By Sabrina Escobar
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The Dow Enters Correction as Iran War Hits the Homefront
Resilience was the key word when the Iran war was just a week or two old, and the damage was greatest to overseas markets, such as South Korea and Brazil. But with the conflict now extending past the one-month mark, U.S. stocks are finally getting hit. The Dow Jones Industrial Average closed in correction territory on Friday, following a volatile trading week whipsawed by President Donald Trump's updates on the conflict.
There was a lot to keep up with. Here's how things stand: The U.S. presented Iran with a 15-point peace plan, which Iranian officials dismissed as one-sided. Despite that, U.S. officials indicated that negotiations were ongoing, at least somewhat. Trump extended a pause on threats to "obliterate" Iran's power plants until April 6, a move the president said came in response to fruitful discussions with Tehran. Who the U.S. is talking to and whether they can deliver on negotiations remains unclear. Strikes continued across the Middle East throughout the weekend.
While Trump's earlier updates rallied markets, his later comments were met with far more cynicism as investors started factoring in the very real likelihood of a drawn-out conflict in the Middle East. All three major U.S. indexes fell for the fifth week in a row, with both the S&P 500 and the Dow marking their longest weekly losing streaks since May 2022.
"Trump's comments indicate more that he wants an exit strategy than that back-channel outreach via would-be mediators has made concrete progress, " writes Oxford Analytica analyst Laura James. "The priority goals each side would need to secure for a credible ceasefire remain wildly divergent."
Capital Alpha analyst Byron Callan notes that the war now appears to be "broadening and deepening," with a 35% chance it could extend even into 2027. He also has growing confidence that the U.S. will use ground forces to snatch the Strait of Hormuz from Iranian control. About 5,000 U.S. troops have been ordered to the Middle East, and there are reports that the Pentagon is considering sending an additional 10,000 soldiers.
Don't expect a rapid resumption of trade through Hormuz even if a deal is reached. Tom Holland, deputy global research director at Gavekal Research, notes that shipping companies and insurers will want to see a deal "bedded down" before sending cargo through the strait. Strikes on key energy infrastructure in the Gulf also mean it will take time for oil and natural gas production to return to prewar levels.
It can be hard to find assets to ride out the shock. Last week's BGS issue highlighted the growing emergence of new safe-haven assets, such as the Singaporean dollar, Swiss Franc, the German 10-year bund, and of course, gold. Many U.S.-based investors that Barron's spoke with over the past week, however, think keeping money stateside is the way to go.
Anna Rathbun, CEO of Grenadilla Advisory, is factoring in a more prolonged conflict in Iran. But the rising geopolitical risks are precisely what's keeping her overweight on U.S. assets. "We need to really understand the equity premium that we would need in order to invest in international assets because the geopolitical risks have changed," she said. Meanwhile, the U.S. economy remains robust and resilient, and provides the chance for significant diversification.
Nancy Tengler, CEO and CIO of Laffer Tengler Investments, is using the volatility to build up a position in high-quality equities in anticipation of a post-war rebound. Tengler says she bought some calls on the S&P last week, and has been adding to her software position as a way to play the AI trade -- she recently bought shares of Palantir, CrowdStrike, Microsoft, and ServiceNow. Tengler is also overweight industrials and consumer discretionary.
For those bets to pay off, the U.S. needs to avoid the worst-case scenario -- an oil-driven recession. If hostilities ramp up, global oil prices could surge even more, making it hard for the Federal Reserve to ignore the shock and likely prompting policymakers to raise rates, writes Oxford Economics senior U.S. economist Matthew Martin.
Even in a best-case scenario, Martin predicts oil prices won't dip below $80 per barrel until the fourth quarter of the year. That could strain both corporate and consumer spending this year and weigh on economic growth. Just how much depends on how long the war lasts, and how high oil prices get.
If U.S. markets thrive, then we can truly call them resilient.
In the Spotlight
Big Tech's Data Centers Caught in the Crossfire
Tech companies have targets on their backs.
