Weekly Market Review

Closing Recap

The North American trading session on Friday evolved into a steady shift toward caution, capping a difficult February for growth stocks. The Nasdaq logged its worst month since March 2025 (-3.38%), and the S&P 500 closed the month lower as investors digested a substantially hotter-than-expected Producer Price Index (PPI). However, the entire macro landscape was upended after the market close on Saturday, when news broke that the US and Israel launched a broad, multi-day strike wave inside Iran targeting missile infrastructure. This massive geopolitical escalation guarantees a highly volatile open on Sunday night, shifting the market’s focus from inflation persistence and credit concerns to outright capital preservation and risk management.

Key Takeaways (The Week in 60 Seconds)

• Geopolitical Shock: The US and Israel initiated a large-scale strike campaign in Iran on Saturday. This is framed as a multi-day operation, ensuring an intensely volatile, risk-off start to the next week.Oil markets are bracing for a “risk-on” open, with WTI already up nearly 3% on Friday to settle above $67.
• Hot Inflation: January Core PPI surged 0.8% MoM and 3.6% YoY (highest since July 2025), severely complicating the Federal Reserve’s rate cut timeline.
• Indices Diverge: The Dow finished February modestly higher (+0.17%), while the Nasdaq plunged -3.38%.
• Stocks Slide as Growth Trade Falters: U.S. markets posted a losing week to close out February. The Nasdaq led declines (-3.3% for the month) as investors reassessed valuations amid sticky inflation. The S&P 500 finished the month down 0.87%, snapping a winning streak, while the Dow showed resilience with a modest monthly gain.
• Historic Breadth Warning: The Equal-Weight S&P 500 is outperforming the cap-weighted S&P 500 by 5.76 points YTD – the widest margin in 36 years. The last time this occurred was at the 2000 market peak.
• Flight to Safety (Bonds): Despite hot inflation data, Treasury yields plummeted. The 10-year dropped below 4% (3.961%), and the 2-year yield hit a 52-week low (3.377%).
• Oil Spikes: WTI Crude surged 2.78% to $67.02 on Friday as traders sniffed out Middle East escalation.
• Yen Weakness Persists: USD/JPY hovers near 156.00, ignoring potential intervention threats. The market awaits the outcome of the Shunto spring wage negotiations to see if the BoJ can justify further hikes.
• Silver Comex Exodus: Silver open interest on the Comex collapsed from 161k to 117k contracts in a month, as hedgers flee to OTC markets due to high margins and HFT manipulation fears.
• Crypto Winter Extends: Bitcoin fell below $64,000, cementing its fifth consecutive red month (-17% in Feb).Institutional outflows and a “risk-off” macro environment have dampened the asset class, despite a brief bounce on Friday.
• Election Year Stat: Going back to 1926, the S&P 500 averages an 18.2% drawdown in the 12 months before midterm elections.
• Mega Data Week: The week ahead is packed with US Nonfarm Payrolls (NFP), ISM PMIs, the UK Spring Statement, and an OPEC meeting.

Looking Ahead

Markets are entering a “True Risk-On/Risk-Off Geopolitical Week.” The Saturday strike in Iran is not a single headline event; it is a structured, multi-day campaign that will produce rolling repricing. Traders must prepare for two paths. Path A (Sustained Risk-Off): Oil maintains a heavy premium, Gold catches a massive bid, volatility structurally expands, and liquidity dominates. Path B (Fast Reversal): If the campaign is contained and Iranian retaliation is impaired, the exaggerated defensive positioning could rapidly unwind.

Weekly Market Narrative: The “No Landing” Scenario bites Back

Before the weekend strikes, the market narrative was already deteriorating. Sellers took control on Friday due to a toxic mix of inflation persistence (hot PPI) and emerging credit concerns (leveraged loans are down 2% from January highs – a historical precursor to stock corrections). February ended with a thud as the “Goldilocks” narrative of cooling inflation and steady growth faced a rigorous stress test. The week began with stability but devolved into a steady shift toward caution. The culprit was a one-two punch of hotter-than-expected PPI data and growing signs of stress beneath the surface of financial markets (leveraged loans down 2%).

