New York, March 4, 2026, 17:00 EST
- Nasdaq climbed 1.29% with tech stocks back in focus, while the S&P 500 picked up 0.78%.
- Traders balanced ongoing Middle East war concerns with persistent strength in U.S. economic figures.
- Fed officials offered diverging takes on what oil-fueled inflation means for their rate-cut outlooks.
Stocks bounced back Wednesday, lifted after Iran indicated it might be open to talks and the White House detailed measures to cushion the oil market—relieving inflation worries that rattled investors just a day before. The Nasdaq Composite jumped 1.29%, with the S&P 500 up 0.78% and the Dow gaining 0.49%, preliminary figures show. “That combination is giving the market some optimism,” said Jim Awad of Clearstead Advisors. Still, Richard Bernstein at Richard Bernstein Advisors noted a protracted conflict “could mean more volatility.” Reuters
The rebound is significant as investors weigh whether war-fueled energy price swings could keep the Federal Reserve in a restrictive stance longer than expected, even while some economic indicators soften. Bond traders have delayed their bets on rate cuts, with surging oil and gas stoking renewed inflation worries. “The market is really struggling to find its footing,” said Will Compernolle, strategist at FHN Financial. Reuters
More numbers stirred the mix. The services PMI shot up to 56.1 in February—that’s the strongest reading since mid-2022. ADP clocked private payroll gains of 63,000. Traders now wait for the Labor Department’s jobs data due Friday. “The U.S. economy is off to a decent start,” said Sal Guatieri at BMO. John Ryding from Brean Capital pushed back: “There is no justification for a rate cut here.” Reuters
Tuesday told a different story. Wall Street retreated as tensions in the Middle East grew, sending energy prices higher. The Dow slipped roughly 0.8%, S&P 500 fell 0.9%, and the Nasdaq lost 1%, according to Reuters. “Investors might be underestimating the geopolitical risk,” said Andrew Slimmon of Morgan Stanley Investment Management. Over at Composition Wealth, Matt Dmytryszyn added, “it’s hard to have strong convictions” with so much uncertainty over what comes next. Reuters
Fed officials are beginning to outline their approach to a possible oil shock. Governor Stephen Miran acknowledged higher oil “will feed into headline inflation,” but argued the impact on core inflation—excluding food and energy—“is quite limited.” Miran remains in favor of more cuts this year. Cleveland Fed President Beth Hammack took a more cautious stance, saying, “We’re in a good spot from a policy perspective,” and signaling rates might remain steady for now. Reuters
Equities moved in a now-familiar way: investors snapped up growth and tech stocks, taking advantage of valuations lower than just a few weeks back after last month’s selloff. Energy names, by contrast, trailed as crude prices held steady following a stretch of sharp climbs.
For traders, oil is still the wild card. A fresh jump could challenge assumptions about controlling supply shocks, feeding directly into inflation outlooks and rate bets.
Risk appetite ticked up outside the U.S. as well. European shares gained, cryptocurrencies pushed higher, and oil took a breather following its turbulent stretch—a backdrop that steadied nerves heading into the U.S. close.
The risk remains clear: a prolonged conflict threatening regional energy assets may keep fuel prices elevated, putting pressure on consumers and making the Fed’s job harder. That could turn this week’s volatile moves into a longer trend.
