This week’s US employment report headlines a fresh batch of economic data for stock investors, who also will closely follow developments in an Iran war that is entering its second month.
Markets will continue to fixate on the fallout for energy prices from the Middle East conflict, which has choked off a big chunk of oil supplies. US crude is up more than 70 per cent year-to-date to about $100 a barrel, leading US petrol prices to surge to an average of about $4 a gallon. This could squeeze consumer spending.
As investors worried about inflation, benchmark Treasury yields jumped to their highest since last summer, creating a possible pressure point on equity valuations.
The benchmark S&P 500 fell for a fifth straight week and is down more than 7pc since the US-Israeli military strikes on Iran in late February. The Nasdaq Composite and Dow Jones Industrial Average both last week confirmed they were in corrections, with those indexes ending down at least 10pc from their respective all-time highs.
During the week, conflicting indications of potential de-escalation of the crisis whipsawed asset prices, and stocks were likely to remain “headline-driven” in the coming days, said Jim Baird, chief investment officer with Plante Moran Financial Advisers.
“Any signs of positive breakthroughs in terms of discussions with Iran and a cessation of the conflict there would go a long way towards providing some reassurance to investors and a boost in sentiment,” Baird said. “Anything that would lead to indications that this might become more long and drawn out, that would be a negative for investor sentiment and certainly would weigh on the market.”
Tomorrow brings an end to a rough first-quarter for US equities. On top of the Iran conflict, concerns about business disruptions from artificial intelligence and weakness in the private credit market also have rattled stocks. The S&P 500 is down about 7pc so far in 2026, following three straight years of solid double-digit percentage gains.
“There’s a lot of uncertainty out there overall,” said James Ragan, co-CIO and director of investment management research at D A Davidson. “So as we get into the last couple of days of the quarter, I just think you could see the market sentiment kind of rolling over a little bit.”
The payrolls report for March is expected to show an estimated increase of 55,000 jobs and an unemployment rate of 4.4pc, according to Reuters data as of Friday. The report is due on Friday, when US stock markets will be closed for the Good Friday holiday.
The prior report for February was surprisingly weak, showing a decline of 92,000 jobs. Given that two of the past three monthly reports yielded negative job growth, “any positive number would probably be good for the market,” Ragan said.
Retail sales data for February and reports on manufacturing and services activity are also due this week.
Worries about a deteriorating labour market prompted the Federal Reserve to cut interest rates last year. But the US central bank will face a bind if more severe employment concerns arise. Inflation was already above the Fed’s target, so surging energy prices present an obstacle to further rate cuts. Now, markets are factoring in no more rate cuts for this year, with fed funds futures actually pricing in a modest chance of a hike in 2026, according to LSEG data as of Friday.
Meanwhile, the benchmark 10-year Treasury yield has climbed to over 4.4pc from about 4pc before the war started.
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