Stocks Fall as Oil Prices Continue to Climb

The S&P 500 Index ($SPX) (SPY) today is down -0.88%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -1.06%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.03%.  March E-mini S&P futures (ESH26) are down -0.97%, and March E-mini Nasdaq futures (NQH26) are down -1.10%.

Stocks are under pressure today as crude oil prices keep rising amid widening disruptions to production and transport in the Middle East.  WTI crude oil prices are up more than +8% today after Iraq suspended oil terminal activity following an attack by Iran on two tankers.  Oman also temporarily evacuated a key oil export hub at Mina Al Fahal, and Iran escalated attacks on Dubai.  Crude prices extended their gains today on comments from Iran’s Supreme Leader Ayatollah Mojtaba Khamenei, who said that Iran’s leverage of closing the Strait of Hormuz should be used and attacks on Gulf Arab neighbors will continue. 

Crude oil prices are moving higher today despite the IEA members' decision on Wednesday to release 400 million barrels from emergency oil stockpiles.  The IEA said the war against Iran is disrupting 7.5% of global oil supply, and the conflict will cut global oil supply by 8 million bpd this month.  The closure of the Strait of Hormuz, through which about a fifth of the world’s oil and natural gas flows, has choked off oil and gas flows due to Iran’s attacks on shipping in the waterway and forced Gulf producers to cut output because they can’t export from the region.

Iran’s President Masoud Pezeshkian said that his country would need “firm international guarantees against future aggression” to accept a ceasefire as well as reparations.  However, comments from President Trump late Wednesday suggest the conflict could continue for weeks when he said that it would be unwise for the US to wind down hostilities too soon.

US economic news today was mixed for stocks after weekly jobless claims rose less than expected, a sign of labor market strength.  Also, Jan housing starts unexpectedly rose to an 11-month high, but Jan building permits fell to a 5-month low.

US weekly initial unemployment claims fell -1,000 to 213,000, showing a stronger labor market than expectations of an increase to 215,000.

US Jan housing starts unexpectedly rose +7.2% m/m to an 11-month high of 1.487 million, stronger than expectations of a decline to 1.341 million. Jan building permits, a proxy for future construction, fell -5.4% m/m to a 5-month low of 1.376 million, weaker than expectations of 1.410 million.

The US Jan trade deficit shrank to -$54.5 billion, narrower than expectations of -$66.0 billion.

Q4 earnings season is nearly over, 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 0% chance for a -25 bp FOMC rate cut at the next policy meeting on March 17-18.

Overseas stock markets are lower.  The Euro Stoxx 50 is down -0.86%.  China's Shanghai Composite fell from a 1-week high and closed down -0.10%.  Japan's Nikkei Stock 225 closed down -1.04%.

Interest Rates

June 10-year T-notes (ZNM6) are down by -9 ticks.  The 10-year T-note yield is up +1.6 bp to 4.245%.  June T-notes fell to a 5-week low today, and the 10-year T-note yield climbed to a 5-week high of 4.249%.  Today’s +8% rally in oil prices is raising inflation expectations and undercutting T-note prices. Also, concerns that the cost of the ongoing war against Iran will boost the US budget deficit are bearish for T-notes. In addition, supply pressures are weighing on T-notes as the Treasury will auction $22 billion of 30-year bonds later today. 

European government bond yields are mixed today.  The 10-year German bund yield rose to a 2.25-year high of 2.958% and is up +1.2 bp to 2.944%.  The 10-year UK gilt yield is up +5.3 bp to 4.739%.

The European Union's economy chief, Valdis Dombrovskis, said the inflation rate could surpass 3% this year and GDP in the Eurozone could be as much as -0.4 points lower if the war in the Middle East causes crude oil prices to remain around $100 per barrel and gas prices stay elevated for an extended period.

Swaps are discounting a 4% chance of a -25 bp ECB rate hike at its next policy meeting on March 19.

US Stock Movers

Airline stocks and cruise line operators are falling today due to the 8% surge in crude oil prices, which are boosting companies’ fuel costs and threatening earnings.  Carnival (CCL), Royal Caribbean Cruises (RCL), Norwegian Cruise Line Holdings (NCLH), United Airlines Holdings (UAL), American Airlines Group (AAL), Alaska Air Group (ALK), and Southwest Airlines (LUV) are down more than -3%.  Also, Delta Airlines (DAL) is down more than -2%. 

Chip stocks are sliding today, weighing on the broader market.  Lam Research (LRCX), Applied Materials (AMAT), and Micron Technology (MU) are down more than -3%.  Also, ASML Holding NV (ASML), Intel (INTC), Analog Devices (ADI), Advanced Micro Devices (AMD), KLA Corp (KLAC), ARM Holdings Plc (ARM), Microchip Technology (MCHP), and Texas Instruments (TXN) are down more than -2%.

Fertilizer stocks are climbing today amid supply disruptions from the closure of the Strait of Hormuz. CF Industries Holdings (CF) is up more than +7% to lead gainers in the S&P 500.  Also, Intrepid Potash (IPI) and Mosaic (MOS) are up more than +4%. 

Netskope (NTSK) is down more than -22% after forecasting a Q1 adjusted net loss per share of -6 cents to -7 cents, wider than Q4’s -4 cent EPS loss.

G-III Apparel Group Ltd (GIII) is down more than -14% after reporting Q4 net sales of $771.5 million, below the consensus of $791.8 million.

Dollar General (DG) is down more than -7% to lead losers in the S&P 500 after giving an underwhelming 2027 comparable sales forecast of up +2.2% to +2.7%, the midpoint right on the consensus of +2.45%. 

UiPath (PATH) is down more than -5% after reporting Q4 subscription revenue of $251.2 million, below the consensus of $252.1 million.

MercadoLibre (MELI) is down more than -4% to lead losers in the Nasdaq 100 after JPMorgan Chase downgraded the stock to neutral from overweight.

GlobalFoundries (GFS) is down more than -4% after a subsidiary of Mubadala Investment Co. was said to sell as much as $852 million of its stake in the stock overnight at $41.60 to $42.60 per share. 

Dow Inc. (DOW) is up more than +6% after Citigroup upgraded the stock to buy from neutral with a price target of $40.

Atlassian Corp (TEAM) is up more than +4% after announcing a restructuring that will eliminate about 10% of its workforce.  UBS upgraded the stock to buy from neutral with a price target of $97.

Occidental Petroleum (OXY) is up more than +3% after Wells Fargo Securities double upgraded the stock to overweight from underweight with a price target of $69. 

LyondellBasell Industries NV (LYB) is up more than +3% after Citigroup upgraded the stock to buy from neutral with a price target of $76.

Earnings Reports(3/12/2026)

Dollar General Corp (DG), Ulta Beauty Inc (ULTA), Lennar Corp (LEN), Adobe Inc (ADBE).