March S&P 500 E-Mini futures (ESH26) are down -1.05%, and March Nasdaq 100 E-Mini futures (NQH26) are down -1.44% this morning as sentiment took a hit after the U.S. and Israel exchanged deadly strikes with Iran across the Middle East.
On Saturday, the U.S. and Israel carried out a coordinated military strike on Iran. U.S. President Donald Trump said the military operation began after Iran refused to commit to renouncing nuclear weapons, even though Tehran has repeatedly maintained it is not pursuing them. Iran’s supreme leader was killed in U.S.-Israeli airstrikes, escalating a conflict that is spreading across the oil-rich Middle East. Iran quickly retaliated with strikes on Israel, U.S. military bases throughout the region, and Persian Gulf nations, including the financial hub of Dubai. On the third day of the conflict, U.S. and Israeli forces continued their strikes on Iran, while Israel also targeted Hezbollah positions in Lebanon. President Trump said the bombing campaign in Iran would continue, potentially for weeks, and urged the nation’s leaders to capitulate.
The price of WTI crude jumped more than +7% after the conflict effectively closed the Strait of Hormuz. Safe-haven assets attracted strong demand, with gold climbing to nearly $5,400 an ounce and the dollar posting its biggest gain in almost a month.
Beyond the Middle East conflict, investors are looking ahead to a slew of U.S. economic data, with a particular focus on Friday’s nonfarm payrolls report, earnings reports from several high-profile companies, and remarks from Federal Reserve officials this week.
In Friday’s trading session, Wall Street’s major equity averages ended in the red. Bank stocks slumped amid investor unease following the recent collapse of U.K. mortgage firm Market Financial Solutions Ltd., with Goldman Sachs (GS) sinking over -7% and Morgan Stanley (MS) falling more than -6%. Also, chip stocks extended their declines, with Nvidia (NVDA) sliding over -4% and NXP Semiconductors N.V. (NXPI) dropping more than -2%. In addition, software stocks sank, with Atlassian (TEAM) falling over -5% and Datadog (DDOG) slipping more than -3%. On the bullish side, Dell Technologies (DELL) jumped over +21% and was the top percentage gainer on the S&P 500 after the tech hardware maker posted upbeat Q4 results and issued strong FY27 AI server revenue guidance.
Economic data released on Friday showed that the U.S. producer price index for final demand rose +0.5% m/m and +2.9% y/y in January, stronger than expectations of +0.3% m/m and +2.6% y/y. Also, the core PPI, which excludes volatile food and energy costs, rose +0.8% m/m and +3.6% y/y in January, stronger than expectations of +0.3% m/m and +3.0% y/y. At the same time, the U.S. Chicago PMI unexpectedly rose to 57.7 in February, stronger than expectations of 52.0. In addition, U.S. December construction spending rose +0.3% m/m, stronger than expectations of +0.2% m/m.
“For the past month the market has been worried about [AI] disruption and its impact on the labor market, so inflation hasn’t been top of mind, but [Friday’s] inflation readings could give the Fed another reason to be more patient with rate cuts and wait until the second half of the year before making any changes,” said Chris Zaccarelli at Northlight Asset Management.
Investors will be closely watching the U.S. February Nonfarm Payrolls report this week amid uncertainty over when the Fed is likely to deliver its next interest rate cut. U.S. rate futures currently are not pricing in a rate cut before July at the earliest. Economists said it would probably take a notably weak number to significantly shift rate-cut expectations. “Our view is that it would take quite a lot to get the Fed thinking about an imminent rate cut,” ING economists said. U.S. retail sales data for January will also attract attention. Other noteworthy data releases include ADP Nonfarm Employment Change, the S&P Global Services PMI, the S&P Global Composite PMI, the ISM Non-Manufacturing PMI, the Trade Balance, Initial Jobless Claims, the Import Price Index, the Export Price Index, Unit Labor Costs (preliminary), Nonfarm Productivity (preliminary), Average Hourly Earnings, the Unemployment Rate, and Consumer Credit.
Market watchers will also focus on earnings reports from several high-profile companies. Semiconductor leaders Broadcom (AVGO) and Marvell Technology (MRVL), as well as cybersecurity firm CrowdStrike (CRWD), along with several prominent retailers such as Costco Wholesale (COST), Target (TGT), and Best Buy (BBY), are scheduled to report their quarterly results this week.
