The market endured a difficult week as a sharp surge in oil prices and escalating tensions between the U.S. and Iran weighed heavily on investor sentiment. The S&P 500 declined 2.0% for the week, while the Nasdaq Composite fell 1.2% and the DJIA dropped 3.0%. Losses were even steeper across smaller companies, with the Russell 2000 falling 4.1% and the S&P Mid Cap 400 losing 4.6%, underscoring a clear risk-off tone across the market.
Conflict between the U.S. and Iran intensified following strikes targeting senior Iranian leadership, triggering retaliatory attacks across the region and raising concerns about the security of global oil supply routes. Tanker traffic through the Strait of Hormuz slowed dramatically causing investors attempted to gauge the potential economic consequences. Crude oil prices ultimately surged $23.80 per barrel, or 35.5%, to $90.86, fueling fears that higher energy costs could ripple through the economy and ultimately inflation.
While the energy sector managed to finish the week higher (+1.0%), most other sectors struggled as investors assessed the implications of the conflict. Materials (-7.2%), health care (-4.6%), industrials (-4.1%), and consumer staples (-4.9%) were among the hardest hit groups, while utilities (-2.1%) and real estate (-2.3%) also retreated. Financials (-1.8%) and consumer discretionary (-1.4%) posted more moderate declines but still faced pressure amid the broader risk-off environment.
Technology-related areas held up comparatively well, helping to limit losses in the major indices. The information technology sector slipped just 0.4% for the week, while the Vanguard Mega Cap Growth ETF also declined only 0.4%. Strength across software names was a notable theme, with the iShares Expanded Tech-Software ETF jumping 7.9% amid continued buying interest in select enterprise software companies. Semiconductor stocks, however, faced significant pressure, with the PHLX Semiconductor ETF falling 7.2% as investors reduced exposure to cyclical growth areas during the week’s volatility.