(March 6): A weak jobs report hit stocks at a time when a widening war in the Middle East is lifting oil prices and fuelling inflation jitters. Renewed anxiety about the private credit industry also curbed risk appetite. Bonds wavered.
Equities headed towards their worst week since November, with the S&P 500 down 1% on Friday. BlackRock Inc curbed withdrawals from a giant private-credit fund. Brent topped US$90. An earlier Treasury rally waned, with the market set for its biggest weekly rout since President Donald Trump announced sweeping tariffs nearly a year ago. That’s even as traders slightly boosted bets on Federal Reserve rate cuts.
Non-farm payrolls slid 92,000 last month after a strong start to the year. The drop was one of the largest since the pandemic, partly reflecting a decrease in healthcare employment due to strike activity. The unemployment rate rose to 4.4%.
The figures could refocus the Fed’s attention on the jobs market as it assesses how long to hold rates steady. Policymakers have been more attuned to inflation lately — even before the war on Iran sparked concerns about price pressures.
A negative payrolls number combined with a jump in oil prices will have traders worrying about stagflation risks, according to Brian Jacobsen at Annex Wealth Management.
See also: Dow Jones turns red for 2026 as Iran war roils old-economy gauge
“Today’s numbers may have put the Fed between a rock and a hard place,” said Ellen Zentner at Morgan Stanley Wealth Management. “Significant weakening in the labour market would support a rate cut, but given the risk that higher-for-longer oil prices could trigger another inflation surge, the Fed may feel compelled to remain on the sidelines.”
With no sign of a let-up in hostilities in the Middle East, the conflict unleashes a wave of disruption across energy markets, with shipping through the Strait of Hormuz at a near-total halt. Trump said he doesn’t want to negotiate an end to the war with Iran in a post on social media that demanded Tehran capitulate.
See also: Stocks fall as oil surge boosts treasury yields
Fed governor Christopher Waller said on Bloomberg TV he doesn’t expect the Iran war to have a sustained impact on inflation. Meantime, Fed Bank of San Francisco president Mary Daly told CNBC that a disappointing February employment report undermines the notion that the labor market was stabilising.
While the latest jobs report precedes the Iran conflict, the recent spike in oil prices raises the probability of stronger energy inflation ahead, according to Andy Schneider at BNP Paribas.
“Modest increases in oil prices, even if sustained, have transitory effects on US headline inflation and minimal effects on US core inflation,” said Michael Gapen at Morgan Stanley. “The Fed can look through these increases, but with inflation above target as long as it has been, even modest oil price pressures could delay rate cuts.”
Absent second round effects or rising inflation expectations, he believes Fed rate hikes have a high bar. A substantial rise in oil prices could weaken activity, acting like an uncertainty shock and putting rate cuts in play, Gapen noted.
If the labour market keeps losing steam, it becomes a more delicate backdrop — especially with geopolitical uncertainty on the rise and energy prices capable of acting as an added tax at the gas pump, according to Bret Kenwell at eToro.
“This may not change the Fed’s decision this month, but a visibly weakening jobs market is the kind of trend that can pull the Fed in a more dovish direction as 2026 unfolds,” he said. “Regardless of interest rates, a deteriorating jobs market is not what investors want to see — particularly while volatility has already been on the rise.”
Stocks
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- The S&P 500 fell 1% as of 10.43am New York time
- The Nasdaq 100 fell 0.8%
- The Dow Jones Industrial Average fell 1.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.3% to US$1.1577
- The British pound was little changed at US$1.3356
- The Japanese yen was little changed at 157.67 per dollar
Cryptocurrencies
- Bitcoin fell 3.3% to US$68,818.71
- Ether fell 4.5% to US$1,987.12
Bonds
- The yield on 10-year Treasuries was little changed at 4.14%
- Germany’s 10-year yield was little changed at 2.85%
- Britain’s 10-year yield advanced 11 basis points to 4.65%
- The yield on 2-year Treasuries declined three basis points to 3.54%
- The yield on 30-year Treasuries advanced two basis points to 4.78%
Commodities
- West Texas Intermediate crude rose 9.9% to US$89.01 a barrel
- Spot gold rose 1.5% to US$5,158.63 an ounce
Uploaded by Felyx Teoh
