ORLANDO, Florida, March 26 - A broad-based sell-off swept through stocks, bonds and gold on Thursday while oil rallied, as fading prospects for de-escalation in the Middle East pushed inflation worries back into focus and left market participants approaching the quarter end in a notably pessimistic mood.
Despite the heightened geopolitical risk, the piece I write today also examines why the outlook for U.S. equities may retain bullish elements even amid war, $100-a-barrel oil and significant economic and policy uncertainty. Barclays strategists have recently lifted their forecast for the S&P 500, and other strategists on Wall Street have followed suit in revising views higher.
Recommended reading to contextualize today’s moves
- Iran sees U.S. peace plan as "one-sided" as Trump presses for deal
- Iran oil shock sets U.S. Treasury seismograph twitching: Mike Dolan
- ECB’s Nagel says April rate hike "an option"
- Japan shifts focus to oil in unorthodox scramble to talk up yen
- Meta shares drop on fears U.S. verdicts open door to deluge of lawsuits
Market snapshot - key moves
- Stocks: Asian markets were lower with South Korea’s KOSPI down 3.5% as the largest decliner. European main indices fell by 1% or more. Wall Street was set to open weaker with the Dow implied down 1% and the S&P 500 implied down 1.7%. The Nasdaq was indicated down 2.4% and has moved into correction territory relative to its October high.
- Sectors & individual names: Nine of 11 S&P 500 sectors declined, led by communications services down 3.5%, technology down 2.7% and industrials down 2.3%. The energy sector was an outlier, rising 1.6%. Selected stocks included Meta down 8%, Nvidia down 4%, Brown-Forman up 9.5% and Valero up 8%.
- FX & crypto: The dollar strengthened 0.4%, with USD/JPY trading within 20 pips of 160.00. Among emerging market currencies, the Thai baht (THB) and Chilean peso (CLP) were among the largest decliners. In the G10 space, the Swedish krona (SEK) and Australian dollar (AUD) were the weakest. Bitcoin fell about 4% and slipped back below $70,000.
- Bonds: U.S. Treasury yields surged, marking the highest U.S. session closes since mid-2025. The yield curve steepened in a bear-flattening dynamic. Treasury auctions showed signs of stress, with a weak $44 billion sale of 7-year notes that featured a large tail and left dealers holding a notable portion of the issuance. That followed similar tepid demand in recent 5-year and 2-year auctions.
- Commodities & metals: Oil climbed about 5% on the day. Precious metals fell: gold down 3% and silver down 5%.
What drove the action
Geopolitical developments related to the Middle East were the principal catalyst. Market reactions to conflicting messages on potential diplomacy and peace efforts produced whipsaw moves: one day risk assets lift on a report that a U.S. peace plan has been presented and communications are underway, the next day equities and other risk-sensitive assets fall on denials and rebuttals.
Specifically, markets responded to headlines that the U.S. administration had presented Iran with a peace plan and that the two sides were in communication, while Tehran publicly denied the characterization and called the plan one-sided. That oscillation in newsflow highlights how difficult it can be to judge market sentiment when competing narratives circulate and when the informational environment is noisy.
Investor unease extended to the Treasury market. The underwhelming $44 billion 7-year auction, described by market participants as weak with a big tail and significant dealer allotments, echoed the softness seen in the most recent 5-year and 2-year auctions. Combined with energy price pressure and reduced foreign central bank holdings in custody at the Fed, those dynamics contributed to jittery conditions for Treasuries and broader markets.
On the technical front, the three main U.S. equity indices have breached their 200-day moving averages, a long-term chart level that many traders monitor for support or resistance. While technical analysis is debated, breaches of prominent levels frequently influence investor behavior and risk positioning. A frequently cited investor remark captures the prevailing caution: "Nothing good ever happens below the 200-day moving average," a comment attributed to Paul Tudor Jones.
Near-term market drivers to watch
- Developments in the Middle East and any associated shifts in diplomatic messaging or security activity.
- Energy market movements and further changes in oil prices.
- Speeches by European Central Bank policymakers Anneli Tuominen, Patrick Montagner and Isabel Schnabel.
- UK retail sales data for March.
- U.S. University of Michigan final March readings on inflation expectations and consumer sentiment.
- Comments from U.S. Federal Reserve officials including Richmond Fed President Thomas Barkin, San Francisco Fed President Mary Daly and Philadelphia Fed President Anna Paulson.
Market implications and positioning
The combination of geopolitical volatility, higher energy prices and strained auction demand is prompting risk-off positioning across equities, credit-sensitive assets and some currencies, while energy-related assets and select commodity-exposed equities have outperformed. The breach of widely watched technical thresholds is also likely to keep some investors conservatively positioned until a clearer signal emerges.
About investment screening tools mentioned
Readers asked whether now is the time to buy specific stocks such as Nvidia. An AI-driven screening tool referenced in the market commentary evaluates Nvidia alongside thousands of other companies each month using more than 100 financial metrics. The tool assesses fundamentals, momentum and valuation to identify opportunities it deems to offer favorable risk-reward profiles, and highlights past winners identified by the model.