Bi-MONTHLY MARKET ANALYSIS &

ECONOMIC UPDATES

March 12, 2026

Wars Impact on Stock Markets

When a crisis such as the Iran war breaks out, it is normal and natural for investors’ emotions to run wild. Fear of financial losses and the fog of war cloud stock market trading decisions. As normal as investors’ anxiousness is over wars is, so are wars themselves. World history offers a long list of them. So, although our concerns rise, we can gain some perspective from history on war’s impact on stock markets. History shows that markets can overreact when a new crisis starts. But they usually calm themselves and return to the prevailing trend that existed before the crisis. The table below shows how the S&P 500 has reacted after historical geopolitical events and conflicts.

While a global conflict tends to generate uncertainty and anxiety, markets are far more resilient than most investors expect. Dramatic world events can trigger big declines, but nothing catastrophic. One consistent takeaway is that shocks cause volatility, but rarely change the long-term trajectory of the economy unless accompanied by deeper fundamental stress. What has been learned from wars, terror attacks, natural disasters, currency crises and other crises is markets hate uncertainty – but adapt quickly. The economic backdrop matters more than the event itself. And shocks rarely alter long-term fundamentals, though they sometimes deepen a recession. Wars typically don’t cause bear markets. The Yom Kippur war of 1973 and the 9/11 terrorist attacks in 2001 occurred while the S&P 500 was already in a bear market. Neither crisis did anything to turn the market around in the near term.

I noted above that stock markets usually return to the prevailing trend that existed before the crisis. The charts below show that. Notice the third chart identifying the start of the current war with Iran. …….

Before the launch of “Operation Epic Fury” the major U.S. stock market index was already trending in a sideways pattern since the October high. The growth sector was trending in a downward sloping way. With a surprise report indicating a weak jobs market and fears of further private credit losses, the disruption of oil supply from the Middle East is rising concerns of a U.S. recession – or worse – “stagflation”. So, the stock market again faces an Iran War with pre-existing conditions. Recent stock market action during conflicts underscored market resiliency. On June 13, 2025, when Israel began a bombing campaign against Iran’s nuclear and military sites, the S&P 500 fell 1.1% to 5,976 and dipped as low as 5,943. By the time the 12-day conflict ended, the index was up nearly 2%. On June 23, after the U.S. bombed Iran’s nuclear plants, the S&P 500 reversed higher and closed with a 1% increase. After that, the S&P 500index added nearly 15% before it took a 6% tumble in November. This January, the U.S. capture of Venezuelan leader Nicolas Maduro brought muted investor reaction. The S&P 500 rose 0.6% and the Nasdaq added 0.7% on the Monday that followed the weekend operation. The event didn’t alter the stock market’s dull trend. “Operation Absolute Resolve” was a short-lived military campaign, although it left questions about Venezuela’s oil industry and U.S. foreign policy.

As I noted above, the oil market is having the biggest impact on stock markets due to the Iran War. Whenever there’s a major military conflict in the Middle East, a close inverse correlation emerges between rising oil prices and falling S&P 500 returns. The 1990-91 Gulf War showed just that. We learned that oil price peaks can signal the lows for stocks, not necessarily military activity. Back then, oil prices topped and U.S. large-cap tech stocks troughed months before military action to liberate Kuwait even started because investors grew more certain that a combination of policy responses would resolve the conflict. So, oil price stabilization will be one of the primary signals for assessing current risk and a potential bottom. Since the start of “Operation Epic Fury” oil has been far from stable. Extreme volatility in oil prices has sparked a jump in the VIX (the investor “Fear Index”). Futures jumped sharply higher last Thursday on news that traffic had ground to a halt through the Strait of Hormuz. On Monday, crude futures soared above $120 a barrel but cooled off to $95 in afternoon trading as officials said they could tap reserves. Tuesday delivered fake news that the U.S. Navy had successfully escorted an oil tanker through the Strait of Hormuz. Instantly oil crashed 17%. After that report was denied, oil shot up from about $78 to near $90, a 15% pop. Market sensitivity to news about the Strait of Hormuz makes sense. The Strait is the primary conduit through which oil and liquefied natural gas exports pass from Saudi Arabia, Iraq, the United Arab Emirates and Kuwait, as well as Iran. Some 80% of Saudi exports reportedly exit the Persian Gulf into the Gulf of Oman. Saudi Arabia is moving some Persian Gulf exports to the Red Sea via a pipeline, but not without risk and well short of usual export flow.