Index	Last Closing Level	Daily Change	Daily Change %	Monthly Trend (Feb)
DJ Industrials	48,977	-522.02	-1.05%	+0.17%
S&P 500	6,878	-29.95	-0.43%	-0.87%
Nasdaq	22,668	-210.17	-0.92%	-3.38%
Russell 2000	2,632	-44.92	-1.68%	Weak

The “No Landing” scenario – where growth stays hot and inflation gets stuck – is becoming the base case. This is bad news for valuation-sensitive sectors like Tech (Nasdaq -3.3% in Feb) but offers some support to cyclical value stocks (Dow +0.17% in Feb). With the 2s10s yield curve inversion deepening and the equal-weighted S&P 500 outperforming the cap-weighted index by the widest margin since 2009, a major rotation is underway. Investors are seeking safety in cash flows rather than chasing AI dreams.

Economic Data Calendar: March 2 – 6 , 2026

A heavyweight week combining major central bank macro data with escalating geopolitical crises. Markets enter March with a heavy slate of data that will either confirm the “sticky inflation” narrative or offer a lifeline to the dovish Fed camp.

• SUN (Mar 1): OPEC Meeting
  • Context: OPEC+ decides on unwinding 2.2m bpd of voluntary cuts. Reports suggest they lean toward returning 137k bpd in April, but the Iran strikes may force them to freeze.
• MON (Mar 2): US Manufacturing
  • Data: US ISM Manufacturing PMI (Feb). Flash data showed a 7-month low of 51.2.  A print above 50 would scream “reacceleration” and hurt bonds.
  • German Retail Sales: A check on the European consumer.
• TUE (Mar 3): UK Fiscal Update
  • Event: UK Spring Statement. Chancellor Reeves is expected to deliver a “very boring” pro-growth speech with no new spending.
  • Eurozone Flash HICP (Feb): Inflation is expected to tick up to 1.8%. A hot number pushes back ECB cut bets.
• WED (Mar 4): Global Growth Check
  • Data: US ISM Services PMI, Australian Q4 GDP (rebound expected), Chinese NBS PMIs (Lunar New Year distortions expected).
  • US ISM Services PMI (Feb): The key economic release of the week aside from jobs. A strong services print (53+) would reinforce the “No Landing” view.
  • Australian GDP (Q4): Expected to show a strong rebound (0.9% QoQ), supporting the hawkish RBA stance.
  • Bank of Canada Decision: Likely Hold. Markets will parse the statement for any shift in tone regarding the timing of future cuts.
• THU (Mar 5): ECB Minutes
  • Event: ECB Minutes. Will reveal the internal debate over sticky services inflation.
  • US Jobless Claims: Monitoring for cracks in the labor market.
• FRI (Mar 6): The Jobs Report
  • Data: US Nonfarm Payrolls (NFP) (Expected 70-90k).
  • US Non-Farm Payrolls (Feb): The Main Event. Consensus is for +70k-90k jobs. A number above 100k would be “too hot” for the Fed, likely sending yields higher and stocks lower. A number below 50k revives recession fears.
  • Data: US Retail Sales (Consumer check against the “K-shaped” economy).

Asset Class Spotlight: Commodities, Currencies, Crypto & Treasuries

The week was defined by a surge in oil on geopolitical fears and continued divergence in FX markets. Geopolitics completely dictate this space. WTI Crude jumped $1.81 to $67.02 on Friday in anticipation of the Iran conflict. Gold spiked to $5,247.90 on safe-haven flows, further boosted by Trump’s remarks regarding a “friendly takeover” of Cuba. Silver is facing a structural crisis on the Comex; open interest is collapsing as hedgers abandon the exchange for the OTC market, fleeing high margins and HFT manipulation. The market is pricing in significant supply risks following the US/Israel strikes in Iran. With OPEC meeting Sunday, the bias is for a continued production pause to support prices.

