Weekly Market Commentary: March 21, 2026

Index Performance

Major Themes

Israel-Iran Conflict Drives an Oil Shock

The week was dominated by the widening Middle East conflict. Israeli strikes on Iran's South Pars gas field — the world's largest — and Iranian retaliation against regional energy infrastructure pushed Brent crude up another 3.3% to settle above $112 a barrel, with WTI back near $98. Iraq declared force majeure on foreign-operated oilfields and drone strikes hit two Kuwaiti refineries on Friday. Energy was again the top-performing S&P 500 sector for the second straight week, but the broader market sold off as the inflation implications weighed on rate expectations.

A Hawkish Hold From the Fed

The Federal Reserve held rates at 3.50%–3.75% on Wednesday, as expected. The bigger story was the tone. Chair Powell acknowledged that a rate hike had been discussed at the meeting, even though it was not the base case. The dot plot still implied one cut on the year, but futures markets moved past that, pricing in no cuts in 2026 and the next move not arriving until well into 2027. Thursday's February PPI then printed at +0.7% month over month — more than double consensus and the hottest reading since July 2025 — reinforcing the hawkish read.

Late-Week Selloff and Deteriorating Breadth

Markets opened the week with a relief rally, then sold off hard from Wednesday afternoon through Friday's close. Both the Dow and Nasdaq traded in correction territory intraday on Friday before closing just shy of the -10% threshold. The S&P 500 finished about 5% below its January all-time high and is now negative year to date. Software was a notable laggard, down roughly 20% on the quarter on AI-displacement concerns.

Looking Ahead

Next week's economic calendar is dense and inflation-focused. Tuesday brings the S&P Global flash PMIs, Conference Board consumer confidence, and February new home sales. Wednesday delivers durable goods orders. Thursday is the third estimate of Q4 GDP, and Friday delivers the Fed's preferred inflation gauge — core PCE for February — alongside personal income and spending and the final University of Michigan sentiment reading.

Earnings are quiet, but Micron reports midweek and will be watched closely for an AI memory and high-bandwidth memory read-through into Q1 reporting season.

Past performance is not indicative of future results. All investing involves risk, including the potential loss of principal.