NEW YORK, March 9, 2026, 11:44 (EDT)
Stocks tumbled out of the gate Monday, with all three major indexes—Dow, S&P 500, Nasdaq—off roughly 1.3% by 9:44 a.m. ET. Oil flirted with $120 a barrel after Iran tapped Mojtaba Khamenei as supreme leader and President Donald Trump gave no sign of reversing course quickly, deepening worries about a drawn-out Middle East conflict. Crude held above $100 even after slipping from its earlier high.
The timing stings, coming right after Friday’s surprise U.S. jobs data rattled markets with talk of stagflation—where growth cools but inflation refuses to budge. Employers slashed 92,000 jobs in February, the Labor Department reported, bumping unemployment up to 4.4%. That’s left investors more skittish, less able to shrug off another jolt in energy prices.
Shifts in expectations are hitting central bank bets. Where traders once saw a June Fed cut as likely, they’re now eyeing September or even October instead. Some European rate markets? They’ve flipped — instead of cuts, they’re reflecting potential hikes, especially if energy prices remain elevated.
Trump poured more cold water on hopes for an early resolution, dismissing talks with Iran and calling the spike in oil prices “a very small price to pay.” Traders quickly pivoted, moving away from bets on a fast settlement and instead started factoring in the possibility of a protracted squeeze on energy supply. Reuters
Oil ended up front and center in the rout. Brent crude spiked to $119.50, while U.S. crude briefly reached $119.48—both marking highs unseen since mid-2022—then lost some ground as the Group of Seven and Saudi Arabia weighed responses to the surge. Talks focused on how to soften the impact; according to a G7 official, there was consensus to hold off on tapping emergency reserves for now.
Fuel-hungry industries and companies dependent on consumer splurging took the hardest hit. The S&P 500 airline index tumbled over 4%. Carnival slid 7.3%, while Royal Caribbean shed 6.3%. Out of all S&P sectors, only energy managed to post gains.
The mood in the market has shifted, analysts noted. “Higher oil prices are playing into fears that inflation could take off to the upside once again,” said David Morrison, senior market analyst at Trade Nation. Over at RBC, Helima Croft pointed out the uncertainty: it’s tough to tell if the war is on track for “multi-week or multi-month.” Reuters
Selling pressure didn’t stop at Wall Street. By late morning, Europe’s STOXX 600 had slumped 1.76%, and Canada’s TSX dropped 1.25%. Tokyo’s Nikkei wrapped up the session down 5.2%, with investors hitting hardest those markets and sectors sensitive to imported energy.
Stress signals didn’t let up. Brent held over $100, while the dollar climbed to levels not seen since November. Wall Street’s VIX—its fear barometer—pushed to an April high. In Europe, credit default insurance prices kept rising.
“A stagflationary shock was not part of the plan,” said Chris Turner, head of global markets at ING. Over at Goldman Sachs, analysts figure a 1 percentage point drop in growth could translate to as much as a 4% hit to S&P 500 earnings. Frederik Ducrozet of Pictet added that policymakers, still marked by the 2022 energy price surge, can’t afford to dismiss the threat of another energy-cost shock. Reuters
This time, technicals might take a back seat to the question of whether oil shipments keep moving through the Strait of Hormuz—a tight corridor that handles roughly 20% of the world’s oil and LNG. Should flows hold steady, reserves get released, and Saudi Arabia’s alternative routes pick up the slack, markets could settle down fast. But if not, expect everything from pricier gas at the pump to potential rate hikes, with airlines, cruise operators, and small-caps facing sharper losses.
