War Escalation Worries Lift Oil, Send Stocks Lower

Published as of: March 26, 2026, 9:25 a.m. ET

(Thursday market open) Stocks surrendered most of yesterday's gains thanks to a 4% rally in oil, rising Treasury yields, and little sign of progress in the Middle East. More threats and additional U.S. troops heading into the region overshadowed hopes for peace that lifted stocks Wednesday. President Trump's five-day extension of an escalation deadline approaches this weekend, and Iran refused to directly negotiate but is reviewing a U.S. proposal.

Today is light on data beyond an as-expected weekly initial jobless claims figure of 210,000. Tomorrow features final March University of Michigan's Consumer Sentiment after a tepid preliminary reading, and the report's inflation outlook could be key. In data yesterday, U.S. import prices rose 1.3% month over month in February, the government said, the largest increase since March 2022. "A much longer Strait of Hormuz shutdown and sustained higher oil prices could represent significant demand destruction," said Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research (SCFR).

On Wednesday, major indexes rose for the second time in three sessions on hopes for peace negotiations in a conflict that's raised costs for U.S. consumers and businesses. Gas prices approached $4 per gallon on average, AAA reported, and diesel fuel prices neared $5.40. That's devastating for trucking firms and for farmers getting ready to plant amid rising fertilizer costs. The U.S. Postal Service announced Wednesday it's adding an 8% fuel surcharge to packages. However, airline executives appear to be looking through the crisis, as United Airlines (UAL) announced it expects to take delivery of more than 250 new aircraft by April 2028. 

1. Musical Fed chairs: With roughly six weeks until Federal Reserve Chairman Jerome Powell's term ends, there's still no hearing scheduled by the Senate Banking Committee on his replacement. President Trump's nomination of Kevin Warsh has been held up amid the administration's criminal investigation of Powell. At last week's Fed meeting news conference, Powell said he would stay on as chair if Warsh isn't confirmed in time and at the Fed at least until the criminal investigation is resolved. He hasn't decided whether he will stay as a regular governor until his term ends in 2028. Doing so would block Trump from nominating a new Fed governor, though the chair traditionally departs when their time as chair ends. "The drama over Warsh's confirmation will pick up in intensity in April, after this upcoming two-week congressional recess," said Michael Townsend, managing director of legislative and regulatory affairs at Schwab. The Fed next meets in late April.
    
2. Speeches, Supreme Court case keep Fed center stage: Though earnings and data are sparse today, there's plenty of Fed action with four major speeches. Governors Lisa Cook, Stephen Miran, and Michael Barr deliver remarks this afternoon and evening, and Vice Chair Philip Jefferson delivers a speech on the "Economic Outlook and Energy Prices" at 7 p.m. that sounds like it might have market implications. Speaking of Cook, that's another question outstanding for the market after Trump tried to fire her last year for alleged financial improprieties that were never proven. The Supreme Court heard arguments on that case earlier this year. A ruling in favor of the administration might raise new concerns about Fed independence, possibly hurting the Treasury market. Treasuries move the opposite way of yields. A ruling could occur any day.
    
3. Crude seen down later in year: Though oil prices continue falling whenever there's hopes for a ceasefire, crude production and shipments can't turn on a dime, especially after war-related damage to Gulf infrastructure. That means it's unclear if oil prices can quickly roll back even if the conflict fades. Futures trading for both Brent and U.S. oil futures show market participants seeing prices down by year-end, but only to $80 and $70, respectively, about $10 more than they traded at before the conflict. To put things in context, $70 to $80 is historically near average, inflation adjusted, and crude traded above $100 often back in the 2011-2014 period without plunging the world into recession. However, many European economies struggled at the time and so did China, while U.S. growth was anemic many of those years despite interest rates near zero. It was the era when some central banks lowered rates into negative territory trying to stimulate activity, and while high oil prices weren't the only pressure point, it's possible they contributed to the tepid growth back then.

