The S&P 500 fell 1.51% to 6,506.54 Friday, posting its fourth consecutive weekly loss, as fresh overnight strikes between Iran and Israel disrupted tanker traffic through the Strait of Hormuz and pushed WTI crude to $98.32 — a 2.27% daily gain that held even after Treasury Secretary Bessent floated the release of 140 million barrels of sanctioned Iranian crude to cap prices. ^[4] The Nasdaq Composite dropped 2.01% to 21,647.61, compounded by the DOJ unsealing an indictment against Super Micro's co-founder for allegedly smuggling $2.5 billion in AI chips to China. ^[6] The Dow shed 0.96% to 45,577.47. The Russell 2000 fell 2.25% to 2,437.27, crossing into correction territory — more than 10% below its recent high — becoming the first major U.S. benchmark to reach that threshold in this selloff. ^[2] The VIX closed at 28.08, up 3.0 points on the day. Energy was the only sector to close green. The session closed out a week in which the market absorbed a hawkish Fed hold, a geopolitical supply shock, and criminal exposure in the AI hardware supply chain — with no relief priced from any of them.

What moved it

The primary driver was overnight escalation in the Middle East. Iran struck Persian Gulf energy infrastructure; Iraq declared force majeure on all foreign-operated oilfields; Strait of Hormuz tanker traffic was severely disrupted. ^[3] Brent crude topped $112 intraday before Bessent's comments about releasing Iranian crude from storage trimmed the peak — WTI settled at $98.32, still the highest close in months. ^[8] Goldman Sachs flagged that Brent could remain in triple digits for years if Strait disruptions persist.

The oil move is inflationary in a moment when the Fed already has limited room. Wednesday's FOMC hold raised the 2026 core inflation forecast to 2.7% and pushed the first expected rate cut to mid-2027; markets now price zero cuts this year. ^[5] A rate hike was discussed at the March meeting, per Chair Powell — not the base case, but now audible.

The DOJ indictment of Super Micro's co-founder (see Movers) added a second dimension: AI chip export controls are now a criminal prosecution, not just a regulatory framework. The market treated it as a supply chain integrity question for the sector broadly.

Sector scoreboard

Energy (XLE) gained 1.52% — the session's sole green sector, with direct commodity exposure absorbing oil's move. ^[1]

Utilities (XLU) fell more than 4% and real estate (XLRE) dropped over 3%. Both sectors carry long-duration rate sensitivity; with the 10-year at 4.25% and no cuts priced, neither has a near-term catalyst. The selloff here was repricing, not panic.

Technology (XLK) declined roughly 2%, dragged by the Super Micro shock and associated Nvidia exposure. Consumer discretionary fell over 2% as growth expectations deteriorated. Financials and industrials closed down between 1–2%.

Breadth was decisively negative: in the Russell 2000, 1,488 stocks declined against 414 advancers. The S&P 500 stocks trading above their 50-day moving average fell further, confirming the index-level decline is not hiding strength underneath.

Movers

Super Micro Computer fell 27.8% to $22.06 after the DOJ unsealed an indictment charging co-founder Yih-Shyan "Wally" Liaw and two associates with smuggling more than $2.5 billion in Nvidia-powered servers to China through a Southeast Asian pass-through entity. ^[7] Supermicro is not named as a defendant and placed the charged individuals on administrative leave. The market read it as sector contagion: Nvidia fell 1.66% on direct revenue exposure — SMCI represents approximately 9% of Nvidia's revenue — and AMD dropped 2.32%. ^[6]

Constellation Energy dropped 10.90%, the largest Nasdaq-100 decline, with Vistra off 6.39%. Both had been positioned as data center power-supply beneficiaries; rate pressure and risk-off unwound that trade Friday. Dell Technologies rose 5.72% with no company-specific catalyst reported — an outlier in the tape.

After the bell

FedEx reported Q3 FY2026 results after Thursday's close; shares traded on those figures through Friday's session. ^[9]

Adjusted EPS: $5.25 vs. $4.12 estimated — a $1.13 beat. Revenue: $24.0B vs. ~$23.5B estimated. Full-year FY2026 adjusted EPS guidance raised to $19.30–$20.10 from $17.80–$19.00. The company confirmed June 1 as the spin-off date for FedEx Freight. Shares gained 2.1% on the session — notable outperformance against the tape. ^[10]

What to watch

Weekend Strait developments. Any follow-on Iranian strikes on Gulf energy infrastructure, or further disruption to tanker navigation, will reset Monday's open. The Bessent sanctions-release trial balloon is the near-term price ceiling; renewed escalation removes it.

Flash PMIs (Monday). March preliminary manufacturing and services PMIs for the U.S. and Europe land Monday morning. A miss on either — especially manufacturing, given oil's cost pass-through — sharpens the stagflation read.

Powell at the BIS (March 25). Chair Powell speaks at the Bank for International Settlements mid-week. With a rate hike now on record as having been discussed and futures pricing no 2026 cuts, any signal about the Fed's inflation tolerance under an oil shock will move rates.

Russell 2000 correction follow-through. Small-caps are now officially in correction. Whether that accelerates — or whether the index stabilizes and sets up a divergence trade versus large-cap — is the first week-ahead equity positioning question.

Nike Q3 (March 31). The next large S&P 500 earnings event. Nothing else of equivalent market weight is scheduled before then.