NEW YORK, March 20, 2026, 4:32 PM EDT
Stocks on Wall Street tumbled Friday, with bond yields climbing on both sides of the Atlantic as traders grew skeptical that the U.S.-Israeli conflict with Iran would wrap up anytime soon—fueling persistent oil and inflation worries. The S&P 500 slid 1.49%, the Nasdaq lost 1.98%, and the Dow shed 0.92%. That marked a fourth consecutive weekly decline for all three major indexes.
This week’s pivot is notable: investors had been betting on Fed rate cuts for 2026. Now, by Friday, futures were showing roughly a 75% probability of at least one rate hike by September—a swift turnaround. That shift hits mortgages, business financing, and stock prices head-on.
Oil was the focus. Brent closed at $112.19 per barrel, a level not seen since July 2022. U.S. crude ended the session at $98.32 after Iraq declared force majeure on foreign-run fields, and shipping through the Strait of Hormuz—responsible for roughly a fifth of global oil and LNG—remained tangled. “A quick reversal in prices looks unlikely, with the damage to production already done,” said Ole Hansen at Saxo Bank. Reuters
Markets found scant reassurance after the latest updates from diplomats and the Pentagon. France’s foreign minister, Jean-Noel Barrot, called a near-term solution elusive, saying there was no “obvious short-term way out.” Reuters added that the U.S. was dispatching more Marines and sailors to the region earlier than planned. Reuters
Losses weren’t confined to heavyweight tech stocks. The Russell 2000 dropped 2.7%, falling into correction territory—Wall Street’s term for a decline exceeding 10% off its recent peak.
Big tech dragged on the market—shares of Nvidia, Microsoft, and Alphabet all declined. Energy names moved higher, with the S&P 500 energy sector jumping 3.5% for the week as crude prices spiked.
Bonds mirrored the trend. The U.S. 10-year Treasury yield climbed to 4.386%. Over in Britain, the 10-year government bond yield topped 5%—levels not seen since the financial crisis. Germany’s 10-year yield? Highest since 2011, as traders pivoted to discussing hikes instead of cuts.
The STOXX 600 dropped 1.8% across Europe, wrapping up a 3.8% weekly slide—marking its third week in a row in the red. Franziska Palmas, senior Europe economist at Capital Economics, flagged the possibility that European Central Bank policymakers could start hiking rates as early as April.
The FTSE 100 tumbled 1.4%, erasing all its year-to-date progress and leaving Britain looking particularly vulnerable. Traders now see close to a 70% likelihood the Bank of England will hike rates by April. Analysts point to a deeper gilt rout than what’s been seen in the U.S. or Germany, chalking it up to the UK’s dependence on natural gas.
“Expectations for a rate cut are fading fast,” said Robert Pavlik at Dakota Wealth Management. Over at ING, Padhraic Garvey noted that with the war stretching into its fourth week, the stress “is not going away anytime soon.” Reuters
There’s concern that markets may have overreached in their recent moves. Chris Fasciano at Commonwealth Financial Network called the pullback “fairly orderly” up to now. UBS Global Wealth Management noted that a less severe scenario in Hormuz remains on the table, though the chances have shrunk considerably. Reuters
Right now, crude prices are front and center for traders. Eric Kuby at North Star Investment Management calls oil the sharpest real-time read on how the market is factoring in the conflict. Next week’s U.S. data, he says, could easily take a back seat if there’s any hint that Gulf energy shipments are resuming.
