Market snapshot
U.S. stock indices declined on Friday as oil prices continued to climb and investors monitored developments tied to the Iran conflict. The S&P 500 closed down 0.61% at 6,632.19, leaving the index about 5% below its recent peak and marking a new low for 2026. The Nasdaq Composite fell 0.93% to finish at 22,105.36, while the Dow Jones Industrial Average slipped 119.38 points, or 0.26%, to settle at 46,558.47.
For the week, the S&P 500 lost 1.6% and recorded its first three-week losing streak in roughly a year. The Dow declined around 2% over the same period, while the technology-heavy Nasdaq retreated 1.3%.
Why investors are cautious
Market attention has shifted to how the conflict in the Middle East could alter expectations for U.S. interest-rate cuts later this year. Federal Reserve policymakers will convene for a two-day meeting this week - their first since the U.S. and Israel launched air strikes on Iran approximately two weeks ago - and the central bank is due to release updated economic projections on Wednesday.
Officials are expected to weigh how an energy-driven shock could influence inflation and economic growth. The recent attacks sparked a surge in oil prices, a move that has reverberated across financial markets and prompted investors to reassess the timing and likelihood of policy easing.
Markets have started to pare back expectations for rate cuts following the escalation, despite earlier optimism that easing would be a primary support for risk assets this year. The Fed is widely expected to keep policy rates unchanged at this meeting when it issues its statement on Wednesday.
The central bank eased policy last year to support a weakening labor market but halted its easing cycle in January, saying risks to employment and inflation had declined. Investors had broadly anticipated further rate reductions later in the year, an outcome generally seen as favorable for stocks and other risk assets. Those expectations have softened as higher energy costs feed concerns about renewed inflationary pressure.
Nvidia's GTC, AI themes and chip industry watching
At the same time, Nvidia's annual developer conference is expected to refocus attention on the AI trade, a theme that helped boost technology stocks earlier this year but also contributed to recent volatility. The company will stage a keynote presentation at a hockey arena with capacity for more than 18,000 people, during which CEO Jensen Huang is anticipated to lay out Nvidia's plans for adapting to a fast-changing AI landscape.
Nvidia is expected to unveil a next-generation AI chip called Feynman, and Huang is likely to address developments across data centers, the company's CUDA programming platform, digital assistants known as AI agents, and physical AI applications including robotics. Another topic investors will watch is Groq, a chip startup whose technology Nvidia licensed for $17 billion in December; Groq specializes in fast, low-cost "inference" computing, where trained AI models produce answers or predictions in real time.
Corporate news on deck
The trading week will also include earnings reports from several companies, notably Micron, Alibaba and Lululemon, which could add to market volatility depending on results and guidance.
Analysts' perspectives
Market strategists and research teams offered a range of assessments on how the recent escalation, oil moves and credit-market dynamics might affect equities.
JPMorgan: "Our view was that this escalation will not be long lasting, due to a range of considerations, and that post the initial bout of derisking, one should use the weakness to add. The fundamental backdrop entering the conflict was equity friendly, looking at strong activity and earnings momentum, and we do not believe that has changed dramatically. Inflation projections were coming down, as were wage growth and services inflation, in contrast to 2022. These would typically be a key ingredient for any inflation spiral."
Evercore ISI: "Geopolitical risk is the highest since 9/11, and violence escalating back to the U.S. The possibility of a Stagflation “tail outcome” with the Consumer retrenching amid Uncertainty and $4 gasoline remains. Yet Consumer resilience has been a constant in past shocks. On the Credit front, a solid reaction to ORCL earnings was a “Green Shoot” for AI Disruption fear. And with Peak Oil, whether on 3/8 at $119.48/bbl (base case) or still lies ahead – the process of unwinding of historically high levels of hedging across Stocks and Credit (Bearish) and Oil (Bullish) will cushion equity market downside and provide the catalyst for renewed rally."
Morgan Stanley: "The bar remains high for the oil spike to threaten the business/earnings cycle. While we can’t rule out modest downside in the near-term if the rate of change on crude/the dollar accelerates further, we maintain our view that this correction is closer to its ending stages in time and price."
RBC Capital Markets: "The S&P 500 was down 4.96% from its January peak, on the cusp of what we’d consider to be true pullback territory (5-10%), but close to where the brief period of weakness that emerged last October/November bottomed out at (a drop of 5.1%). Several issues continued to weigh on the U.S. equity market last week, with investors contemplating how long the conflict in Iran might last, how high oil might go, and the state of private credit. As the week wore on, it appeared to us that the prospect of a longer conflict emerged as a more realistic possibility, though we would note that a group of investors we met with on Thursday still seemed to be in the camp that the conflict would not go beyond 4-6 weeks."
Raymond James: "The credit market follows the oil market’s lead, which is why credit spreads have moved up only modestly, and have remained much narrower than liberation day, the yen carry trade unwind, bank liquidity crisis, Russia/Ukraine, and not even in the same zip code as being consistent with meaningful recession chance in the U.S. And the equity market is likely to take cues from the credit market. So when it comes down to it, the oil market will drive both credit and equity markets until the Strait of Hormuz is back to normal operation."
Related market tools and commentary
Market participants interested in whether to buy Nvidia at current levels may see a variety of signals. One tool referenced in market commentary evaluates NVDA alongside thousands of other companies each month using more than 100 financial metrics and applies AI to identify stocks with attractive risk-reward profiles. The tool's historical notable winners include Super Micro Computer (+185%) and AppLovin (+157%). It also states that the AI has no bias and identifies opportunities based on current data. Readers should be aware this commentary reflects the tool's described methodology and past outcomes cited in market materials.
What to watch this week
- Federal Reserve two-day policy meeting and the release of updated economic projections on Wednesday.
- Oil price movements and any new developments in the Iran conflict that could influence inflation expectations and rate-cut timing.
- Nvidia's GTC keynote and any product or roadmap announcements, including the expected Feynman AI chip and updates across data-center and AI applications.
- Earnings reports from Micron, Alibaba and Lululemon and how their results affect sector sentiment.
Investors are balancing the prospect of continued policy stability against the risk that rising energy costs could reaccelerate inflation and alter the trajectory of rate cuts, while pockets of strength in AI and technology remain a focal point for industry and market watchers.