U.S. Stocks End Flat as Iran War Signals and Oil Price Swings Confuse Markets

U.S. stocks finished Tuesday’s volatile session near flat as investors struggled to interpret conflicting developments surrounding the war with Iran and sharp swings in oil prices.

The Dow Jones Industrial Average slipped 34 points, or 0.1%, while the $S&P 500(.SPX)$

fell 0.2%. The tech-heavy $NASDAQ(.IXIC)$ ended essentially unchanged. $NVIDIA(NVDA)$

Stocks

Markets whipsawed between gains and losses throughout the session as traders reacted in real time to geopolitical headlines and shifting energy prices.

Top Gainer: $Vertex Pharmaceuticals(VRTX)$ (+8.3%). Biggest Decliner: $Centene(CNC)$ (-16%).

Best Sector: Consumer Discretionary (+1.2%). Worst Sector: Utilities (-1.2%)

Conflicting Signals on the Strait of Hormuz

Investor sentiment shifted repeatedly following mixed signals about developments in the Middle East.

A now-deleted post from Chris Wright suggested the U.S. Navy had escorted an oil tanker through the Strait of Hormuz, a key global energy chokepoint. The statement was later walked back, adding to uncertainty.

At the same time, reports surfaced that Iran could be preparing to deploy mines in the strategic shipping route, raising concerns about further disruptions to global oil supplies.

Roughly 20% of the world’s oil and gas supply flows through the Strait of Hormuz, making it one of the most critical energy corridors in the global economy.

Oil Prices Swing Sharply

Oil prices were the biggest driver of market moves throughout the day.

After surging above $100 per barrel on Monday, crude prices dropped sharply on Tuesday.

• Brent crude settled at $87.80 per barrel, down 11.3%

• The decline marked the largest percentage drop since March 2022

Despite the pullback, oil prices remain elevated. Crude futures are up roughly 44% year to date, reflecting the ongoing supply disruption risks tied to the Iran conflict.

Why Oil Stocks Aren’t Rallying

Surprisingly, the surge in oil prices hasn’t translated into strong gains for energy stocks.

The world’s five largest oil companies, have risen only about 1% on average since the war began.

• $Exxon Mobil(XOM)$

• Chevron

• TotalEnergies

• BP

• Shell

Analysts say several factors explain the muted response:

1. Operational risk: Oil companies themselves face disruptions from the conflict.

2. Pre-war rally: Investors had already bid up energy stocks before the war began.

3. Uncertain duration: If the conflict ends quickly, oil prices could fall just as fast.

Inflation Data Could Shift Market Focus

Investors may soon turn their attention away from geopolitics, at least temporarily, as key inflation data approaches.

The Bureau of Labor Statistics is scheduled to release the February Consumer Price Index (CPI) report.

Economists expect:

• Monthly inflation: +0.3% (vs. +0.2% previously)

• Annual inflation: 2.5% (up from 2.4%)

• Core inflation: 2.5% year over year

Higher food and energy prices, along with tariff-related cost increases, are expected to push the headline number higher. However, cooling shelter inflation and lower vehicle prices may offset some of those pressures.

A Growing Headache for the Federal Reserve

The inflation outlook remains complicated for the Federal Reserve.

Rising oil prices tied to the Iran conflict are already pushing gasoline prices higher, up more than 20% compared with a month ago.

While policymakers may treat the oil shock as temporary, economists warn that a bigger risk lies in rising inflation expectations.

If consumers begin to expect higher inflation long-term, it could trigger broader price increases across the economy.

Market Outlook

Markets remain highly sensitive to geopolitical developments and energy price volatility.

For now, investors are balancing three major risks:

• Oil supply disruptions in the Middle East

• Inflation pressures from rising energy costs

• A weakening U.S. labor market

With inflation data looming, the next major catalyst could determine whether markets continue drifting sideways, or face another surge in volatility.

Corporate Earnings

• Campbell’s

• UiPath

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.

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