The S&P 500 fell 0.61% to 6,632.19 Friday — capping its third consecutive weekly loss — as Iran's Supreme Leader Mojtaba Khamenei offered no concession on the Strait of Hormuz, allowing WTI crude to gain another 3.1% to $98.71 and Brent to hold above $103. ^[3] The Nasdaq shed 0.93% to 22,105.36, its lowest close of 2026; the Dow lost 0.26% to 46,558.47 and the Russell 2000 dropped 0.36%. Oil's persistence near $100 has repriced the rate-cut calendar: fed funds futures moved the first expected cut to October, from June before the conflict began in late February. ^[8]

What moved it

Iran's Hormuz posture delivered no off-ramp on Friday. ^[4] Khamenei reiterated that the Strait's closure should remain "a tool to pressure the enemy," commercial traffic through the chokepoint stayed near zero for the fifth consecutive day, and Iranian officials floated the $200 oil warning again. The IEA estimates the disruption affects 7.5% of daily global oil supply, and with Brent above $100 the market is beginning to price in a prolonged rather than tactical blockade.

The direct transmission to equities runs through the Fed. Every sustained $10 rise in WTI adds roughly 25 cents to retail gasoline prices; AAA put the national average at $3.59/gallon Friday, up 22% over the past month. ^[9] That cost hits March CPI — the first print that fully captures the post-war period — and flows into April PCE, the Fed's preferred gauge. Core PCE is already at 2.8% against a 2% target, and the energy shock complicates the path to normalization without providing any corresponding growth offset. The Conference Board flagged the collision directly: stagflation risk, not rate-cut sequencing, is now the committee's primary constraint. ^[11]

University of Michigan consumer sentiment printed 55.5 for March, down 1.9% from February. The expectations index fell 4.4%; the current conditions component rose 2.1%, suggesting spending behavior hasn't adjusted yet — but the forward-looking read says households are beginning to reprice their outlook.

Sector scoreboard

ExxonMobil and Chevron rose 2.8% and 2.4% respectively, with the Energy Select Sector ETF (XLE) gaining approximately 2.5% — the only sector in the green Friday by a significant margin. ^[10] XLE is now up more than 27% year-to-date, the widest dispersion from the broader market since the post-pandemic supply shocks of 2022. The sector's outperformance is straightforward factor math: upstream producers have near-zero incremental cost exposure to the crisis that is destroying margins everywhere else.

Technology led declines. Software names were hit by a combination of higher-for-longer rate pressure compressing growth multiples and Adobe-specific contagion. Meta fell approximately 2%, Oracle and Palantir each dropped around 2%, and Salesforce shed 3.3% as the Dow's worst performer. Consumer discretionary and industrials each declined more than 2%. Airlines absorbed another fuel-cost repricing: the sector has now lost more than 15% since the Iran war began. Financials lagged as the rate environment the industry wants — steep curve, controlled inflation — is the opposite of what an oil-driven supply shock delivers.

Consumer staples were the relative outperformers among the red sectors, consistent with defensive rotation during sustained drawdowns.

Movers

Adobe fell 8.5%, the session's most significant large-cap move. Thursday's after-hours report was a clean beat — adjusted EPS $6.06 versus $5.87 expected, revenue $6.40 billion versus $6.28 billion — but Q2 EPS guidance of $5.80–$5.85 stepped down from Q1's actual, and Shantanu Narayen simultaneously announced he would exit after 18 years with no successor named. ^[5] The board appointed lead independent director Frank Calderoni to run the search. ADBE is down 23% in 2026 prior to Friday's drop; the market is not separating the quarterly beat from the leadership vacuum arriving at a moment when Adobe's AI competitive moat is under active debate. ^{[6] [7]}

Ulta Beauty dropped 8% after reporting Q4 results that beat on revenue and EPS but issuing fiscal 2027 guidance — adjusted EPS of $13.50–$14.50 against the $14.82 consensus — that implied margin compression and a comparable-store slowdown. Discretionary names are getting less earnings-multiple cushion in an oil-shock environment where consumer purchasing power is being taxed at the pump.

What to watch

FOMC meeting (March 17–18): A hold is a near-certain outcome at 97%+ implied probability, but the revised dot plot and Summary of Economic Projections are the live variables. The committee is expected to raise PCE inflation projections and trim GDP estimates — the stagflation configuration it has no clean policy tool to address. Powell's characterization of the oil shock will determine whether the market's October cut-pricing holds.

Hormuz posture: Khamenei's statements this week moved from tactical ambiguity to explicit policy. Any signal of a diplomatic channel — or any escalation involving the chokepoint itself — resets energy and risk-asset positioning overnight.

Nvidia GTC 2026: The annual developer conference begins next week. Blackwell ramp data and any Vera Rubin commentary will test whether AI hardware demand can hold as a macro cushion against the broader tech multiple compression.

February PCE (due March 28): First full inflation read that captures post-war conditions. Core is at 2.8% now; any acceleration shifts the first-cut pricing further out and complicates the Fed's median dot for 2026.

Kevin Warsh confirmation hearings: Powell's term ends May 2026. Warsh is widely expected to run a more hawkish regime; confirmation progress introduces a medium-term policy layer that markets have begun to price but haven't fully resolved.