US Stocks Mixed as Oil Surges Reignite Inflation Concerns; Iran Claims Strait of Hormuz Closed

On Monday, Eastern Time (March 2), tensions in Iran continued to escalate, causing extreme volatility in the U.S. stock market. However, tech and software stocks rebounded, and the three major indices closed with mixed gains and losses. Crude oil surged sharply on Monday after Iran announced the Strait of Hormuz had been closed, threatening to target all ships attempting passage. Markets worry this could reignite inflation concerns, potentially affecting the Federal Reserve’s rate cut path. U.S. Treasury bonds were hit, with yields soaring.

【U.S. Stock Indices】

At the close, the S&P 500 rose 0.04% to 6,881.62; the Dow Jones fell 0.15% to 48,904.78; the Nasdaq gained 0.36% to 22,748.86.

According to CCTV News, on Monday (March 2), as Middle East tensions further escalated, President Trump for the first time outlined U.S. war objectives, stating that strikes could last four to five weeks.

At an event at the White House, Trump said the military action against Iran might last 4 to 5 weeks, but he is prepared for it to extend beyond that. “From the beginning, we expected it to take four to five weeks, but we have the capacity to fight longer,” he added. He also stated he would not grow tired of the operation, emphasizing, “I won’t get bored. There’s nothing boring about this. Whenever, at any time, we will do whatever it takes.”

It appears that short-term geopolitical risks will become the market’s top “killer.” Overnight, U.S. stocks initially sold off, with defense and energy stocks rising. However, investors bought the dip, funds flowed back into tech stocks, and the market recovered as investors assessed how long the Middle East conflict might last and its impact on inflation and the Fed’s policy path.

Currently, the surge in oil prices could reignite inflation fears, potentially hindering the Fed’s rate cut plans, especially after key shipping routes are blocked. According to CCTV News, late on March 2 local time, an advisor to Iran’s Islamic Revolutionary Guard Corps stated that the Strait of Hormuz had been closed, and Iran would target all ships attempting passage. The IRGC has not yet issued an official statement.

On the same day, Jeremy Nixon, CEO of Ocean Network Express, said that about 750 ships are stranded near the Strait of Hormuz following U.S.-Israel strikes on Iran, including around 100 container ships. About 10% of the global container fleet is stuck there.

However, analysts are relatively optimistic. Bill Smead, founder and chairman of Smead Capital Management, said, “Market participants believe this is temporary, and issues in the oil sector will eventually subside.” Investors are returning to familiar, strong-performing stocks like NVIDIA and other top tech giants, as well as defense stocks.

Morgan Stanley strategist Mike Wilson’s team believes that, unless oil prices rise sharply and persistently, the Middle East conflict is unlikely to shake their bullish outlook on U.S. stocks. Past conflicts in the region did not cause long-term market declines. For the war to significantly and sustainably impact U.S. markets, oil prices would need to jump above $100 per barrel.

【U.S. Treasury Bonds】

U.S. Treasury yields surged, with the 10-year yield closing at 4.039%, and the 2-year yield, sensitive to Fed policy, at 3.385%.

【Popular U.S. Stocks】

Among popular stocks, NVIDIA rose 2.93%, Apple increased 0.20%, Alphabet A fell 1.68%, Alphabet C declined 1.63%, Microsoft gained 1.48%, Amazon dropped 0.77%, TSMC fell 1.42%, Meta rose 0.83%, Tesla up 0.20%, Seagate declined 0.79%, Intel down 0.24%.

In major news, NVIDIA announced on its website that it has reached strategic agreements with Lumentum and Coherent, investing $2 billion in each company.

Apple announced new entry-level iPhone 17e and a new M4-powered iPad Air, kicking off the product launch season.

【Global Indices】

In Europe, the FTSE 100 fell 1.20% to 10,780; France’s CAC 40 dropped 2.17% to 8,394; Germany’s DAX declined 2.42% to 24,672.

In Asia, the Hang Seng Index fell 2.14% to 26,060; the H-shares index down 1.78% to 8,702; the Nikkei 225 declined 1.35% to 58,057.

【China Indices】

On March 2, overnight, the Hang Seng Tech Index futures fell 3.42%, the Nasdaq Golden Dragon China Index declined 1.08%, while the FTSE China A50 Index rose 0.84%.