The Iran war has rattled foreign stocks more than U.S. equities. For many foreign indexes, the damage so far has rivaled that of last April when Trump’s tariffs sent shock waves across global markets. U.S. stock market indices are mostly in a trading range. One of the smartest stock market operators alive is Mark Minervini, author of “Trade Like a Stock Market Wizard”. He says, “History shows that conflict-driven declines eventually create meaningful buying opportunities — but not immediately. Risk is elevated, and patience is required. This too will resolve. And when it does, a new up-leg will emerge from the geopolitical rubble — as it always has.”

TAKING PERSPECTIVE…

Proper Perspective: In our hectic and often hard to comprehend world, it is very easy to lose perspective. You may agree it is sometimes difficult to see the big picture. The media often doesn’t help with this, but unfortunately instead encourages us to see things in a most negative light. Here is hopefully a pause to gain positive perspective.

Famous Quote For Today: “Why is that nobody understands me, yet everybody likes me?”

~~ Albert Einstein, 1944

Today in History – On this day in 1947, President Truman Doctrine established to prevent spread of Communism.

MARKET ANALYSIS

INDICATORS OF INTEREST:

Market’s Current Signal: Uptrend Under Pressure. Analysis of the stock market over 130 years of history shows we can view it in terms of three stages -market in uptrend, uptrend under pressure and market correction. Since the 1880’s, this perspective has led to investment out-performance relative to market indexes. This is due to trend analysis which determines risk reducing, return enhancing market entry and exit points.

The U.S. stock market’s current signal indicates the market is in Uptrend Under Pressure. This trend change was triggered March 5 and ended the Confirmed Uptrend in place since last April 22. October 12, 2025 was the 3rd anniversary of this bull market. Recent weakness has yet to end the bull run.

Here are key market levels as of Monday, March 9:

Recapping Last Week

The conflict raging across the Middle East spiked oil prices to the highest level in more than two years, pressuring risk assets across the globe. U.S. equity indices held up better than their international counterparts, with the Nasdaq Composite down just over 1% while the S&P500 fell 2%. The MSCI EAFE and Emerging Market indices both tumbled close to 7% as disruptions to energy supplies threatened to derail economic growth in Europe and Asia. A sharp rally in the U.S. dollar also weighed on international stocks and most commodities outside of oil. Gold fell 2.3% while silver plunged 10%. Crude oil futures soared to $92.61 before settling around $91, up 35% for the week. Fears of rising inflation spurred by higher energy prices led to a jump in U.S. Treasury yields. Friday’s shocking non-farm payrolls report only briefly slowed the ascent: the U.S. economy unexpectedly shed 92,000 jobs in February and the unemployment rate ticked up to 4.4%. While a strike by healthcare workers and severe winter weather were cited as contributing factors, there was enough weakness across the report to raise concerns about broader labor market deterioration. In other economic news, January’s delayed retail sales figures revealed a 0.2% decline MoM, coming in below the expected flat reading. However, other data suggested that economic growth may yet accelerate in the first quarter of this year. U.S. business activity continued to expand last month, with the ISM manufacturing PMI registering 52.4 while services jumped to 56.1, its highest reading since July 2022. Survey respondents remained wary of tariffs, as the manufacturing prices paid subindex soared to 70.5 from 59.0. On last Wednesday, Treasury Secretary Bessent said a 15% global tariff—rising from its current 10% rate—will likely be implemented soon under Section 122 of the Trade Act of 1974.

Overseas, Eurozone inflation rose last month and may rise further if war in the Middle East leads to sustained higher energy prices. CPI increased to 1.9% YoY from 1.7% while the core measure jumped to 2.4% from 2.2%. Producer prices also rose in January, ahead of the consumer data. UK government bond yields surged as a doubling in gas prices cast doubt on the central bank’s ability to cut rates this year. In a budget update speech, finance minister Reeves acknowledged the risks facing Britain, which has the highest inflation among developed economies and is heavily exposed to energy cost impacts from the assault on Iran. Australia’s economic growth gained momentum in Q4 2025, reigniting price pressures and keeping further rate hikes on the table. Finally, China’s official PMIs stayed in contraction territory last month as domestic demand remained weak.

