Weekly Market Commentary March 2nd to March 6th 2026
Markets faced elevated volatility this week, with the S&P 500 declining 2% as investors absorbed a series of geopolitical developments and macroeconomic data. Tensions in the Middle East remained the dominant catalyst for market instability over the past five trading sessions, particularly within the energy sector. The Strait of Hormuz, a waterway used for transporting approximately 20% of global oil and gas shipments, has effectively been closed since March 2, creating a critical supply bottleneck. This disruption has placed significant upward pressure on energy prices, with oil prices having surged above $90 a barrel. The 35% price increase for the week marks the largest weekly gain since 1983.
The February Labor Report showed a notable deterioration in labor market conditions. According to the Bureau of Labor Statistics, the U.S. economy lost 92,000 jobs in February, a sharp decline from the downwardly revised January figure of 126,000, and the second weakest monthly payroll print since 2020. Severe winter weather played a meaningful role with 228,000 unable to work due to weather conditions. The Unemployment Rate edged higher, increasing from 4.3% to 4.4%, while the Labor Force Participation rate held steady at 62.0%.
Consumer spending softened in January, with Retail Sales declining 0.2% month over month, although activity remained higher on a 3.2% year over year basis. The monthly pullback was driven in part by weaker motor vehicle sales, along with declines at gas stations and health and personal care stores. However, underlying demand was somewhat firmer than the headline suggested: excluding autos and gasoline, Retail Sales rose 0.3% in January, reflecting steadier discretionary spending. Economists note that severe winter weather likely contributed to the slower pace of activity, temporarily weighing on consumer mobility and shopping patterns.
The ISM Manufacturing Index rose to 52.4 in February, marking a second consecutive month of expansion and only the third expansionary reading in the past 40 months. The report showed solid underlying momentum, with key components, particularly new orders and production holding in expansionary territory. Meanwhile, the ISM Services PMI registered 56, its highest level since July 2022 and the 20th consecutive month of expansion, signalling continued strength in the broader services sector.
Market volatility picked up this week with all major indices falling. The S&P 500 fell 2% to 6,740, marking its fourth decline out of the last five weeks while the 10-Year U.S. Treasury jumped from 3.96% to 4.14%, as inflation fears returned.
Next week’s important economic releases include Consumer Price Index, Personal Consumption Expenditures and the first reading of 4th Quarter Gross Domestic Product (GDP).
