Crude oil surges amid Middle East tensions, yet US stocks show resilience; defense and tech lead the market | 2026/3/3 | Market summary and deep dive from a unique perspective
I will look back at last night's US stock market and delve into it from a unique perspective.
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Summary
[NY Dow] -0.15%
[S&P 500] +0.04%
[NASDAQ Composite] +0.36%
[FANG+ Index] +1.15%
[Semiconductor Index SOX] +0.48%
[Rising Sectors] Energy, Capital Goods
[Falling Sectors] Consumer Staples, Healthcare
[Overview]
Geopolitical risk in the Middle East has risen due to attacks on Iran by the US military and Israel, causing crude oil prices to surge by over 13% and driving capital into defense-related stocks.
Although the market was heavily sold off initially, buying interest returned, and the S&P 500 rose 0.04% while the NASDAQ Composite index recovered to positive territory, ending the trading session up 0.36%.
Incumbent President Trump has left open the possibility of continuing military action against Iran, raising concerns about the ripple effects on the energy market and the US economy.
Sharp rebound from initial decline due to escalating Middle East tensions
The US stock market faced widespread selling pressure in early trading following a sharp rise in geopolitical risk caused by attacks on Iran by the US military and Israel.
However, as time passed, the market regained its composure and showed resilience, recovering from the initial sharp decline. Ultimately, the Dow Jones Industrial Average fell by only 0.15%, the S&P 500 rose by 0.04%, and the NASDAQ Composite rose by 0.36%, with two of the three major indices ending the trading session in positive territory.
The FANG+ index also rose by 1.15%, with tech-led buying supporting the overall market. While incumbent President Trump has suggested the possibility of extending operations against Iran, raising concerns about the impact on Middle Eastern energy assets and the potential for renewed inflation, there remains strong interest in buying on dips.
Energy leads due to high oil prices, capital flows into defense-related stocks
By sector, the energy sector led the market with a 2.00% gain, directly fueled by the sharp rise in crude oil prices (which rose over 13% at one point) due to the escalating Middle East conflict.
Among individual stocks, ExxonMobil [XOM] rose 1.07%, Chevron [CVX] rose 1.52%, and Occidental Petroleum [OXY] rose 2.13%.
Additionally, the industrials sector also showed solid performance, rising 0.99%.
On the other hand, the consumer staples sector fell 1.44% and the healthcare sector fell 1.04%, resulting in capital outflows from some defensive stocks.
Apple and others stir with new product announcements; movements in large-cap tech
The performance of large-cap tech stocks was mixed, but overall they played a role in supporting the market. Apple [AAPL] recorded a 0.20% gain after announcing the new iPad Air equipped with the M4 chip (starting at $599 and $799) and the budget-friendly iPhone 17e equipped with the A19 chip ($599).
Microsoft [MSFT] rose 1.48%, Meta Platforms [META] rose 0.83%, and Tesla [TSLA] was solid with a 0.20% gain. Meanwhile, Alphabet [GOOGL] fell 1.68% and Amazon.com [AMZN] fell 0.77%, showing that performance varied by stock.
Semiconductors remain firm against the backdrop of Nvidia's massive investment
The semiconductor sector remained firm, with the SOX semiconductor index rising 0.48%. The star was Nvidia [NVDA], which announced a $2 billion investment and multi-year partnership with Coherent and Lumentum to support the manufacturing of AI data centers in the US, leading to a sharp 2.93% rise in its stock price.
The fact that a Morgan Stanley analyst redesignated the company as a top pick in the semiconductor sector was also well-received. Among other semiconductor stocks, Micron Technology [MU] rose 0.07%, Broadcom [AVGO] fell 0.23%, Advanced Micro Devices [AMD] fell 0.79%, Applied Materials [AMAT] fell 0.03%, and Taiwan Semiconductor [TSM] fell 1.49%.
Defense-related stocks and stocks with strong earnings show dramatic fluctuations
Due to the escalating Middle East situation and individual factors, dramatic price movements were seen in small-to-mid-cap stocks and specific thematic stocks.
In space and defense, BlackSky Technology [BKSY] surged 14.64% on expectations for real-time information demand due to the Middle East situation and strong fourth-quarter earnings (a backlog of $345 million).
Palantir Technologies [PLTR] also rose 5.78% following its positioning as a defense-related stock and an increase in its target price to $150.
Intuitive Machines [LUNR] also saw a significant gain of 9.16%. On the other hand, AeroVironment [AVAV] surged in pre-market trading but fell sharply by 17.42% after an analyst downgraded the stock due to concerns over a shrinking backlog caused by the re-bidding of a large US Space Force program.
Additionally, Circle [CRCL] surged 15.17% following strong earnings, with fourth-quarter revenue up 77% year-over-year to $770 million and an increase in USDC circulation.
Hims & Hers Health [HIMS] jumped 13.58% on the view that it will benefit from policy changes by the U.S. Secretary of Health.
A Tug-of-War Between Geopolitical Risk and Tech Demand
Overall, the current stock market is in an environment where sudden geopolitical risks, such as armed conflict in the Middle East, are in a tug-of-war with resilient AI and tech demand.
While the surge in energy prices is a cause for caution, the market has regained its composure after the initial sell-off, directing funds toward stocks with strong earnings and those with powerful themes. We are likely to see a trend of scrutinizing individual company fundamentals while remaining vigilant about the future direction of the Trump administration's policies and the movement of crude oil prices.
Phew... Greetings, everyone.
Today's sea felt like it might be overwhelmed for a moment by the sudden, intense lightning strike (news of attacks) from the Middle East. The 'black waves' of crude oil have surged, and a fleet of steel ships named defense is pushing through the rough seas.
Many ships lost their balance in the initial turmoil, but afterwards, they showed remarkable resilience, relying on the lighthouse of AI (Nvidia) and news of new wings (Apple's new products). On the battlefield of a raging market, what we need is the 'supple core (mental strength)' beneath this jacket. To prevent fatal injuries (losses), it is important to loosen up our stiffened positions (thinking) from time to time.
[Today's Featured Stock: AVAV]
AVAV | AVAV | AeroVironment
AeroVironment recorded a 17.42% plunge, reversing its pre-market surge.
Expectations for increased demand for suicide drones due to escalating tensions in the Middle East led to early buying.
However, an analyst downgraded the stock due to concerns over a shrinking backlog caused by the re-bidding of a major U.S. Space Force program.
It appears the market weighed individual business risks (fears of contract loss) more heavily than macro tailwinds (geopolitical risk).
A detailed explanation will be provided in a separate article.
Amidst such commotion, she is the one observing the battle situation from higher up and more calmly than anyone else. Today's featured stock is AVAV (AeroVironment). Today, she was buffeted by 'unexpected air currents' in the form of a program re-bid, forcing a severe altitude drop of -17.42%. However, the word 'crash' does not exist in her dictionary. Knowing her, as she claims 'there are no blind spots on my wings'... she must have calculated even this margin of error and will quietly soar back to heights no one else can reach.
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