Hewlett Packard Enterprise Co (HPE), Vail Resorts Inc (MTN).

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