Crude Awakening

Performance for Week Ending 3.27.2026:

The Dow Jones Industrial Average (Dow) fell 0.9 percent, the Standard & Poor’s 500 Index (S&P 500) lost 2.1 percent, and the Nasdaq Composite Index (Nasdaq) declined by 3.2 percent for the week ending March 27. Sector breadth was negative, with seven of the 11 S&P sector groups closing lower. Energy was the best performer (6.2 percent), while communication services (7.2 percent) was the weakest.

*See below for Index Definitions

MARKET OBSERVATIONS: 3.23.2026  – 3.27.2026

The S&P 500 finished lower for the fifth straight week, its longest losing streak since May 2022. Driving the losses was uncertainty around the reopening of the Strait of Hormuz and worries about what the recent spike in oil prices may mean for inflation, growth, and monetary policy. The S&P is now down 8.7 percent since its all-time high reached on Jan. 27. The tech-heavy Nasdaq Composite has fared even worse, falling over 10 percent from its all-time high and meeting the technical definition of a correction.

Economic Roundup: The March reading of manufacturing conditions from S&P Global rose to 52.4 from 51.6 in February, compared with an expected reading of 51.5 in a survey compiled by Bloomberg. The increase follows mixed readings in the regional manufacturing sector readings from the New York and Philadelphia Federal Reserve (Fed) banks. The S&P Global index for services conditions fell to 51.1 in March from 51.7 in February, the lowest in 11 months. New applications for U.S. unemployment benefits rose slightly last week, suggesting the labor market remains stable and likely giving the Fed scope to hold interest rates steady while monitoring inflation risks from the conflict in the Middle East. Meanwhile, the Kansas City Fed monthly manufacturing index rose to a reading of 11 in March from 5 in February, compared with expectations for a decrease to 3 in a survey compiled by Bloomberg. The index indicates expansion, which was in line with the Philadelphia Fed and the S&P global flash indexes but in contrast with the Empire State index that suggested contraction. Mortgage rates jumped for a fourth straight week, reaching the highest point in six months and dampening prospects for the crucial spring season as the Iran war roils markets. The average rate for 30-year fixed-rate loans climbed to 6.38 percent, the highest since September 2025 and up from 6.22 percent last week, according to data from Freddie Mac.

Fed Speak: Fed Vice Chair Philip Jefferson said he is keeping a close eye on higher energy prices, which, if sustained, could worsen inflation but also slow consumer and business spending, creating a challenging situation for a central bank tasked with price stability and full employment. Fed Governor Michael Barr said a price shock from higher oil prices could trigger rising inflation expectations that the Fed needs to guard against, providing a further reason the Fed should take time to assess the economy before any further reduction in interest rates. Fed Governor Stephen Miran said it is premature to draw conclusions about how surging oil prices will affect the U.S. economy, as he stuck to his guns and argued a softening jobs market requires more rate cuts from the central bank. Chicago Fed President Austan Goolsbee said inflation is the greater risk facing the U.S. economy right now with the unemployment rate remaining fairly stable, though a quick resolution of the Iran conflict could still leave the Fed poised to cut rates later this year.

Outlook: The recent market volatility and uncertainty surrounding the duration of the conflict with Iran has resulted in a tactically cautious view on the market, although looking out six–12 months we still maintain a constructive view as we do not believe the situation in the Middle East—at least at this point—is enough to derail the current bull market. Historically, the negative market reaction to geopolitical events is usually measured in days and weeks. Markets have seen this movie before. When Russia invaded Ukraine in 2022, oil spiked, stocks sold off hard—and then recovered. The muscle memory of the market is that geopolitical shocks, while painful, tend to be temporary.

The focus should continue to be on what actually drives stock prices—earnings, the economy, and interest rate policy—all of which we think remain in a favorable place. The U.S. economy is growing, earnings are forecast to grow at a double-digit pace this year, the Fed is expected to maintain an easing bias with expectations of at least one more rate cut this year, and fiscal policy from the One Big Beautiful Bill Act will likely be a tailwind during the first half of the year. History suggests that bull markets rarely end when the Fed is easing and both the economy and earnings are growing.

The Week Ahead: The impact from the Iran conflict will continue to be front and center in the week ahead as more economic indicators for March are reported. The focal point will be on Friday’s payroll data, with consensus expectations compiled by Bloomberg expecting nonfarm payrolls to rise by 55,000. The unemployment rate is forecast to come in at 4.4 percent, unchanged from February. Other data points of interest include the March ISM manufacturing index due Wednesday, the Conference Board’s consumer confidence index for March on Tuesday, and the February retail sales report out on Wednesday. The first quarter earnings calendar will begin to drift back into the picture with four members of the S&P 500 scheduled to release results. The Fed speaking calendar will pick up with seven speeches scheduled, including Fed Chair Jerome Powell on Monday.

— By Michael Schwager, Chief Market Strategist, Managing Director

Definitions

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since Oct. 1, 1928.

Standard and Poor's 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Nasdaq Composite Index is a broad-based capitalization-weighted index of stocks in all three Nasdaq tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of Feb. 5, 1971.

This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.