📊 Weekly Market Recap
S&P 500 return Year-to-date were approximately -3.84%
S&P 500 3 month return were approximately -3.84%
S&P 500 return over the past 4 days were approximately 3.39%
This Week in the Markets – 3 Things to Know
Markets Think the War Ends Soon- We all got a jolt of happiness as the indexes just had one of their strongest weeks of the year. The markets convinced themselves early in the week that the war (and the effect on oil prices) was going to end soon. President Trump’s Wednesday night address dispelled that somewhat – though he did insist it wouldn’t drag on too long. The day after everyone seemed to digest the news and we ended up with a very good (holiday-shortened week). Despite the doom and gloom the S&P is now sitting about where it was at Thanksgiving (ie, down from recent highs, but hardly a catastrophic crash).
Oil Spike Repricing Inflation Risk– Oil prices are obviously affected by a war in one of the biggest oil-producing regions in the world. Higher oil immediately pressures margins and pushes inflation expectations higher. That’s where “warflation” starts to show up in the data, as geopolitics feeds directly into CPI-sensitive components. The bond market is already reacting, with yields becoming more sensitive to energy-driven inflation risks. For equities, this creates a split: sectors with pricing power or direct exposure to commodities benefit, while cost-sensitive industries get squeezed. It also complicates the Fed outlook, since sticky inflation reduces flexibility on rate cuts. Bottom line, oil isn’t just moving, it’s resetting the inflation and rate narrative.
The Space Trade– The IPO chatter around SpaceX is starting to ripple through the market, and it’s not happening in isolation. The recent rocket launch added real momentum to the narrative, reminding investors just how fast the space economy is advancing. That visibility is translating into flows, not just toward SpaceX speculation, but into the broader aerospace and industrial supply chain. Companies tied to launch systems, propulsion, and satellite infrastructure are seeing renewed interest as investors position ahead of a potential landmark IPO.
Crosscurrents & Catalysts- Caught Between Strength and Shock
The U.S. economy is holding up better than many expected, showing continued resilience across key areas like consumer spending, employment, and business activity. A very strong jobs number this morning blew past expectations. There’s no clear sign of a sharp slowdown, which has helped support equity markets and overall sentiment. As mentioned above, costs remain elevated in certain parts of the economy, and businesses are navigating an environment where margins aren’t as predictable as they once were. Financial markets are reflecting this balance, with strength in headline numbers but more selective movement underneath. Investors are no longer operating in a clear-cut expansion or contraction cycle, they’re navigating something in between. It’s an economy that’s stable on the surface, but increasingly sensitive to external shocks.
That external pressure is showing up clearly in the relationship between oil and equities, which this chart highlights. As oil (blue line) surged sharply through March, the S&P 500 (orange line) began to trend lower, showing a clear divergence. This inverse relationship is key, rising energy costs act as a tax on the economy, compressing margins and weighing on equity valuations. The spike in oil wasn’t gradual either; it accelerated quickly, which is why equities reacted more aggressively toward the end of the period. You can also see moments where both moved together briefly, but the dominant trend is oil up, stocks under pressure. This tells us the market is highly sensitive to input cost shocks right now.
Looking forward, the eventual resolution of the conflict could act as a major turning point for both markets and the broader economy. If tensions ease and oil stabilizes or pulls back, that pressure on equities could quickly reverse. Lower energy costs would improve margins, ease inflation concerns, and give central banks more flexibility.
S&P 500 SECTOR SNAPSHOT – Past Week
