Shares Bolstered by Expectations of a Quick Resolution to the Iran Conflict

Market Overview

The S&P 500 Index is showing a slight increase of 0.03% today, while the Dow Jones Industrial Average has slipped by 0.11%. The Nasdaq 100 Index is performing better, rising by 0.63%. Futures for March E-mini S&P are up 0.07%, and March E-mini Nasdaq futures have gained 0.53%.

Key Drivers in Today's Market

Equity markets are trending upward following news that Iran has reached out to the United States through indirect channels to discuss ending the ongoing conflict. This development has raised optimism that the war could conclude sooner than anticipated. According to The New York Times, Iranian intelligence officials contacted the CIA shortly after US-Israeli military actions began. Stocks received an additional boost from a strong US labor market, as the February ADP employment report indicated job growth exceeded forecasts.

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Market Constraints and Global Trade

Despite the positive momentum, gains are being held in check due to escalating international trade tensions. Treasury Secretary Scott Bessent has indicated that new 15% tariffs on US imports could be implemented as early as this week.

Commodities and Energy Update

Oil prices, which had surged overnight, have reversed course and are now down over 1%. The decline follows reports that Iranian officials have proposed talks with the US to resolve the conflict. Additional downward pressure on oil prices came after President Trump announced that the US would guarantee the safe passage of energy shipments through the Strait of Hormuz, offering insurance and potentially naval escorts.

Nevertheless, the Strait of Hormuz remains closed, with Iran’s Revolutionary Guard warning that any vessel attempting passage will be attacked. This critical waterway, responsible for about 20% of global oil shipments, remains blocked, forcing Iraq—the second-largest OPEC producer—to halt output at its largest Rumalia oil fields as storage capacity is reached. Additionally, Kayrros reported that four out of six tanks at Saudi Arabia’s Ras Tanura refinery are full, and the Ju’aymah terminal is nearing its storage limit. Goldman Sachs estimates the current risk premium for crude oil at $18 per barrel, reflecting the potential impact of a six-week complete shutdown of tanker traffic through the strait.

Geopolitical Events and Energy Markets

Debris from an intercepted Iranian drone recently ignited a significant fire at Fujairah, the UAE’s main oil trading hub and one of the largest storage sites in the Middle East. European natural gas prices soared to a three-year high after Qatar shut down its Ras Laffan facility—the world’s largest LNG export plant—following an Iranian drone strike. This plant supplies roughly 20% of the world’s liquefied natural gas.

US Economic Data

• Mortgage applications in the US rose by 11% for the week ending February 27. The purchase index climbed 6.1%, and the refinance index jumped 14.3%. The average 30-year fixed mortgage rate remained steady at 6.09%.
• The February ADP employment report showed an increase of 63,000 jobs, surpassing the expected 50,000.

Federal Reserve Commentary

Cleveland Fed President Beth Hammack delivered hawkish remarks, emphasizing the need to bring inflation back to target levels and suggesting that monetary policy may remain unchanged for an extended period.

Upcoming Market Focus

Investors are closely monitoring developments in the US-Iran conflict, corporate earnings, and economic indicators this week. The February ISM services index is projected to dip by 0.3 to 53.5, and the Federal Reserve will release its Beige Book. On Thursday, initial jobless claims are forecast to rise by 3,000 to 215,000. Fourth-quarter nonfarm productivity is expected to grow by 1.8%, and unit labor costs by 2.0%. Friday’s data includes forecasts for a 60,000 increase in nonfarm payrolls, an unchanged unemployment rate at 4.3%, and average hourly earnings up 0.3% month-over-month and 3.7% year-over-year. February retail sales are anticipated to fall by 0.3%, with sales excluding autos expected to remain flat.

Earnings Season Update

The fourth-quarter earnings season is nearly complete, with over 90% of S&P 500 companies having reported results. Earnings have generally supported stock prices, as 73% of the 481 reporting companies exceeded expectations. Bloomberg Intelligence projects S&P 500 earnings growth at 8.4% for Q4, marking the tenth straight quarter of year-over-year gains. Excluding the largest technology firms, earnings are expected to rise by 4.6%.