In addition, the Fed will release its Beige Book survey of regional business contacts this week, providing anecdotal insight into economic conditions across the country. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee. Market participants will also parse comments from a host of Fed officials, including Williams, Kashkari, Bowman, Daly, Paulson, and Hammack, throughout the week.
Meanwhile, Apple has hinted at a “big week” of new product launches, beginning Monday morning. The iPhone maker is expected to unveil several new products, potentially including the iPhone 17e and a lower-cost MacBook, over several days.
Today, investors will focus on the U.S. ISM Manufacturing PMI, set to be released in a couple of hours. The survey will be closely monitored for insights into the state of the U.S. economy. Economists project the February ISM manufacturing index to be 51.7, compared to the previous value of 52.6.
The U.S. S&P Global Manufacturing PMI will also be released today. Economists forecast that the final February figure will be unrevised at 51.2.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.962%, up +0.10%.
The Euro Stoxx 50 Index is down -2.05% this morning, pulling back sharply from a record high as the widening conflict in the Middle East sparked a broad-based selloff. Airline, bank, and consumer-sensitive stocks tumbled on Monday. At the same time, energy stocks climbed amid a surge in oil prices, while defense stocks also gained as the Middle East conflict fueled expectations of higher U.S. defense spending. The benchmark index is on track for its steepest daily drop in more than seven months. Meanwhile, Commerzbank said the prolonged conflict could lift Eurozone inflation by one percentage point and trim economic growth by a few tenths of a percentage point. A sustained increase in oil prices would tighten financial conditions, pressure corporate margins, and reignite stagflation fears across economies, according to Julius Baer. On the economic front, a survey released on Monday showed that Eurozone manufacturing grew at its quickest pace in nearly four years in February as new orders rebounded and factory output increased, though mounting cost pressures squeezed margins. Separately, data showed that Germany’s monthly retail sales unexpectedly fell in January. Investor focus this week is on the Eurozone’s preliminary February inflation data, January unemployment figures, and January retail sales data. The Eurozone’s final fourth-quarter GDP data will also draw attention. In addition, European Central Bank President Christine Lagarde will appear on Monday and Thursday, while Executive Board member Isabel Schnabel is scheduled to speak at the end of the week.
Germany’s Retail Sales and the Eurozone’s Manufacturing PMI were released today.
The German January Retail Sales fell -0.9% m/m, weaker than expectations of no change m/m.
Eurozone’s February Manufacturing PMI came in at 50.8, in line with expectations.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.47%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.35%.
China’s Shanghai Composite Index closed higher and hit a 10-year high today, defying regional weakness in the wake of the military conflict in the Middle East. Energy stocks jumped on Monday in response to a sharp rise in oil prices amid escalating Middle East tensions. Investors also flocked to gold and defense stocks. In addition, shipping stocks rallied amid the risk of potential disruptions to key routes such as the Strait of Hormuz. Shipping costs are already rising as insurers send out cancellation notices, strategists at Franklin Templeton said. At the same time, airline and tourism stocks slumped amid conflict-related travel disruptions. Sentiment was also bolstered by expectations that Beijing may intervene to stabilize markets ahead of one of the nation’s biggest policy events of the year. Investors are looking ahead to the upcoming sessions of the National People’s Congress and the National Committee of the Chinese People’s Political Consultative Conference, with the CPPCC set to open on Wednesday and the NPC beginning on Thursday. Investors will be closely watching the “Two Sessions” for key economic targets for 2026, most notably the GDP growth goal. China is widely anticipated to set a 2026 growth target of 4.5%-5.0%, down from its previous “around 5%” goal, as domestic demand remains weak. The NPC meeting carries added significance as policymakers will lay out priorities linked to a new five-year plan. Investor attention this week is also on China’s February PMI data, which will likely underscore the need for additional policy support after a weak start to the year.
