New York, March 4, 2026, 17:00 EST
- Nasdaq rose 1.29% as investors returned to tech shares; S&P 500 gained 0.78%
- Markets weighed Middle East war risks against still-firm U.S. economic data
- Fed officials struck different tones on how oil-driven inflation risks affect rate-cut plans
U.S. stocks closed higher on Wednesday after a report Iran had signaled openness to talks and the White House outlined steps aimed at limiting oil-market disruption, easing a bout of inflation anxiety that had hit markets a day earlier. The Nasdaq Composite climbed 1.29%, while the S&P 500 added 0.78% and the Dow rose 0.49%, according to preliminary data. “That combination is giving the market some optimism,” said Jim Awad at Clearstead Advisors, while Richard Bernstein at Richard Bernstein Advisors warned a longer conflict “could mean more volatility.” 1
The rebound matters because investors are trying to work out whether war-driven moves in energy prices will force the Federal Reserve to stay restrictive for longer, even as parts of the economy show signs of cooling. In bond markets, traders have pushed out expectations for rate cuts as higher oil and gas prices revived inflation fears, and strategist Will Compernolle at FHN Financial said, “The market is really struggling to find its footing.” 2
Fresh data added to the cross-currents. A services PMI — a monthly survey of business activity — jumped to 56.1 in February, its highest since mid-2022, while ADP said private payrolls rose by 63,000; the Labor Department’s jobs report is due Friday. “The U.S. economy is off to a decent start,” said BMO’s Sal Guatieri, though Brean Capital’s John Ryding argued, “There is no justification for a rate cut here.” 3
Tuesday had looked different. Wall Street slipped as the Middle East conflict widened and energy prices climbed, with the Dow down about 0.8%, the S&P 500 off 0.9% and the Nasdaq down 1%, Reuters reported. “Investors might be underestimating the geopolitical risk,” said Andrew Slimmon at Morgan Stanley Investment Management, while Matt Dmytryszyn at Composition Wealth said “it’s hard to have strong convictions” with the path of events unclear. 4
Fed officials, meanwhile, have started to sketch out how they might treat an oil shock. Governor Stephen Miran said higher oil “will feed into headline inflation,” but that the evidence it lifts core inflation — which strips out food and energy — “is quite limited,” and he still favors further cuts this year. Cleveland Fed President Beth Hammack struck a more cautious note, saying, “We’re in a good spot from a policy perspective,” and suggesting rates could stay on hold for some time. 5
In equities, the day’s action showed a familiar pattern: investors leaned back into growth and tech after last month’s selloff left parts of the sector looking cheaper than weeks ago, while energy shares lagged as crude steadied after sharp gains.
Oil remains the big variable for traders. Any renewed spike would test the belief that supply disruptions can be contained, and would land straight in inflation expectations and rate forecasts.
Beyond the U.S., risk appetite also improved, with European stocks higher and cryptocurrencies rallying as oil paused after a volatile run, a broader backdrop that helped stabilize sentiment into the U.S. close. 6
But the downside case is still plain: a drawn-out fight that hits regional energy infrastructure could keep fuel costs high, squeeze consumers and complicate the Fed’s path, turning this week’s sharp swings into something more persistent.
