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The S&P 500 closed Friday at 6,506, completing its fourth consecutive losing week and settling below its 200-day moving average for the first time since May. The Dow hit its 2026 low. The Russell 2000 fell 2.26%. Dip buyers, who showed up reliably for every selloff earlier this year, have not come back since the war started.
Friday’s session had a quality that veteran traders have learned to dread. The Wall Street Journal reported that US warplanes and helicopters were beginning an effort to reopen the Strait of Hormuz, which should have been bullish for equities. Oil did fall on the headline. Stocks fell anyway. When a market can’t rally on good news, the problem isn’t the news. It’s the market.
At the close, the damage was spread evenly. S&P 500 down 1.51% to 6,506.48, per Yahoo Finance. Nasdaq Composite down 2.01% to 21,647.61. Dow off 443.96 points, or 0.96%, finishing at 45,577.47, its lowest close of the year. Russell 2000 down 2.26% to 2,438.45. VIX up 11.31% to 26.78. Not panic territory, but comfortably above the long-run average of 20, and it’s stayed there for three weeks running.
The 200-Day Line Broke. That Changes the Conversation.
For technical traders, the most important development of the week wasn’t Friday’s selloff. It was Thursday’s close. The S&P 500 settled below its 200-day moving average of 6,619 for the first time since May 2025, per Schwab’s market update. That level had held through the Ras Laffan strikes, through the first two weeks of war, through the initial oil spike. Thursday, it broke.
A 200-day moving average isn’t a magic line. But it’s the most widely watched technical indicator in equity markets, and when the S&P breaks below it, the character of the market changes. Institutional trend-following models that use the 200-day as a regime signal flip from “buy the dip” to “sell the rally.” That mechanical shift in positioning is part of why dip buying, which showed up reliably for every selloff in early March, has vanished.
Schwab’s Nathan Peterson, director of derivatives research and strategy, put it plainly: “The candlesticks on the charts have been shifting from dip buying eagerness in early March to closing at or near the lows.” That doesn’t make headlines, but it tells you where institutional sentiment sits right now.
Four Weeks Down. The Worst Stretch Since the Tariff Shock.
Four consecutive losing weeks makes this the worst stretch for the S&P 500 since April 2025, when the Trump administration’s trade tariffs rattled global supply chains. That comparison matters because the tariff selloff was driven by policy uncertainty that eventually resolved. This one is driven by a war that is actively escalating.
Iran hit Fujairah port in the UAE with drones over the weekend, halting oil loadings at a facility that was specifically designed to bypass the Strait of Hormuz. Meanwhile, US forces bombed 90 military targets on Kharg Island, Iran’s primary oil export terminal, while leaving the oil infrastructure intact as a threat. USS Boxer with thousands of Marines departed California for the Gulf. Trump told reporters the strait would “open itself” while his Treasury secretary was lifting sanctions on Iranian oil to keep global supply from collapsing entirely. None of this suggests a resolution is close.
Four central banks froze rates this week, and not one offered any signal that easing was on the table. Fed held at 3.50 to 3.75%. Bank of England voted 9-0 to hold. ECB raised its inflation forecast. BOJ cited the war directly in its decision. CME FedWatch now shows a 52% probability of a rate hike by October. Macquarie went further, calling in a note this week that the Fed’s next move will be a hike, though the firm pushed the timing out to first half 2027.
The Tape Is a Two-Track Market
Underneath the headline indexes, the market has fractured in a way that makes the S&P 500 a misleading summary of what is actually happening in US equities. Energy stocks are having a spectacular year. Liberty Energy is up over 70% in 2026 and has more than tripled from last April’s tariff-shock low, per Yahoo Finance. Solaris Energy Infrastructure has more than quadrupled from the same point. Exxon Mobil, Chevron, and ConocoPhillips have all outperformed dramatically.
Everything else is struggling. iShares Expanded Tech-Software Sector ETF remains more than 29% below its recent high and has dropped over 21% year to date, per CNBC. Consumer Discretionary stocks are sliding as gas prices eat into household spending. The equal-weight S&P 500, which strips out the distortion of mega-cap concentration, has been telling a different story from the cap-weighted index all year. In February, the equal-weight version gained 3.5% while the cap-weighted index fell 0.8%. That gap has widened since the war began, because energy carries more influence in the equal-weight measure while the Mag 7 tech names carry less.
This matters for portfolio construction. If you own an S&P 500 index fund, your performance is dominated by seven companies that are all sensitive to rate expectations and none of which benefit from higher oil prices. If the war continues and rates stay elevated, the index is fighting two headwinds simultaneously while the stocks underneath it move in opposite directions.
The Macro Setup for Next Week Is Loaded
Atlanta Fed’s GDPNow tracker was revised down to 2.3% from 2.7% on Thursday, reflecting the early drag from energy costs on consumer activity. A Bloomberg survey of analysts still has full-year 2026 GDP growth at 2.5%, but that estimate predates the latest round of oil escalation. Q1 GDP will only capture one month of war, which means the real damage won’t show up in hard data until Q2.
Next week’s calendar is frontloaded with data that could move the tape. Flash PMI numbers arrive Monday, March 24, and they represent the first real-time read on how the war is affecting business activity across manufacturing and services. If the services PMI contracts or even decelerates sharply, the stagflation narrative that has been building since mid-March will harden into consensus. Final Q4 GDP lands Friday alongside the University of Michigan consumer sentiment reading, which already dipped to 55.5 in the preliminary March print.
On the earnings side, GameStop and KB Home report Monday. Durable goods orders arrive Wednesday alongside results from Cintas, Paychex, and Chewy. None of these are market-moving names individually, but collectively they offer a window into consumer health, housing demand, and business spending in the early weeks of an oil shock.
Friday’s session ended with a quality that should concern anyone holding long equity exposure into the weekend. Stocks couldn’t rally on a Hormuz reopening headline. Dip buyers haven’t shown up in two weeks. The S&P is below its 200-day for the first time in ten months. And the VIX is elevated but not panicking, which historically means the market hasn’t found its washout low yet. Next leg depends entirely on whether the war escalates or de-escalates. Monday’s flash PMI will tell you whether the economy has started feeling what the tape already knows.
For a complete timeline of how the Iran war reshaped global markets, see our reference page.
