Wall Street is opening a critical week under the weight of five consecutive losing weeks, record oil prices, and deepening uncertainty over whether a diplomatic deal can end the war in Iran before global markets sustain further damage.
Stock Futures: A Fragile Bounce
US stock futures edged higher Monday morning as Wall Street headed into a holiday-shortened trading week. Contracts linked to the S&P 500 gained 0.5%, those linked to the Dow Jones Industrial Average rose 0.5%, and Nasdaq 100 futures climbed 0.4%, after the major indexes closed last week sharply lower.
The gains are tentative at best. The S&P 500 finished last week 1.7% lower, capping its fifth straight weekly drop, the longest such streak since 2022, pushing the benchmark to its lowest level in more than seven months. The Nasdaq 100 entered correction territory, falling more than 10% from its October peak. The Dow Jones Industrial Average also slid into correction.
The S&P 500’s worst single-day loss since the war began came Thursday, when it dropped 1.74% to close at its lowest level since September, with eight of eleven sectors finishing in the red. The Nasdaq 100 slid 2.4%, led lower by megacap names including Nvidia and Meta Platforms.
Oil Prices: The Central Driver
Crude oil is the single most important variable shaping every other asset class right now.
Oil prices climbed Monday after President Trump told the Financial Times that his preference would be for the United States to control Iran’s oil industry “indefinitely.” Brent crude rose 2% to $107 a barrel, and West Texas Intermediate followed.
Last week’s numbers were even sharper. Brent crude futures jumped 5.66% to settle at $108.01 per barrel on Thursday, while West Texas Intermediate climbed 4.61% to $94.48. By Friday, Brent crude rose another 4.22% to settle at $112.57 per barrel, its highest level since the war began.
The supply picture explains the pressure. The International Energy Agency has characterized the 2026 Iran war, including the closure of the Strait of Hormuz, as producing the “largest supply disruption in the history of the global oil market.”
The Houthi factor is now adding a second chokepoint to the crisis. With the Strait of Hormuz effectively closed by Iranian forces, Saudi Arabia’s East-West Pipeline has become the most critical alternative route for crude supplies. To exit the Red Sea, oil tankers must pass through the Bab el-Mandeb Strait, within striking distance of Houthi militants in Yemen. Insurance costs for Red Sea routes are climbing, and shipowners are already pulling back. If the Bab el-Mandeb were also disrupted, the global market could lose another 7 million barrels per day of supply capacity.
Aluminum: A Surprise Front in the Energy War
Iran’s strikes over the weekend opened a new front in the commodity markets. Iran’s strikes on aluminum plants in the United Arab Emirates and Bahrain over the weekend pushed aluminum prices higher Monday, as the industry braced for supply constraints. The Middle East supplies around 9% of the world’s aluminum, which is used in automobiles, construction, and packaging. Two of the region’s top suppliers reported damage to their facilities. Aluminum futures jumped over 4% to trade at $3,341. Since the war began, aluminum prices have reached their highest levels since 2022, as the Strait of Hormuz closure has restricted exports to the United States and Europe.
Gold: The Safe Haven That Is Not Acting Like One
Gold’s behavior during this war has been one of the most debated stories in markets.
Gold hit an all-time high of $5,602 per troy ounce at the end of January and appeared to be heading higher still in early March, but has since dropped nearly 25% to a low of $4,100, trading around $4,500 at the time of writing. While the Iran war has raised longer-term concerns over energy security and global stability, the immediate fallout, in the form of surging oil prices and renewed inflation fears, has forced investors to prioritize liquidity and higher-yielding assets over metals.
Gold is now almost 15% lower since the war began, putting it on track for the worst gold price crash since 2013. Bloomberg noted that “gold’s safe-haven status is failing its biggest test,” while the Financial Times reported that “tumbling gold price puts ‘haven’ status in doubt.”
Newsweek offered the clearest explanation for why. The Iran war has sent oil prices higher and revived fears that inflation will last longer than expected. When inflation looks stubborn, central banks are more likely to keep interest rates higher for longer. Higher interest rates make Treasury bonds and cash more appealing compared with a metal that pays no income. In reality, gold often tracks real yields more closely than inflation headlines alone, and if markets believe inflation will force central banks to stay tough on rates, real yields can rise and push gold prices down.
Jim Wyckoff, senior analyst at Kitco Metals, told Reuters that “if the conflict continues, prices could dip below $4,000, while a ceasefire and renewed rate-cut hopes could lift them back toward $5,000.” J.P. Morgan and Deutsche Bank, however, remain bullish on a longer horizon. J.P. Morgan predicts prices will reach $6,300 per ounce by year-end 2026, while Deutsche Bank is maintaining a $6,000 target.
Inflation and the Labor Market
The war’s economic consequences extend well beyond commodity markets.
The Organization for Economic Cooperation and Development forecast all-items inflation in the United States to reach 4.2% for 2026, a sharp increase from its prior projection of 2.8% and well above the Federal Reserve’s own estimate of 2.7%.
Treasury yields have climbed throughout the war as investors adjust their expectations for inflation and fewer interest rate cuts. The 10-year Treasury yield hit 4.48%, its highest level since July, and the 30-year yield briefly touched 5%, a key psychological threshold.
Goldman Sachs raised its recession probability to 30% over the next 12 months, driven by the surge in oil prices. The bank expects the unemployment rate to rise to 4.6% by year-end, up from 4.4% in February, as hiring slows.
The March jobs report will be released Friday, though markets will be closed for the Good Friday holiday. Wall Street is expecting payrolls to rebound to a gain of 45,000 after a surprise loss of 92,000 in February. Also due this week are the Job Openings and Labor Turnover Survey on Tuesday, the ADP private payrolls report on Wednesday, and the ISM manufacturing index.
Federal Reserve Chair Jerome Powell is scheduled to participate in a moderated discussion Monday at Harvard University. He will not be giving a formal policy speech, but investors will be watching closely for any signals on the Fed’s next move.
The Diplomatic Track
Trump extended his deadline for Iran to agree to a peace deal through April 6, and on Monday threatened to “obliterate” Iran’s key energy and desalination infrastructure if no agreement is reached. Trump told reporters aboard Air Force One that Iran has agreed to “most of” the 15-point U.S. list of demands to end the war. Iran’s foreign ministry rejected that characterization, calling the proposal “unrealistic” and saying there had been no direct negotiations between the two countries.
Fortune reported that analysts assign only a 25% probability that the conflict ends by the end of May 2026, a 45% probability it is settled in the fall of 2026, and a 35% probability it extends into 2027.
For markets, the math is straightforward: every day the Strait of Hormuz remains closed, oil prices climb, inflation expectations rise, rate-cut hopes shrink, and equity valuations face further pressure. This week’s jobs data and Powell’s remarks will offer Wall Street the next signal about how much further the damage could run.