March 23, 2026

“The real key to making money in stocks is not to get scared out of them.”

Peter Lynch 

Another lousy week on top of the past several, anticipations of war then war. But first here are the numbers. The S&P 500 lost 2.52%, the Dow Jones Industrial Average fared little better off 2.42%, and the Nasdaq took it on the chin down 3.10%. Internationally, the FTSE followed off 3.34%, and the MSCI-EAFE surrendered 2.8%. The 2-Year Treasury rose and paid 3.907%, and the 10-year yield followed the fight to safe havens up 4.286%.

As Barron’s Conner Smith reports “Four Strait. The Nasdaq Composite flirted with a correction on Friday as the major indexes fell for a fourth week in a row. The tech-heavy index dropped 2% on Friday. The S&P 500 dipped 1.5%. The Dow Jones Industrial Average dropped 444 points, or 1%. Swings in oil prices related to headlines out of the Middle East have been the market’s driver since the war in Iran began on Feb. 28. Stocks fell to session lows today as President Donald Trump told reporters, “I don’t want to do a cease-fire.” After the market’s close and stocks’ severe reaction, President Trump seemed to change his tone somewhat. “We are getting very close to meeting our objectives as we consider winding down our great Military efforts in the Middle East,” he wrote in a post on Truth Social. Iran worries finally caught up to traders betting on the path forward for interest rates. There’s now a 31% chance of a rate an interest-rate hike in 2026, compared with zero chance a week ago, according to the CME FedWatch Tool. Odds of a quarter-point cut this year were down to 6.1%. The Nasdaq has dropped in nine of the past 10 weeks, something it hadn’t done since 2022. The Dow has now matched its longest weekly losing streak since 2023.”

On the inflation front, that is driver of inflation being oil prices, the Trump administration is temporarily waiving sanctions on Iranian oil shipments already at sea, As one who has two marine engineers sons who sail under the Jones Act, this is a rare step that marks the first time the U.S. has eased such restrictions since they were imposed following the 1979 Islamic Revolution. Treasury Secretary Scott Bessent said the short-term move applies only to crude already loaded onto tankers, not new production, as the administration looks to ease soaring energy prices tied to the Iran conflict. The waiver could release roughly 140 million barrels of oil into global markets, as disruptions in the Strait of Hormuz and regional fighting have sent prices sharply higher. “This is a narrowly tailored, temporary step,” Bessent said, stressing broader sanctions remain in place under the administration’s maximum pressure campaign. U.S. sanctions on Iran’s oil sector have been a cornerstone of policy for decades, aimed at cutting off revenue to the regime after the 1979 revolution and subsequent hostage crisis. The restrictions have been repeatedly tightened in recent years to drive Iranian exports toward zero.

Officials say the current waiver is designed to stabilize global markets without providing long-term financial relief to Tehran. In the meantime, US Navy and Air Force have increased attacks on all Iranian instillations along the coast of the Strait of Hormuz and soon expect to remove the treat to global shipping and negotiating increase the responsibility to the countries that rely on that free flow of shipping feeding the worlds energy demands.

The Federal Reserve Action is not helping. As widely expected, the Federal Reserve held its benchmark rate steady this week from 3.5% to 3.75%. But there was more to the story than the decision not to cut. Indeed, the more important takeaway was how constrained policymakers appeared to be. In updated projections, 12 of 19 officials still penciled in at least one rate cut this year, the same as in December, but several lowered the amount of easing they expect, and one participant projected a rate hike next year. That’s the first signal we’ve seen in the hawkish direction in months. Inflation has been sticky over the past few months, but market participants and Fed officials have largely (and correctly, in our view) not viewed as a nuisance. That was, of course, before the Iran war added a wrinkle to the story with rapidly rising oil prices. The pass-through effects of higher energy costs will register in March’s inflation print, which will almost certainly point to upward pressure on the consumer price index. Chairman Powell has also pointed to continued firmness in services inflation excluding housing, a sign that the Fed is drifting back towards a stance of holding rates steady for the foreseeable future.

In the Jobs market, some might argue that the jobs market should take priority in rate setting, given that the U.S. lost 92,000 jobs in February and the unemployment rate edged up to 4.4%. But we think the labor market has softened gradually rather than cracked outright.  The issue is no longer simply when the Fed cuts, but whether it can do so comfortably at all if inflation remains stuck above target, and geopolitical risks continue to pressure energy markets. It would take more serious deterioration in the jobs market to move the needle at this stage.

The impact on the global economy depends on how long the war lasts, say economists and supply-chain experts. A quicker resolution, meaning anywhere within the next five weeks, would push global inflation higher but result in a “relatively small” hit to global gross domestic product. If the conflict goes longer, the hit to GDP and inflation would be more acute, and some countries could be forced into recession or hyperinflation.

Understanding the impact of military success is key to having patience in this volatile market. The strategy of the US taking out all military targets and defense infrastructure and the Israeli’s decapitating the Iranian regime has been unprecedented and very effective. If this conflict ends with the state time frame objective or sooner, and if the Iranian people do their part once the regime is effectively destroyed, we will see stability and optimism return to the markets. One thing is clear that it will offer several opportunities for the investor to go forward. In the meantime, caution remains the watchword.

In the housing market, median US home-sale prices hit $387,000 (up 1.3% year-over-year), with monthly payments at $2,649, the highest in nine months but still down 2.7% annually. Activity ticked up slightly: pending home sales fell just 0.2% year-over-year (smallest drop in six weeks), new listings rose 1.2% (second straight gain), and purchase applications improved amid better weather and less competition from higher rates. Mortgage rates for 30-year fixed loans rose sharply last week to an average of 6.22%, up from 6.11% in the prior week and the highest in over three months. This marks the third straight weekly increase, driven by inflation fears from the US-Israeli war in Iran spiking energy prices and pushing the 10-year Treasury yield to around 4.28%.

So, what does it all mean? It is important to realize that many agendas are in play right now and negative reporting, though now has a low confidence level by the public, the results will invertible be known. If the administration is correct, we should within the next month or so see a return of the bullish sentiment and markets will recover.

Mike