So here's the scene Tuesday: markets were basically having an identity crisis. On one side, you had oil prices shooting up because, well, the Middle East is still a mess. On the other, you had tech stocks, the usual market darlings, getting knocked down a peg. The result was a lot of indecision, with major indexes barely budging in different directions.
The main driver was crude oil. West Texas Intermediate (WTI), tracked by the United States Oil Fund (USO), jumped 4.9% to $92.42 a barrel by midday. That's a staggering 40% gain since the start of the month. Brent crude wasn't far behind, up 4.2% to $104.14.
Why the surge? The hopeful chatter about a ceasefire seems to have been just that—chatter. Iran and Israel continued exchanging strikes, and a report suggested Saudi Arabia and the UAE might be edging closer to joining the conflict. This directly contradicted a claim from former President Donald Trump on Monday about "very good and productive conversations" for a resolution, which Iranian officials promptly denied.
This renewed uncertainty sent bond yields higher, reversing some of Monday's decline. The yield on the 10-year Treasury note climbed back to 4.39%, up about 4 basis points. The 2-year yield rose to 3.91%, and the 30-year touched 4.94%. With energy prices screaming higher, traders are now pricing in a stark reality: zero Federal Reserve rate cuts in 2026. That's a complete U-turn from the Fed's own guidance just last week, which still pointed to a cut this year.
Against this backdrop, U.S. stock performance was a study in contrasts. The S&P 500 inched up a mere 0.1% to 6,590. The Dow Jones Industrial Average did a bit better, adding 0.4% to 46,402, helped by defensive names like Walmart Inc. (WMT), which gained 2.4%. The tech-heavy Nasdaq 100 dipped 0.1% to 24,172. The small-cap Russell 2000 actually outperformed its large-cap cousins, gaining 0.8% to 2,511.
Within the so-called Magnificent Seven, it was a rough day. Microsoft Corp. (MSFT) dropped 2.4%, Amazon.com Inc. (AMZN) fell 1%, and Alphabet Inc. (GOOGL) lost over 2%. The pressure came from rising real interest rates and growing questions about whether the massive capital spending on AI is sustainable in a world where energy costs are spiking.
Even the crypto market felt the chill. Bitcoin fell 1.9% to slip back below $70,000, weighed down by the same souring risk sentiment hitting tech stocks.
The economic data told a two-part story. The flash S&P Global U.S. Manufacturing PMI climbed to 52.4 in March, beating expectations. It looks like companies were stockpiling goods, likely fearing supply chain disruptions from the overseas conflict. However, the Services PMI fell to an 11-month low of 51.1, and the Composite PMI also dipped, signaling a broader softening in business activity outside the factory floor.
