Geopolitical tensions in the Middle East drove equities and bonds lower this week as investors re-priced risk following U.S.-Israel strikes on Iran and a weaker than expected U.S. jobs report that threw cold water on the economy’s momentum. Commodities and energy, however, bucked the downward trend with West Texas Intermediate Crude Oil rising 35% from a weak ago to $90+ a barrel.
Economic Highlights:
- Surprise job losses rattled already fragile markets on Friday. Nonfarm payrolls fell by -92K in February, below estimates for a +50K gain. February’s print was a sharp reversal from January’s downwardly revised gain of 126K. Meanwhile, the unemployment rate also rose to 4.40% from 4.30%. In a troubling sign for inflationary pressures, average hourly gains rose 0.40% for the month.
- Winter Storm Fern chilled retail sales in January, depressing spending at car dealers, gas stations, and brick-and-mortar stores as fewer consumers ventured out amid the blustery conditions. The 43-day government shutdown delayed the report, which showed retail sales slipping 0.20% for the month. However, excluding car dealers and gas stations, retail sales actually rose 0.30% suggesting consumers continue to open their wallets.
- The services industry continued to shine in February. The ISM Services Index rose 2.3 points to 56.1. Numbers above 50 indicate expansion while those below signal contraction. Inventories and orders gauges all posted strong gains. Meanwhile, inflationary pressures eased with the prices-paid gauge falling 3.6 points to 63.
- The ISM Manufacturing Index expanded at a slightly lower pace in February as new orders and production eased from the previous month. The index slipped to 52.4 from 52.6 in January. Prices however continued to move higher, sparking inflationary concerns on an 11.5 point surge in the prices-paid gauge to 70.5.
War and Weak Hiring Wallop Markets
Geopolitical tensions shook Wall Street this week following the U.S.-Israel attack on Iran. The economically sensitive Dow Jones Industrial Average shed 1,100+ points over the week’s sessions as investors weighed the potential hit to global economic growth due to supply chain disruptions. Oil trading was particularly volatile with West Texas Intermediate Crude Oil rising 12%+ on Friday, settling above $90+ a barrel. Brent, the international benchmark, rose 8.50% to $92+ a barrel. Prices have been under pressure from the start of the conflict as fewer oil tankers dare to risk sailing through the Strait of Hormuz. The transportation bottleneck is unlikely to ease soon, being reflected in recent crude oil futures trading. On Friday, President Trump ratcheted up the pressure on Iran, saying in a Truth Social post there won’t be a deal to end the Iran war without an “unconditional surrender” – something the Iranian leadership has vowed to not comply with. U.S. treasury bonds, which are usually seen as safe havens during these types of conflicts, traded lower this week as well. Bond investors showed concern that the war will add to inflationary pressures on top of higher prices from tariffs. A universal, 15% global tariff went into effect this week, replacing not only the tariffs overturned by SCOTUS the week prior but also the 10% tariffs put in place immediately thereafter (under Section 122 of the Trade Act of 1974). The 10-year Treasury yield hit an intraday high of 4.19% on Friday before easing somewhat on the weaker-than-expected jobs report. The release of February’s jobs data reversed investors’ opinions on the direction of the economy which contradicted the trend seen in services, retail, and manufacturing released this week.
While the payrolls report brought the focus back to domestic affairs late in the week, markets spent the majority of the time focused on the developments in the Middle East. Pundits and market strategists have varying theories on just how long the conflict might last, but the simple fact is that no one knows. Scenarios range from weeks, months, or longer. Absent a crystal ball, one is left to rely on history as a guide in order to assess how disruptive geopolitical events tend to be for markets. Here the data is somewhat comforting. According to the Stock Trader’s Almanac dating back to 1939, twelve months after a geopolitical crisis, the S&P 500 posts an average gain of 2.92%. While that is well below the average 8-10% that markets tend to return, it is certainly not a debacle, keeping in mind this is a very noisy sample and it takes into account major world wars as well as the 1970’s oil crisis (when the global economy was more greatly correlated with oil). The 2023 Gaza incursion resulted in a -10% correction in the S&P, which bottomed in 3 weeks, but saw the S&P launch higher by +32% over the next 12 months. During the first Gulf War (1990 & 1991), the S&P posted a -6% decline in 1990 before returning +26% in 1991. The second Gulf War was preceded by the Dot.com bust, clouding a direct comparison, but trading was generally choppy prior to the invasion in March of 2003, with the S&P higher by +26% for the full year. It goes without saying that the past is not necessarily indicative of the future, but these wars reflect a common pattern which is that wars impart a certain degree of uncertainty for financial markets in the near-term but the effects have tended to resolve quickly in the modern era. We can only hope the same will hold true again.