【Chinese Concept Stocks】

Popular Chinese stocks: Tencent Holdings (HK) down 0.77%, Alibaba down 1.09%, Pinduoduo down 0.88%, NetEase up 0.19%, Baidu down 0.71%, Ctrip down 2.17%, Li Auto down 0.11%, Xpeng down 3.22%, NIO down 3.18%.

【Forex and Commodities】

On Monday, the US dollar index strengthened 0.9% to 98.55 amid increased safe-haven demand due to Middle East tensions.

After the U.S. and Israel launched strikes on Iran, investors worry about prolonged conflict. Spot gold opened sharply higher but was later sold off, ending down 1.2% at $5,321 per ounce; spot silver opened high but declined, ending down 6.7% at $89.6 per ounce.

Following attacks by Israel and the U.S. on Iran, Iran’s retaliation led to the shutdown of multiple oil and gas facilities, disrupting key shipping through the Strait of Hormuz, causing oil prices to surge. WTI crude rose 6.37% to $71.29 per barrel; Brent crude increased 7.14% to $78.07 per barrel.

【Key Highlights】

Trump does not rule out deploying ground troops to Iran if necessary

On Monday, Trump said the “big wave” of strikes against Iran has not yet begun, and the operation could last four to five weeks, with preparations for it to extend beyond that. The Defense Secretary said no ground troops have been deployed inside Iran, and all options remain on the table. The Secretary of State claimed the Iranian navy threat has been successfully neutralized. U.S. officials worry that actions against Iran could spiral out of control and deplete U.S. air defense reserves.

Iran claims the Strait of Hormuz has been closed, will target all ships attempting passage

According to CCTV News, late on March 2, an advisor to Iran’s IRGC said the Strait of Hormuz has been closed, and Iran will target all ships trying to pass. The IRGC has not issued an official statement yet. Jeremy Nixon, CEO of Ocean Network Express, said about 750 ships are stranded near the Strait, including around 100 container ships. About 10% of the global container fleet is stuck there.

If the Strait of Hormuz is fully blocked, could oil hit $200? Deutsche Bank analyzes three scenarios

Deutsche Bank categorizes the situation into three scenarios: if reopened within two weeks, oil prices could fall back to around $70; if a “fuzzy blockade” persists, prices could fluctuate between $80 and $100; if it becomes a large-scale “forced blockade” with mines, preventing OPEC from increasing output, Brent could surge to $200. The extent of damage to Hormuz and the duration of the blockade will be key variables.

NVIDIA invests $2 billion each in two optical tech companies

On Monday, NVIDIA announced strategic agreements with Lumentum and Coherent, investing $2 billion in each. NVIDIA stated that it has multi-year agreements with Lumentum to accelerate innovation in advanced optical technologies, including R&D, to support next-generation AI infrastructure and system design. The non-exclusive deal includes multi-billion dollar procurement commitments and future capacity rights for laser components. NVIDIA also plans to invest $2 billion to help Coherent build a new wafer fab in the U.S.

Apple launches iPhone 17e: starting at 4,499 yuan, same price as 16e but with more features

Apple announced the new entry-level iPhone 17e and a new M4-powered iPad Air, marking the start of the product launch season. The iPhone 17e will be available for pre-order at 10:15 PM Beijing time on March 4 and will go on sale on March 11. It comes in light pink, white, and black, with 256GB and 512GB storage options, priced at 4,499 yuan and 6,499 yuan respectively. Notably, the previous iPhone 16e had three storage options, with the base at 128GB and priced at 4,499 yuan—meaning the 17e base model offers more storage at the same price.

Report: ASML plans to expand chip manufacturing equipment into advanced packaging

According to reports, ASML, the leading lithography equipment maker, is actively expanding into advanced packaging equipment to extend its AI supply chain footprint. It is also exploring how to break current exposure field size limits and how AI can boost production efficiency. With a current P/E ratio of 50, far above NVIDIA, market expectations are high.

U.S. Federal Appeals Court rejects Trump administration’s request to delay tariffs refunds

The U.S. Department of Justice argued that the appeals court should wait for the Supreme Court to issue a final ruling and grant an additional 90 days for administrative and legislative review, totaling up to four months of delay. The Federal Circuit Court of Appeals rejected this request, ordering immediate action to restart legal proceedings and send the case back to the Court of International Trade. Following the Supreme Court ruling, over 100 additional companies filed lawsuits seeking tariff refunds, bringing the total to over 2,000 cases against the Trump administration.