S&P 500 Posts Third Straight Weekly Loss on Iran Oil Shock
The index fell 1.6% this week to 6,632, now 5% below its recent high. Oil above $100 and stagflation fears are driving the selloff.
Wall Street just posted its worst three-week stretch in nearly a year.
The S&P 500 fell 1.6% this week to close Friday at 6,632, extending its decline to three consecutive weeks. The index now sits 5% below its February high—not quite correction territory, but close enough to make traders nervous. The Nasdaq dropped 2.1% weekly to 22,105. The Dow lost 1.2% to finish at 46,558.
This is the first three-week losing streak since March 2025. And unlike that episode, which was driven by growth concerns, this selloff has a clear cause: $100 oil.
The Stagflation Trade
The Iran war has revived a word traders hoped they'd never hear again: stagflation.
Brent crude closed above $100 for the second straight day Friday. The Strait of Hormuz remains effectively blockaded, with ship transits down 96% from normal levels. The IEA's record 400 million barrel reserve release hasn't meaningfully moved prices.
High oil means higher inflation. Higher inflation means the Fed can't cut rates. And the Fed holding rates high—or worse, hiking—would pressure growth exactly when the economy faces an energy tax on consumers and businesses alike.
That's stagflation: rising prices alongside slowing growth. It's the worst macro backdrop for equities.
Sector Performance
The week's performance shows classic risk-off rotation:
| Sector | Weekly Change |
|---|---|
| Energy | +3.8% |
| Utilities | +0.4% |
| Consumer Staples | +0.2% |
| Healthcare | -0.5% |
| Financials | -1.2% |
| Industrials | -1.4% |
| Technology | -2.3% |
| Consumer Discretionary | -2.8% |
Energy is the only sector with meaningful gains, for obvious reasons. Defensive sectors—utilities, staples—held flat. Everything else sold off, with consumer discretionary and tech leading declines.
The equal-weighted S&P 500 outperformed the cap-weighted version by 0.8 percentage points this week. That gap signals money rotating out of mega-caps and into smaller names. It's a breadth improvement, but driven by large-cap weakness rather than small-cap strength.
The Week Ahead
Monday brings NVIDIA's GTC conference keynote, the AI industry's marquee event. Tuesday and Wednesday the Fed meets, with an interest rate decision and updated projections landing Wednesday afternoon.
The Fed meeting is the critical event. Markets are pricing no change to rates, but the updated dot plot and economic projections will show how officials view the oil shock. If the Fed signals it's worried about inflation more than growth, expect risk assets to sell off further.
Traders have already repriced rate expectations dramatically. Three weeks ago, fed funds futures showed multiple 2026 cuts. Now they show one cut at most, potentially none. Some traders are even pricing a small chance of a hike.
Technical Levels
The S&P 500's 200-day moving average sits at 6,480. That's the level bulls need to hold. A break below would trigger systematic selling from trend-following strategies and likely accelerate the decline toward 6,200—the October 2025 swing low.
On the upside, 6,800 is the first resistance, roughly where the index traded before the conflict began. Reclaiming that level would require either de-escalation in the Middle East or a Fed signal that it won't tighten despite the oil spike.
Neither seems imminent. The market volatility we've seen over the past three weeks isn't going away soon.