Premium"Everyone's Getting Pounded..." Until Trump Saved The Day (For Now)
Tl;dr: Yesterday's put-selling-driven dip-buying was inherently unstable and backed by little to no volume... which left us open to today's early chaos as everything was dumped everywhere all at once (stocks, bonds, gold, crypto) while oil (and NatGas) and the dollar spiked. A reversal on Trump's 'tanker insurance' reports saved the day, dragging everything 'off the lows'.
Today's bloodbathery started overnight with carnage in Korea...
Around the US open, our MSGs were flooded with serious - not panicky - comments, looking for color on the chaos with one macro fund trader's remarks catching our eye: "everyone's getting pounded."
He was right - from Iranian naval personnel to Iraqi oil-workers and from Saudi Embassy staff to European energy traders, the chaos was spreading with oil (and NatGas) surging along with the dollar (pound pounded) while stocks, crypto, and gold all pummeled as yields continued to spike.
The S&P 500 opened below its well-defined recent range. That means the 6,800 level, which had been support, is now resistance — the pivot line that decides whether this stays a buyable dip or turns into a more mechanical drawdown.
Worries about both AI and about stagflation because of Iran are weighing on the market. Meanwhile, the curve is flattening, the dollar is bid and the commodity cross-section is shifting in a way that fits a risk-off mood with sticky inflation. In a recent note, TD Securities said this is the kind of setup that can quickly squeeze quant funds, turning selling more indiscriminate even if overall leverage doesn’t look particularly high.
We broke the box...
Then, around 1130ET, oil prices tumbled and stocks were bid as Reuters reported President Trump was considering a proposal to help oil tankers transiting conflict zones to obtain insurance - this potentially lifting the implicit closure of the Straits (via threats from IRGC) since the attacks on Iran began.
The recovery was modest at first and then Trump tweeted the confirmation around 1440ET and stocks surged, oil tumbled.
Tale of the tape...
However, Goldman's traders noted that overall liquidity was poor (top of book depth sitting at just $3m to start - right around Liberation Day levels); but volumes were elevated (+30% vs the 20DMA - unlike yesterday) and ETF activity was high, around 45% of tape - the highest in 5+ years (this is hedging not single stock trading).
Simply put, spiking oil prices raise the potential that rising inflation could negatively impact global growth, reducing the cyclical tailwinds that have helped to offset the AI disruption headwinds for much of the first two months of 2026.
But, Trump's late day tweet dragged WTI lower, rescuing markets from that peril... for now...
EU NatGas prices came off their highs (and closed before Trump saved the day)
This, as Goldman's Chris Hussey noted, makes navigating this sea of red more difficult:
The market has been navigating an interesting territory for the past year that includes:
the strong secular tailwinds of the AI revolution;
the cyclical momentum of the extended post-pandemic echo-boom; and
the prospects for market-friendly monetary policy as the Fed lurches towards a leadership change later this spring.
This 3-legged stool of upside performance, however, is now being met with uncertainty on all 3 legs.
The AI disruption theme took over for the AI revolution theme late last year and has been an undercurrent of stock market performance in January and February as the Software complex came under particular pressure.
And with the escalation of conflict in Iran, the cyclical momentum and Fed-friendly legs of the stool have also now been brought into question.
Higher oil prices have the potential to drive inflation up, as Goldman's Jessica Rindels pointed out: Every $10/bbl increase in oil prices that we see (front-month Brent is up ~$10/bbl since Friday's close) is likely to curb US GDP growth by ~10bp. This doesn't sound like a lot, obviously, but with the S&P 500 trading at a P/E of 22X, any uncertainty about the path for growth and earnings may be met with a bigger impact than the growth hit could appear to justify.
Additionally, Rindels estimates that a sustained 10% increase in oil prices could boost core CPI by 4bp and headline CPI by 28bp. And in scenarios in which the increase in oil prices proves more persistent, we would expect year-over-year headline CPI inflation to rise to 3.0% in May and to remain elevated relative to our baseline forecast for the remainder of the year. In a world of renewed 3% US inflation, the Fed, in theory, may be less likely to cut rates than the current environment where we forecast inflation to recede to 2.0% by year-end.
Now, to be sure, it is difficult to ascertain in real time how far and how long energy prices may rise. Sam Dart raised Goldman's first half 2026 Europe nat gas price by ~50% to capture a 20% decline in LNG supply tied to production and shipment disruptions in the Middle East.
But given that energy prices trade off of strict supply/demand economics, we may see more volatility in energy prices until we get clarity on supply disruptions -- volatility that may continue to carry-over from commodity markets to other markets like stocks and bonds.
Where does that leave us?
Well, still down from Friday's close, but well off the lows (again)...
Before we leave equity-land, we note VIX was elevated along with skews...
...but equity risk remains less stressed than credit risk...
Even before this past weekend's events, credit spreads have been widening as investors begin to demand more compensation to lend to business models they see as vulnerable to AI-driven disruption.
Treasury yields also roller-coasted today, surging higher with crude prices and reversing lower with crude prices - but still ending higher on the day...
Rate-cut expectations plunged hawkishly (but bounced back a little)...
The dollar spiked dramatically early on but gave back some gains after Trump's comments (at a notable resistance zone)...
Gold puked all the way down to $5000 and bounced immediately. Still an ugly 4%-ish down day...
Bitcoin has been on a wild ride since the Iranian attacks began... but is back to unchanged today since last Friday...
Finally, as Bloomberg's Michael Ball reports, much of the weakness is due to the dispersion trade coming off, something we warned was likely. The big theme earlier this year was being short index or certain sector vol versus long single stock or different sector volatility, tied to a rotation that used mega cap and software as funding to buy industrials, energy and materials.
Now that the macro narrative has turned negative enough to garner a broad risk-off tone and correlations are jumping towards 1, that dispersion trade is unwinding and it’s hammering the prior winners, which is why industrials, materials and even energy are lagging on a day oil is up.
The map from here is clean. Above 6,800, the SPX buys time and keeps the drawdown contained. Below it, the negative-gamma pocket gets deeper, dealer hedging flows accelerate moves, and the next area where positioning provides some support sits much lower.
Key levels for the SPX are:
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Resistance: 6,800, 6,820, 6,860, 6,900
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Pivot: 6,900 (bearish <, bullish >) updated 2/26
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Support: 6,700, 6,600 We currently (3/2/26) look for a move into the 6,600s as a "wash out" low
Negative gamma still troughs in the 6,600s, and a move to that level still seems calibrated to meet VIX 30.
That's where we think equity re-entry gets interesting, as negative gamma dot he downside exhausts and VRP could be fat enough to get interesting.
With that in mind, 6,600s is where it may make sense to play some long delta ideas, but until then we are more in the "sell the rip" camp vs buying dips. On this point, yesterday's dip was bought oh-so-strongly, but that flow was dominated by put selling.
Add in widening stress in credit, and the equity tape keeps a fragile feel into the next macro catalyst - Friday’s jobs report.
One more thing, a wise old energy trader (who faded the late-day tumble in crude)...
...warned that Trump's words are very different from his actual actions on the tanker insurance (monetary or military) and will likely either take many days to paper (legal) or may not have an impact on actual oil prices (given the subsequent reductions in physical production, not just transport).