Interest Rate Expectations

Markets are currently pricing in only a 2% probability of a 25 basis point rate cut at the next Federal Reserve meeting scheduled for March 17-18.

Global Markets Performance

• European stocks are mixed, with the Euro Stoxx 50 up 1.67%.
• China’s Shanghai Composite dropped to a 3.5-week low, closing down 0.98%.
• Japan’s Nikkei 225 also hit a 3.5-week low, ending the day down 3.61%.

Interest Rates

June 10-year Treasury note futures are down by 4 ticks, with the yield rising 0.8 basis points to 4.067%. The rebound in equities has reduced demand for safe-haven government bonds, putting pressure on Treasury prices. The stronger-than-expected ADP employment report and hawkish Fed comments are also weighing on Treasuries. However, losses are limited as declining oil prices have eased inflation concerns.

European government bond yields are falling, with the 10-year German bund yield down 0.3 basis points to 2.749%, and the 10-year UK gilt yield down 4.0 basis points to 4.431%.

Eurozone producer prices for January increased by 0.7% month-over-month but fell 2.1% year-over-year, both better than expected. The region’s unemployment rate dropped by 0.2 to a record low of 6.1%, indicating a stronger labor market than anticipated.

Swaps indicate no expectation of a 25 basis point rate cut by the European Central Bank at its next policy meeting on March 19.

Notable US Stock Movers

• Semiconductor and AI infrastructure stocks are advancing, with Seagate Technology up over 3%. Micron Technology, Western Digital, ARM Holdings, and Lam Research are all up more than 2%. Applied Materials, KLA Corp, Marvell Technology, and Analog Devices have each gained over 1%.
• Cryptocurrency-linked stocks are surging as Bitcoin climbs more than 5% to a three-week high. Coinbase Global leads the S&P 500 with a gain of over 9%, Galaxy Digital Holdings is up more than 8%, Strategy is up over 7% in the Nasdaq 100, and MARA Holdings and Riot Platforms are also posting strong gains.
• Energy stocks are under pressure as WTI crude falls more than 1%. APA Corp leads S&P 500 decliners, down over 3%. ConocoPhillips, Halliburton, Devon Energy, and Exxon Mobil are all down more than 2%, while Diamondback Energy, Chevron, and Occidental Petroleum are each down over 1%.
• Ross Stores is up more than 7% after reporting Q4 sales of $6.64 billion, beating estimates.
• nLight Inc. has gained over 7% after Baird initiated coverage with an outperform rating and a $95 price target.
• Moderna is up more than 6% after settling a lawsuit with Genevant for $950 million regarding its Covid vaccine delivery technology, a result seen as favorable by analysts.
• Brown-Forman rose over 4% after posting Q3 net sales of $1.06 billion, exceeding expectations.
• Target advanced more than 3% after Telsey Advisory Group upgraded the stock to outperform with a $145 price target.
• Alcoa is up over 3% following an S&P Global Ratings upgrade to BB+ with a stable outlook.
• Dow Inc. gained more than 1% after KeyBanc Capital Markets upgraded the stock to overweight with a $38 price target.
• Gitlab fell over 7% after projecting 2027 revenue below consensus estimates.
• Webtoon Entertainment dropped more than 5% after reporting a larger-than-expected Q4 loss.
• Abercrombie & Fitch declined over 5% after forecasting Q1 sales growth below expectations.
• Frontline Plc is down more than 3% after Arctic Securities downgraded the stock to hold.

Upcoming Earnings Reports (March 4, 2026)

• Bath & Body Works Inc (BBWI)
• Broadcom Inc (AVGO)
• Brown-Forman Corp (BF/B)
• Okta Inc (OKTA)
• Veeva Systems Inc (VEEV)