Japan’s Nikkei 225 Stock Index closed lower today, while government bonds jumped, as U.S.-Israeli strikes on Iran triggered a pullback from risky assets. Bank stocks plummeted on Monday, with losses intensified by mounting financial uncertainty in U.S. and European credit markets following the collapse of U.K.-based mortgage lender Market Financial Solutions. Airline stocks were also hit hard. “War is never good for civilian air travel, and the higher oil costs will also dampen demand” for flights, according to Andrew Jackson, head of Japan equity strategy at Ortus Advisors. In addition, export-oriented stocks such as electronics and drugmakers slumped. At the same time, energy stocks climbed in response to higher crude oil prices. Nobuhiko Kuramochi, vice president of Parasol Research Institute, said that Japan’s “high dependence on Middle Eastern crude oil” is likely to dampen sentiment around equities as the Iran crisis develops. Citigroup analysts on Monday downgraded Japanese equities to Underweight from Overweight, citing concerns that “Japan tends to be an underperformer amid rising oil prices.” Meanwhile, Bank of Japan Deputy Governor Ryozo Himino reiterated on Monday the bank’s position on further interest rate hikes but stopped short of offering any clear guidance on the timing of the next move. The BOJ “should gradually shift to a more neutral stance through moderate policy rate hikes,” Himino said. On the economic front, a private-sector survey showed on Monday that Japan’s manufacturing activity picked up in February to its strongest pace in nearly four years, driven by robust demand. Investor focus this week is also on Japan’s January employment figures and fourth-quarter capital spending data. In addition, investors will watch a speech from BOJ Governor Kazuo Ueda on Tuesday for clues about the timing of the central bank’s next rate hike. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +28.03% to 34.99.
The Japanese February S&P Global Manufacturing PMI was revised higher to 53.0 from the preliminary reading of 52.8.
Pre-Market U.S. Stock Movers
The Magnificent Seven stocks fell in pre-market trading amid risk-off sentiment triggered by the Middle East conflict, with Tesla (TSLA) and Alphabet (GOOGL) dropping over -2%.
Airline stocks tumbled in pre-market trading as the Middle East conflict forced the closure of airports across the region. United Airlines (UAL) is down over -6%, American Airlines (AAL) is down more than -5%, and Delta Air Lines (DAL) is down over -4%.
Chip stocks sank in pre-market trading, with Micron Technology (MU) falling over -3% and Intel (INTC) dropping -3%.
Defense stocks surged in pre-market trading following the U.S.-Israeli strikes on Iran. Lockheed Martin (LMT) and RTX (RTX) are up more than +7%. Also, Northrop Grumman (NOC) is up over +5%.
Energy stocks climbed in pre-market trading amid an oil price spike after the Middle East conflict effectively shut the Strait of Hormuz. Occidental Petroleum (OXY) is up over +6%. Also, Exxon Mobil (XOM) and Chevron (CVX) are up more than +3%.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - March 2nd
EchoStar (SATS), AST SpaceMobile (ASTS), MongoDB (MDB), Venture Global (VG), Credo Technology Group Holding (CRDO), Norwegian Cruise Line Holdings (NCLH), AAON, Inc. (AAON), Belite Bio (BLTE), ADT Inc. (ADT), Sealed Air (SEE), Riot Platforms (RIOT), Core Scientific (CORZ), Archer Aviation (ACHR), California Resources (CRC), Ingram Micro Holding (INGM), Life360 (LIF), Tidewater (TDW), Turning Point Brands (TPB), Dave Inc. (DAVE), Alamo Group (ALG), Plug Power (PLUG), Helios Technologies (HLIO), Nuvation Bio (NUVB), Harrow (HROW), Surgery Partners (SGRY), Quantum Computing (QUBT), Uniti Group (UNIT), Zymeworks (ZYME), BigBear.ai Holdings (BBAI), Asana (ASAN), Ameresco (AMRC), AnaptysBio (ANAB), NextDecade (NEXT), Ouster (OUST), Kosmos Energy (KOS), Limbach Holdings (LMB), Astrana Health (ASTH), UroGen Pharma (URGN), Xeris Biopharma Holdings (XERS), Kayne Anderson BDC (KBDC), Vitesse Energy (VTS), Apartment Investment and Management Company (AIV), ThredUp (TDUP), Sturm, Ruger & Company (RGR), Crawford & Company (CRD.A), LendingTree (TREE), iHeartMedia (IHRT), Cerus (CERS), Crawford & Company (CRD.B), Senseonics Holdings (SENS), StealthGas (GASS), Aldeyra Therapeutics (ALDX), James River Group Holdings (JRVR), Quanterix (QTRX), Stoneridge (SRI), Compugen (CGEN), BRC Inc. (BRCC), WhiteHorse Finance (WHF), Mobile Infrastructure (BEEP).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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