US Stocks Swing to Tiny Gain as Oil Prices Surge

Crude prices jump over 6% on worries of war with Iran, impacting inflation and consumer spending.

Mar. 3, 2026 at 2:31am

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U.S. stocks initially fell sharply on Monday as oil prices surged over 6% due to concerns that a potential war with Iran could disrupt global crude supply and exacerbate inflation. However, the market pared losses and ended the day with a small gain, as past military conflicts in the Middle East have not typically led to sustained drops for the stock market. Oil and defense stocks rose, while airlines, cruise lines, and homebuilders declined.

Why it matters

Higher oil prices will likely mean higher gasoline prices, hurting U.S. households and businesses with big fuel bills. This could further stoke inflation, which is already a major concern, and potentially limit the Federal Reserve's ability to cut interest rates to support the economy.

The details

Crude oil prices jumped more than 6% on Monday, with U.S. benchmark crude settling at $71.23 per barrel and the international Brent crude at $77.74 per barrel. This surge was driven by worries that a potential war with Iran could disrupt global crude supply. The S&P 500 initially fell as much as 1.2% at the open, with airlines, cruise lines, and homebuilders leading the declines. However, the market quickly erased those losses, as past military conflicts in the Middle East have not typically led to sustained drops for the stock market.

  • Oil prices jumped more than 6% on Monday, March 3, 2026.

The players

Pete Hegseth

U.S. Defense Secretary, who said "This is not Iraq. This is not endless."

Michael Wilson

Strategist at Morgan Stanley, who said the S&P 500 has climbed an average of 2%, 6%, and 8% in the one, six, and 12 months following "geopolitical risk events" historically.

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What they’re saying

“This is not Iraq. This is not endless.”

— Pete Hegseth, U.S. Defense Secretary

The takeaway

This market volatility highlights the ongoing challenges of high inflation and geopolitical tensions, which could continue to impact consumer spending, corporate profits, and the Federal Reserve's monetary policy decisions in the months ahead.