The Iran war-driven spike in oil prices significantly impacted global markets last week, resulting in the S&P 500's first three-week losing streak in approximately a year [1]. Nine out of eleven S&P 500 sector indexes ended the week lower, with only energy and utilities showing gains [1]. Brent crude, the international benchmark, surged over 11%, while West Texas Intermediate crude rose 8% during the past five trading sessions [1]. On Thursday, Brent settled above $100 for the first time since 2022, and both Brent and WTI briefly traded above $119 on Monday before retreating and then climbing again [1]. The S&P 500 dropped 1.6% for the week [1].
Jim Cramer advised investors to remain cautious amid the ongoing Middle East conflict, warning against exiting the stock market entirely due to the risk of missing a potential rebound once the war subsides [1]. He emphasized the importance of patience, stating, "Believe me, you'll be kicking yourself if you sell everything and then you have to watch this market rebound without you" [1]. As the week progressed and the S&P Short Range Oscillator indicated oversold conditions, Cramer recommended buying opportunities, adding to Procter & Gamble (PG) on Wednesday and Alphabet (GOOGL) on Friday [1]. He suggested that if the Oscillator reaches minus-10%, it could historically signal a strong buying opportunity, with oversold conditions beginning at minus-4% [1].
The surge in oil prices has overshadowed key economic reports, including the consumer price index for February and the personal consumption expenditures price index for January, as both were released before the U.S. and Israel attacked Iran on February 28 [1]. The outlook for inflation is now clouded, with expectations that inflation will rise in the coming months [1]. Investors are increasingly concerned about stagflation—a period of higher prices and sluggish economic growth—with some referencing the 1970s, when the S&P 500 fell over 40% in a year during the OPEC oil crisis and recession [1].
Market sentiment remains cautious, with volatility expected to persist as long as Iran continues to block or threaten oil tankers in the Strait of Hormuz [1].
CONCLUSION
The Iran conflict has driven oil prices sharply higher, leading to broad stock market losses and heightened fears of stagflation. Investors are advised to remain patient and look for buying opportunities during oversold conditions, while volatility is expected to continue as geopolitical tensions persist. The market's outlook is clouded by inflation concerns and uncertainty surrounding the ongoing conflict.