Bold truth: the markets are treading water as geopolitical tensions flare, and every flare-up in the U.S.-Iran situation could quietly tilt inflation and policy in the weeks ahead.
Stock futures on Tuesday night were essentially flat after a volatile session for U.S. equities. Dow futures hovered near the flatline, S&P 500 futures edged up 0.02%, and Nasdaq 100 futures gained 0.07%. Earlier, major indices closed lower for the session, though not at their intraday lows: the S&P 500 slipped about 0.9% and the Dow fell roughly 403 points (about 0.8%), after a time when the Dow briefly dropped more than 1,200 points. The Nasdaq Composite finished down about 1%.
All 11 sectors of the S&P 500 finished lower, with Materials dropping the most at around 2.7% and Industrials off nearly 2%. Throughout the day, investors weighed how rising oil prices could affect the U.S. economy and potential shifts in future monetary policy.
President Donald Trump announced that the U.S. would provide risk insurance to all maritime trade through the Persian Gulf to unfreeze tanker movement in the Strait of Hormuz. This key oil transit route faced disruptions after threats from an Iranian Revolutionary Guard commander, contributing to a sharp rise in crude prices: Brent crude rose about 4.71%, and West Texas Intermediate gained roughly 4.68%, though both retreated from session highs by the close.
Analysts from Edward Jones suggested potential opportunities for long-term investors if energy prices stabilize and soften in the days and weeks ahead. As traders head into Wednesday, attention turns to the ADP private payrolls report, with expectations for 48,000 jobs added in February, up from 22,000 in January. Earnings season continues with Abercrombie & Fitch, Broadcom, and Okta on deck.
In related commentary, Goldman Sachs warned that the U.S.-Iran conflict could push inflation higher if it drags on longer than expected. Their baseline scenario anticipates energy-driven CPI rising to about 2.7% in May from 2.4% in January, then easing toward the Federal Reserve’s 2% target by year-end. A more persistent oil shock could push headline CPI to around 3% in May and keep inflation elevated through the year. The Fed’s preferred inflation measure stood at 2.9% for headline CPI and 3% for core in December.
UBS Global Wealth Management remained constructive on U.S. equities, forecasting minimal disruptions to energy supplies despite renewed fears of a prolonged conflict. They maintained a 2026 year-end target for the S&P 500 at 7,700, implying roughly 11% upside from the prior close.
After-hours movers included CrowdStrike, Box, GitLab, and Ross Stores, with mixed results and guidance guiding the stock activity. CrowdStrike beat on both top and bottom lines but offered a cautious near-term outlook; Box posted solid numbers and raised guidance; GitLab issued a softer fiscal 2027 view; Ross Stores topped estimates and raised its quarterly dividend by 10%.
Bottom line: volatility persists as geopolitical headlines swing commodity prices and inflation expectations. For traders, the question isn’t just about where prices stand today, but how sustained energy shocks might reshape policy paths and corporate earnings in the months ahead. Do you think the energy shock will prove temporary, or could it redefine inflation dynamics for the rest of the year? Share your thoughts in the comments.