Earlier this week, Amazon Web Services said its Bahrain cluster of data centers had been disrupted because of Iranian drone activity in the area. This marks the second time this month that the web giant's services have been disrupted by the conflict after facilities in the U.A.E. were affected by earlier strikes. The company is now shifting workloads to other locations, a company spokesperson said.
American tech companies should prepare for more strikes to their data-center infrastructure in the region, OA analysts Laura James and Rawan Maayeh write. Iran's semiofficial Tasnim News Agency published a list of "Iran's new targets" in mid-March, which included specific operating facilities owned by companies like IBM and Palantir.
Recovering from any structural damage will be costly, and if strikes continue, companies could rethink their long-term investment in the region, James and Maayeh note. A quicker resolution to the conflict, however, is likely to keep most tech investment plans in place, especially if Gulf states offer up incentives, such as subsidies for continued infrastructure buildout.
The Bottom Line: While the Middle East has emerged as a lucrative market for many tech companies in recent years, the Americas remains their biggest source of revenue. Companies with significant U.S. defense contracts like Palantir and Oracle are particularly well insulated, as ongoing conflicts could result in new or renewed contracts. Analysts have revised their earnings estimates for Palantir, Oracle, and Microsoft higher since the Iran war began.
Stocks Affected: AMZN, MSFT, PLTR, IBM, ORCL
The Invisible Front of the Iran Conflict Hits Corporate America
The Middle East may be taking the brunt of the Iran conflict, but the war in cyberspace starting to hit U.S. companies.
Groups with ties to the Islamic Revolutionary Guard Corps have been launching cyberattacks over the course of the month. Recent attempted targets have included a Polish nuclear research center, an airport in Kuwait, and American medical equipment company Stryker. Intuitive Surgical also reported being the target of a phishing incident, although it didn't specify who was behind the attempt.
Cybersecurity experts believe attacks conducted by Iranian state-backed factors and affiliated hacktivist groups could continue, likely targeting critical service providers in the energy, telecommunications, military, and finance sectors across the U.S. and its allies. Alexander Niejelow, executive director at Hilco Global Cyber Advisors, warns that within the financial services space, regional banks could be particularly vulnerable.
Iran isn't the only threat, he adds. Other adversaries, such as China and Russia, may take advantage of the distraction the Iran war presents to launch their own cyberattacks. Earlier this week, the Federal Communications Commission banned foreign-made commercial Wi-Fi routers, many manufactured in China and Vietnam. Scrutiny of Chinese-made routers has intensified recently over signs that foreign hackers use these devices for espionage.
The Bottom Line: Cyberattacks can lead to revenue loss and erode consumer trust, but academic research suggests that companies face short-term declines in share price after disclosing a data breach. While Stryker stock is down 15% this month, and Intuitive is off about 10%, it's unclear whether that is because of the breaches, the market selloff, or a combination of the two.
Stocks Affected: SYK, ISRG
Fertilizer Stocks Face a Crucial Test as Planting Season Approaches
April showers bring May flowers -- and eventually about three-quarters of the U.S.'s annual harvest. But with about a third of the world's tradable fertilizer stock caught in the Strait of Hormuz bottleneck, this year's planting season will be a tricky one.
Fertilizer prices have risen more than 30% since the start of the Iran War. Gulf states produce key minerals used in fertilizer production, including urea, phosphate, ammonia, and sulfur. Unlike oil, there are no strategic fertilizer reserves, partly because they have a relatively short life span of about three to five months. Lack of affordable fertilizer could lead to lower crop yields, food production, and profits for farmers, writes OA senior analyst Sarah Fowler.
Most U.S. farmers stocked up on fertilizer for the spring well in advance of the war, said Mark Milam, fertilizer specialist and editor at ICIS. Summer is the real problem. Most farmers resupply in June and July, creating the possibility of shortages if supplies aren't rebuilt. Although the U.S. has a robust fertilizer manufacturing industry, the country still relies on nitrogen and phosphate imports to meet demand, Milam adds.