Current View

Inside and outside the stock market, the geopolitical headlines continue to stun the world. The most alarming commentary I have read is reference to WWIII. My wife, Maya, sent me a text late yesterday asking, “Have you seen this?” She attached a news alert that warned Iran allegedly might retaliate against the U.S. by attacking California by launching drones. The war drama is most highlighted by continued soaring oil prices. And yet, yesterday the Nasdaq eked out a .01% gain and the closed down only .01%. Call the day unchanged. So far this morning, the major market indices have been weak but bouncing off earlier losses of about 2%. In general, the market has been showing signs of weakness which started before the start of “Operation Epic Fury”. Especially in the growth stock space. The Nasdaq, through yesterday, has closed below its 50-day moving average 25 of 26 trading sessions. The Dow has been down 7 of the last 9 days. Today, oil has spiked early. That has taken stocks lower. While energy sector is the big winner, there are many losers. Travel, financial and semiconductor stocks have been hit hardest in today’s early trade. Travel stocks are sinking for the third straight session on heavy volume and undercutting key support levels. The banks and financial stocks are falling the most since the market crash of last April.

Here’s my 2026 OUTLOOK .

Industry Group Strength: BEARISH. As of yesterday, 81 out the 197 groups I monitor are up year-to-date. 116 are down.
New Highs vs. New Lows: BEARISH. In yesterday’s session, there were 83new 52-week highs and 138 new 52-week lows.
Dow Dividend Yield: BEARISH. The current yield for the Dow Jones Industrial Average is 1.85%. The 10-year Treasury now 4.25%.
Volatility Index: BULLISH. Volatility has been volatile. The “VIX” is now 26. This is up from 18 two weeks ago. The index is also known as the “Fear Index.” It is considered a contrarian indicator and therefore viewed as bullish as it rises indicating investors are becoming more fearful. The VIX:

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Fear / Greed Index: BULLISH. Investors are driven by two emotions: fear and greed. Too much fear can create a condition of oversold/ undervalued stock prices. Too much greed can result in overbought/overvalued stock prices. The AAII Investor Sentiment Index is now neutral. BE FEARFUL WHEN OTHERS ARE GREEDY. At 27, the Fear & Greed Index is up down 58 four weeks ago.

CLICK VIDEO FOR MORE ON THE “FEAR & GREED INDEX”

Bull / Bear Barometer: NEUTRAL. This secondary market indicator should also be viewed with a contrarian perspective. As of yesterday, according to the latest survey of stock market newsletter writers by Investor’s Intelligence, the bullish tally is 49.1%, down from 61.5% two weeks ago. The bears are 21.8%, up from 15.4% two weeks ago. Consider this a contrarian indicator because the crowd is often wrong at market tops and bottoms. In other words, extreme bullishness has been seen near several market tops in the past, while extreme bearishness has been seen at market bottoms.

Put / Call Ratio: NEUTRAL. The ratio of put-to-call options is 0.90, up from 0.71 two weeks ago. The put-call ratio tracks the mood of what options investors are doing, not just saying. They typically buy puts if they think a stock will decline and calls if they think it will rise. If they’re buying lots of puts, they see the market declining. And if they’re loading up on calls, they’re generally bullish. Historically, market bottoms occurred when the reading spikes to 1.2 or more. Market tops are often made when the reading is 0.6 or less. Note how reliable this is with respect to the February record low coinciding with the market high. Keep in mind this is also a contrarian indicator.

ECONOMIC UPDATES

Global Economic Indicators & Analysis:

POSITIVE INDICATORS

Jobless Claims Down: The number of people who lost jobs and applied for unemployment benefits at the end of February clung to recent lows and added to a flurry of signals suggesting the labor market has stabilized. Initial jobless claims were unchanged at 213,000 in the last week, the government said today. Jobless claims rise when businesses start cutting jobs and laying off workers, making them one of the best early warning signs of a worsening economy.