Bitcoin and the Iran war: The war in Iran might provide a real-time test of bitcoin's true nature. Is it a risk asset, trading like a tech stock, waiting for the all-clear before staging a recovery from the steep decline that preceded the war? Or is it a store of value, a hedge against monetary expansion, likely to soar if a prolonged war triggers aggressive printing of fiat currencies by central banks, something that wars often do, even in the face of inflation. Could it be both? As always, there's been plenty of debate lately. The bottom line: We'll have to wait for the market itself to reveal any answer, definitive or not. For now, price action and other metrics show bitcoin in a holding pattern while nervous investors take a wait-and-see approach to possible U.S.-Iran talks. Market conditions and sentiment have improved in recent weeks but investors remain far from bullish. The coin rallied to $76,000 last week, although data showed that could easily have been short covering. The Crypto Fear & Greed Index rose to 11 on Wednesday, but that still signals extreme fear. While money is still flowing into spot exchange-traded funds (ETF), the seven-day average of those inflows is at the lowest level in a month—and barely in positive territory. Overall spot trading volume, trending lower since March 6, has hit the lowest level since mid-February. All of which points to tepid demand among mainstream investors, and cautious, defensive positioning at this uncertain time.

• Energy stocks were among the only significant overnight gainers Thursday. ConocoPhillips (COP) and Chevron (CVX) each rose nearly 1%, while Valero Energy (VLO) and ExxonMobil (XOM) also climbed. Brent crude, the global standard price, topped $100 per barrel again this morning.
   
• Market breadth, measured by the percentage of S&P 500 stocks trading above their respective 50-day moving averages, remains in the doldrums at 28.5%, though up from 17% at its lows last week. Stepping back, it's a more positive story as nearly 50% of S&P 500 stocks now top their 200-day moving averages. 
   
• Shares of memory chip stocks including Micron (MU) and SanDisk (SNDK), fell sharply early after Alphabet's Google introduced an AI model that it said could reduce the amount of memory needed to run large language models, CNBC reported.
   
• Qualcomm (QCOM) dropped nearly 2% in trading ahead of the open following a downgrade from Bernstein to market perform from outperform. Higher memory prices could have a "deleterious effect" on overall smartphone shipments, the analyst wrote.
   
• Shares of Meta Platforms (META) and Alphabet (GOOGL) both slipped 1% early after a Los Angeles jury found Alphabet's Google unit and Meta liable in a landmark social media addiction lawsuit whose outcome could influence thousands of similar cases against the tech companies, Reuters reported.
   
• Gold (/GC) dropped 2% and silver (/SI) fell 6% early today as traders warily eyed lack of progress ending the war.  Mining firm stocks including Freeport-McMoRan (FCX), Hecla (HL), and Newmont (NEM) were among the worst performing stocks heading into the open. Gold and silver are down double-digits since the fighting began, hurt by ideas that central banks might start raising interest rates amid oil-fueled inflation.
   
• The 10-year Treasury note yield surged five basis points early today to almost 4.4%, near recent highs, amid inflation worries caused by the war. Higher yields are one of many headwinds blowing against stocks this morning.

War and markets, the latest: Check Schwab's WashingtonWise podcast for updates on how the war is affecting markets and what legislators are addressing in Washington. The new broadcast also included thoughts on how investors can protect their portfolios during times of uncertainty.

Dividend stocks with breakout potential: Watch Schwab's trading tools video to learn how to use the thinkorswim^® platform to scan for value.

Custodial accounts help save for college: Schwab's new education article covered custodial accounts. They don't offer the tax breaks of 529 plans, but can be used for college expenses not covered by an Education Savings Account (ESA) or a 529 plan.

Teach your children: The digital world can be one way to help people acquaint their kids with traditional money skills. Learn more in our new financial planning article.

As with most markets, the near-term price action for bitcoin futures (/BTC—candlesticks) is likely to depend on the Iran war. Bitcoin has held up relatively well since the war started, forming a rising price channel and testing its 50-day moving average (red line). But if it manages to break past the short-term high of $76,000, it will likely face strong resistance around $83,000, the average cost basis for spot bitcoin exchange-traded funds (ETF), as short-term holders use the bounce to exit.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

March 27: Fourth quarter GDP—third estimate and University of Michigan final March Consumer Sentiment.
March 30: No major earnings or data expected.
March 31: March Consumer Confidence and expected earnings from McCormick (MKC) and Nike (NKE).
April 1: March ISM Manufacturing PMI^®, March ADP employment, February construction spendings, and expected earnings from Conagra (CAG).
April 2: February factory orders.