Investors are entering a critical week for markets, with the Fed meeting, surging oil prices linked to the Iran war, and major earnings reports all set to shape market sentiment.

US stocks ended last week under pressure as the Middle East conflict pushed oil prices higher and raised fresh inflation concerns.

The S&P 500 fell 1.6% for the week, while the Dow Jones dropped about 2%. The Nasdaq declined 1.3%, reflecting growing uncertainty around energy prices and economic policy.

Fed Meeting Takes Center Stage

The biggest event this week will be the Federal Reserve’s policy decision on Wednesday, where Chair Jerome Powell is expected to address the economic impact of the Iran war and rising oil prices.

Markets widely expect the Fed to leave interest rates unchanged, with futures markets pricing in about a 99% probability of no rate change.

However, investors will closely watch Powell’s comments for clues on whether the war-driven surge in energy prices could delay potential rate cuts later this year.

Oil Prices and the Strait of Hormuz

The war in Iran has pushed oil markets into turmoil.

Oil briefly surged above $100 per barrel, the first time since the 2022 energy crisis triggered by Russia’s invasion of Ukraine. Prices later pulled back into the $80 range but remain highly volatile.

The key issue remains the Strait of Hormuz, one of the world’s most important energy chokepoints.

Roughly 14 million barrels of crude oil pass through the narrow waterway each day, but Iran’s Revolutionary Guard has warned it will not allow “a liter of oil” to pass during the conflict.

Analysts warn that if the strait remains closed for two months, oil prices could remain elevated well into the year.

Rising Oil Raises Inflation Risks

Higher energy prices are also complicating the Fed’s inflation fight.

Inflation has already remained above the Fed’s 2% target, and economists warn the recent surge in oil prices could push consumer prices higher again.

Some analysts are even raising concerns about stagflation, a scenario where inflation stays high while economic growth slows.

For now, economists say it may be too early to make that call as the full economic impact of the war is still unfolding.

Key Earnings to Watch

On the corporate side, several major companies will report earnings this week.

The biggest report will come from Micron Technology, whose results on Wednesday will provide insight into the strength of the semiconductor and AI memory chip market.

Other companies reporting include:

  • Dollar Tree
  • Macy’s
  • Darden Restaurants
  • Oklo

Investors will also watch Nvidia’s annual GTC conference, where CEO Jensen Huang is expected to outline the company’s latest developments in artificial intelligence and data center technology.

Economic Data to Watch

Several economic reports could also move markets this week.

Key data releases include:

  • Industrial production
  • Housing market data
  • Jobless claims
  • Producer Price Index (PPI)

Together, these reports will offer fresh clues about the strength of the US economy at a time when geopolitical tensions and energy shocks are creating new risks for global markets.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.