Manufacturing Sector Up: American manufacturers grew in February for the second month in a row for the first time in a year. The Institute for Supply Management’s survey of manufacturers was basically unchanged at 52.4% in February from 52.6% in the prior month, according to last Tuesday’s ISM report. The January reading was the highest since June 2022. Any number above 50% indicates business is growing.

Service Sector Up: The largest part of the U.S. economy expanded in February at the fastest pace in three and a half years, a survey showed, as businesses adjusted to high tariffs and sales and new orders rose. A survey of service companies such as banks, retailers and restaurants climbed to 56.1% in February from 53.8% in the prior month, the Institute for Supply Management said last Wednesday. The ISM’s “New Orders Index” jumped to an 18-month high and employment even reached a one-year peak, both suggesting stronger growth in the months ahead.

CPI Up (no more than expected): The consumer price index increased a seasonally adjusted 0.3% for the month, putting the 12-month inflation rate at 2.4%, according to Bureau of Labor Statistics data released yesterday. Both numbers matched the Dow Jones consensus forecast. Stripping out volatile food and energy prices, the core CPI posted a 0.2% monthly reading and 2.5% annual rate, compared with forecasts for 0.2% and 2.5%, also in line with the estimates.

Existing Home Sales Up: Existing home sales unexpectedly increased by 1.7% in February 2026 to a seasonally adjusted annual rate of 4.09 million units, according to the National Association of Realtors (NAR) Tuesday, driven by easing mortgage rates. Despite this monthly rise, sales remain 1.4% lower than a year ago. The median existing home price grew slightly to $398,000, while inventory remains tight, boosting competition.

WEAK INDICATORS

Jobs Market Down/Unemployment Up: The economy shed 92,000 jobs in February in a suprise to Wall Street, but the decline in employment was tied to winter storm Fern and major strikes involving health-care workers.The unemployment rate, meanwhile, rose slightly to 4.4% from 4.3%.Economics polled by The Wall Street Journal had forecast 50,000 new jobs last month.Even after factoring out the strikes and weather, the February employment report was weak. Still, the loss of jobs last month is unlikely to prove decisive in helping the Federal Reserve to determine whether to cut interest rates again.The low unemployment rate suggested the labor market was stable, for one thing, and the effects of the strikes are already fading.Perhaps more worrisome to the Fed is the recent rise in oil prices tied to the conflict with Iran. Rising energy costs could nudge inflation higher and tie the Fed’s hands. The economy has actually lost net jobs since last April. The total job gains since last May are now negative-19,000, according to the latest Labor Department data.

Small Business Optimism Down: Tuesday, the NFIB Small Business Optimism Index fell 0.5 points to 98.8 in February 2026, marking a second consecutive monthly decline but remaining slightly above the 52-year average of 98. Despite lower optimism, reduced uncertainty, higher sales, and better profits were reported, though competition and labor quality remain key concerns.

New Home Building and Permits Down: U.S. single-family homebuilding fell in January amid harsh winter weather, and a strong rebound is unlikely, with permits for future construction declining. Single-family housing starts, which account for the bulk of homebuilding, dropped 2.8% to a ‌seasonally adjusted annual rate of 935,000 units in January, the Commerce Department’s Census Bureau said on today. This report was delayed due to the government shutdown. Data for December was revised lower to show starts rebounding to a rate of 962,000 units instead of the previously estimated 981,000-unit rate. Homebuilder sentiment has remained depressed, suggesting that new single-family home construction is unlikely to significantly improve in the near term. Starts for housing projects with 5 units or more, a very volatile ⁠segment, surged 29.1% to a rate of 524,000 units in January. Overall housing starts increased 7.2% to a rate of 1.487 million units. They advanced 9.5% year-on-year in January. Permits for the future construction of single-family ⁠housing units fell 0.9% to a rate of 873,000 units in January. Permits decreased 11.6% from a year ago. Building permits for housing projects with 5 units or more tumbled 13.4% to ⁠a rate of 453,000 units in January. Overall building permits dropped 5.4% to a rate of 1.376 million units. They declined 5.8% year-on-year in January.