Northern Hemisphere fertilizer manufacturers are riding a "nice crest of a wave" from higher prices, Milam said. Their stocks are too. Shares of fertilizer maker CF Industries are up 35% this month, while CVR Partners has gained 36% and Intrepid Potash has gained 23%.
The good times may not last. For one, farmers may choose to pivot away from fertilizer-intensive crops, such as corn, toward those with lower production costs such as soybeans. They may also decide to use less fertilizer when planting this spring, or turn to cheaper alternatives by swapping out more expensive ammonia fertilizers for cheaper potash options. Both could hurt the harvest.
The Bottom Line: Demand for fertilizer made in the Americas will likely remain high until the Hormuz bottleneck unsnarls, presenting an opportunity for domestic manufacturers. If supply remains constrained, food prices are likely to rise around the world, adding to inflationary pressures that have knock-on effects outside of the agricultural industry.
Stocks Affected: IPI, CF, UAN, NTR, MOS
On the Radar
Ukraine: The War Rages On
-- Russia launched what the Ukraine Air Force called "one of the most
massive attacks" of the war on Tuesday, firing nearly 1,000 drones across
several cities in the span of 24 hours. Ukrainian President Volodymyr
Zelensky said the scale "strongly indicates that Russia has no intention
of really ending this war."
-- Following the latest round of peace talks, which ended March 22, Zelensky
told Reuters that the U.S. is pushing for Ukraine to leave the Donbas
region, an industrial area at the heart of the conflict. Washington could
walk away from the negotiation table to focus on Iran if they don't, he
added. The White House didn't respond to Barron's request for comment.
-- Ukraine's current strategy focuses on attacking Russia's energy
infrastructure, such as key oil export ports and refineries, and while
its ability to completely disrupt Russian oil production will be limited,
sustained attacks will "add to global market pressures," writes OA senior
analyst Dafne Ter-Sakarian.
China: Let's Circle Back in May
-- President Trump's trip to China to meet with President Xi Jinping,
originally scheduled for March 31, was pushed back to May 14. The visit
could be delayed further depending on how long the conflict in Iran lasts,
writes OA analyst Thomas Shipley. But both parties will likely remain
interested in ensuring stability in bilateral relations, he adds.
-- The talks are expected to cover a range of topics, including tariffs,
Taiwan, China's fentanyl exports, and Chinese critical mineral export
controls.
-- Beijing will likely be in a "better strategic position" than the U.S.,
Shipley writes. China could yield modest concessions on agriculture and
fentanyl while potentially getting key concessions, such as partial
easing of tariffs and other trade restrictions.
Trade: What to Watch After the WTO's Ministerial Conference
-- Sunday marks the last day of the World Trade Organization's ministerial
conference in Yaounde, Cameroon, a high stakes meeting of the world's top
trade representatives.
-- The meeting comes in the midst of an existential crisis for the WTO,
where its effectiveness is being undermined by geopolitical rivalries,
unilateral changes to U.S. trade policy, and divisions over what the
organization's future looks like. WTO director-general Ngozi
Okonjo-Iweala called for reform in her opening statements Thursday.
-- The biggest reform could be to the Most Favorable Nation status -- the
WTO's core tenet that requires members to apply the same tariffs to all
trading partners. The U.S. has pushed to modify MFN, arguing that it
fails to promote reciprocity within the trade system. Experts don't
expect massive changes to MFN to emerge from the conference, but talks in
Cameroon could set the stage for more discussions.
-- Watch for progress on smaller agenda items such as extending a moratorium
of duties on digital products, such as software and music. If no progress
is achieved over the weekend, it would reinforce the impression that the
WTO has "very little capacity to act, even on relatively limited
initiatives," write researchers at the German Institute of Development
and Sustainability.
Until next week.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
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March 29, 2026 06:55 ET (10:55 GMT)
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