By Martin Baccardax
U.S. stocks are set to extend their slide into the Friday session, dragging the Nasdaq deeper into correction territory and pulling the S&P 500 into a similar path. Investors appear to have discounted President Donald Trump's latest effort to soothe market angst over the war with Iran.
That could be a worrying development in the conflict, which began with U.S.-led attacks on Feb. 28, as the S&P 500 drifts further away from its 200-day moving average, oil prices continue to climb higher, and bond markets factor in a longer bout of inflation for economies around the world.
Trump said last night, through his Truth Social media network, that he would offer a third extension to a deadline he established last week for Iran to agree to U.S. terms that would end the monthlong war.
"As per Iranian government request...I am pausing the period of energy plant destruction by 10 days, to Monday April 6," he said, adding that talks with Iran are "ongoing."
The post, which came shortly after stocks closed deeply in the red and extended the S&P 500's post-war decline to around 5.8%, triggered an initial market reaction that was quickly reversed, with stocks now poised for further declines Friday.
A lack of detail from the White House on both the talks and their participants, as well as reports that as many as 10,000 U.S. troops could be deployed in the Gulf, only added to the market's skeptical take on the president's latest missive.
Oil prices are back on the march, as well, with Brent crude futures expiring in March rising 2% to $110.20 a barrel and those for April delivery jumping 1.8% to $103.17 a barrel.
"While a kneejerk reaction saw Brent fall by as much as $4.50 a barrel in response, most of this move proved fleeting, and Brent crude is currently trading within touching distance of the level it was at before Trump's post," said Deutsche Bank strategist Jim Reid.
"While the delay might reduce some of the immediate escalation risk, it offers no new visibility on the path towards resolution, given Iran's denials over talks, and while the Strait of Hormuz remains largely closed," he added.
Bond markets are also in selloff mode, with benchmark 2-year note yields topping the 4% level on Thursday and last seen trading at 4.021%.
That marks a staggering gain of around 63 basis points since the start of the conflict and suggests, along with the moves seen in long-dated paper, that investors are bracing for a period of stagflation in the world's biggest economy as a result of the oil price shock.
Stocks are reacting accordingly.
The S&P 500 closed below the 6500 point mark for the first time since Sept. 4 on Thursday, taking the benchmark 7.2% south of its all-time high in February and placing it firmly in the realm of correction territory heading into the final trading days of the first quarter.
The Nasdaq, in fact, closed around 10.6% south of the all-time high it reached on Oct. 29, marking a formal correction pullback for the tech-focused benchmark.
That said, the S&P 500 is only down around 0.45% from last Friday's close, despite what Fundstrat's Tom Lee described as a "painful and arduous week" for investors.
"I'm still holding hope that March is an up month," he said, adding that he feels around 95% of the selloff is already in the books.
But the lack of a sustainable bounce from Trump's latest pause, a futures market that sees oil trading north of $90 a barrel well into the summer months, and bond yields that suggest little chance of a Federal Reserve rate cut anytime this year doesn't bode well for broader risk sentiment.
Glen Smith, chief investment officer at GDS Wealth Management in Flower Mound, Texas, thinks markets are likely to keep their "oil up, stocks down" dynamic for the time being, but he's also bullish on an eventual turnaround.
"The speed of the market's declines in recent weeks and the fact that most of this fear has been driven by a single narrative, geopolitical tensions, suggests that the market is in the midst of a correction, and not a bear market," he said.
Write to Martin Baccardax at martin.baccardax@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 27, 2026 06:47 ET (10:47 GMT)
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