The Week Ahead
Key reports include CPI, durable goods, and existing home sales.
To the Moon and Beyond
This year is shaping up to be a big one for space exploration despite some challenges facing NASA, the National Aeronautics and Space Administration, the agency responsible for coordinating America’s activities in space. NASA’s long-awaited, ambitious program to return humans to the moon with its Artemis mission has faced a technical issue that forced the agency to roll its Artemis II rocket from the launch pad at Kennedy Space Center back to the Vehicle Assembly Building last month. NASA has been aiming to return to the moon and announced last week that four missions are tentatively scheduled within the next three years. The last U.S.-crewed spaceflight to the Moon launched on December 7, 1972, and successfully concluded on December 19, 1972. It was the final flight of the Apollo program.
NASA’s plan includes launching a crew of four astronauts on a 10-day journey around the moon. Instead of taking humans on a lunar landing this year as previously planned, NASA will launch a test flight to practice a meetup between the Orion crew capsule and one or both lunar landers being developed by companies SpaceX and Blue Origin. NASA is planning a moon landing with Artemis 4, slated for 2028, and the U.S. space agency might attempt another lunar landing that same year.
In other space news, NASA recently revealed the first pictures of its newly constructed Nancy Grace Roman Space Telescope, which could soon help researchers discover more than 100,000 distant exoplanets, map the universe on the largest possible scale, including billions of galaxies, unveil hundreds of billions of stars, and help scientists probe dark matter and dark energy -– the invisible scaffolding and mysterious forces that together are fundamental to our understanding of the cosmos. Named after NASA’s first chief astronomer (not Nancy Grace the TV commentator), the Nancy Grace Roman Space Telescope will have a field of view at least 100 times larger than NASA’s Hubble telescope while maintaining comparable sharpness. Construction on the new telescope was completed late last year at NASA’s Goddard Space Flight Center in Greenbelt, MD, outside of Washington, D.C. The telescope measures around 42 feet tall and weighs 9,184 pounds. Roman will be powered by six massive solar panels that will harness the energy of the sun.
Construction on the Roman began in February 2016, and it is possible that Roman will lift off ahead of schedule and could begin collecting data before the end of 2026. NASA has previously launched other flagship space telescopes, including the James Webb Space Telescope which launched in December 2021, and the Hubble which launched in 1990. These telescopes are still providing meaningful data and advancing knowledge of the universe. Hubble just discovered a new ‘dark galaxy’ believed to be made up of 99% dark matter, which NASA said is “an invisible form of matter that does not reflect, emit, or absorb light.” NASA added that it “may be among the most heavily dark matter-dominated galaxies ever discovered.” The James Webb Telescope also continues to make groundbreaking discoveries including unveiling a 3D map of the upper atmosphere of Uranus, revealing a high-speed jet stream on Jupiter that was previously unseen despite being over 3,000 miles wide and traveling at about 320 mph. Additionally, the James Webb Telescope discovered methane and carbon dioxide in the atmosphere of an exoplanet. These are just a few of many discoveries.
As of September 2025, scientists have discovered more than 6,000 exoplanets in roughly 30 years. However, Roman is expected to find more than 15 times as many in half a decade, which would be a huge boon to scientists and space exploration. In total, Roman is expected to collect more than 20,000 terabytes of data over the course of its initial five-year mission. It is capable of capturing high-definition photos of the outer solar system and the edges of the visible universe. It’s incredible to think that NASA is just 67 years old and is widely considered the global leader in space exploration, unveiling the universe through its missions and turning curiosity into discovery.