Asset	Last Level	Friday’s Change	Weekly Change / Note
WTI Crude	$67.02	+1.81	+2.78% (Geopolitical Risk)
Brent Crude	$72.72	+1.97	Strong Bid
Gold (Apr)	$5,247.90	+53.70	+1.03% (Safe Haven Bid)
Silver	~$77.30	Volatile	+1.5% approx (Rebounding)
EUR/USD	1.1824	+0.0027	-0.28% (Monthly Loss)
USD/JPY	155.96	-0.13	+0.83% (Monthly Gain)
10-Year Note	3.961%	-0.054	Yields Dip < 4.0%
Bitcoin	~$63,650	-6.0%	5th Red Month

FX Breakdown:

• EUR/USD: Held surprisingly steady at 1.1824 despite the hot US PPI data.EUR/USD held above 1.1800 but posted a monthly loss as the ECB signals comfort with current policy while the Fed’s cut timeline extends.
• GBP/USD: Erased all January gains, closing February heavily down at 1.3486 (-1.47% for the month). The hot US PPI and Middle East risks applied a massive safe-haven bid to the Dollar, crushing the Pound.
• USD/JPY: Closed February up 0.83% at 156.06. The Yen gave back early Friday gains as Japan’s national inflation slowed and PM Takaichi nominated two new BoJ board members who contrast with near-term tightening policies. USD/JPY remains the key watch. Despite a slight pullback Friday, it closed February up nearly 1% at 155.96. The Yen is failing to gain traction even as US yields dip, highlighting the structural weakness of the Japanese currency.

Crypto: Bitcoin is trapped in a liquidity-constrained environment, slipping to $63,650 and securing a devastating fifth consecutive red month (-17% for February). Corporate buying from MicroStrategy is tapering, leaving the asset vulnerable to the broader risk-off environment. The most glaring divergence is in the bond market. Despite January Core PPI surging to 3.6% (which should send yields skyrocketing), the 10-Year yield plunged below 4%, and the 2-Year yield hit a 52-week low. This is a massive, screaming “flight to safety” signal from bond traders who were pricing in the geopolitical eruption before it even hit the weekend news cycle.

What to Watch Next Week

1. The Middle East War Premium (Sunday/Monday): The US-Israel multi-day strike campaign in Iran overrides all economic data. Watch the Sunday futures open for Crude Oil and Gold. If oil spikes violently and holds, it will act as a massive tax on the global consumer, dragging down high-beta equities immediately.If Tehran retaliates or threatens oil shipping lanes (Strait of Hormuz), oil could spike to $75+ overnight, crushing risk sentiment. Watch headlines closely Sunday night.
2. OPEC+ Pivot (Sunday): OPEC+ was leaning toward adding 137k bpd back into the market in April. However, with Iranian infrastructure under attack, OPEC may suddenly shift gears to hold cuts to capitalize on the geopolitical premium. Their Sunday announcement will amplify the oil market’s opening gap.
3. Nonfarm Payrolls vs. Stagflation (Friday): While the war commands attention, Friday’s NFP (exp. 70-90k) collides with the hot PPI data. If the US prints weak jobs but inflation is sticky, the “stagflation” narrative will harden, boxing the Fed into a corner where they can neither cut rates to save growth nor hike to kill inflation.
4. Equal-Weight S&P & Midterm Warning: History is flashing red. The Equal-Weight S&P outperforming the cap-weighted index by this magnitude hasn’t happened since the 2000 peak. Combined with the historical 18.2% average drawdown in pre-midterm election years (2026), the structural risk in the broader equity market is dangerously high.
5. Japanese Yen: With USD/JPY near 156 and Tokyo CPI data due, any hot inflation news combined with risk-off flows could finally trigger a Yen rally. Conversely, if US yields spike on strong data, intervention watch returns at 158.