Markets Continue to Seesaw in Wake of Mideast Conflict | The Close 3/3/2026
Speakers
Summary
- Geopolitical Risk Premium: Markets are seesawing due to conflict in the Middle East (Iran/Israel). While US equities (S&P 500) showed resilience by paring losses, oil prices remain elevated due to supply chain fears in the Strait of Hormuz.
- Energy Disruption: Iraq is shutting down production in major fields due to export inability. The US has committed to naval escorts for tankers, signaling the severity of the blockage.
- Retail Bifurcation: A clear split is emerging in retail. Target (TGT) and Best Buy (BBY) are surging on turnaround execution and efficiency, while "high-flyers" like On Holding (ON) are punished for guidance misses.
- Tech Rotation: A rotation is observed out of "Mag 7" and hardware (Tesla, Memory Chips) into beaten-down software and value/cyclical retail.
- Macro Outlook: Despite the conflict, the US economy remains insulated as a net oil exporter, though inflation risks persist if gasoline prices spike.
Trade Ideas
On Holding stock dropped ~8% (worst day since August) after forecasting net sales that fell short of estimates, despite growing apparel sales by nearly 80%. The company is transitioning from a pure footwear play to a "toe-to-head" brand. While the CEO argues demand is strong, the market is punishing the guidance miss, suggesting the valuation was priced for perfection that didn't materialize. WATCH. Wait for price stabilization; the growth story (Asia-Pacific doubling) is intact, but near-term sentiment is broken. Further deceleration in core footwear sales or execution risks in the apparel expansion.
Tesla closed at its lowest level since November. The entire memory chip space (Micron, SanDisk/Western Digital) is under pressure and acting as a drag on the market. Investors are rotating *away* from momentum/Mag 7 names and hardware. Technical breakdowns in these specific names signal a loss of institutional support. SHORT. Momentum has unwound; these are the "sources of funds" for the rotation into retail/value. A sudden "risk-on" rally in the broader Nasdaq if yields drop.
Chronert states the software sector has "found a bottom" and has already discounted the hit to terminal multiples regarding AI disruption. CrowdStrike (CRWD) beat earnings estimates. The market over-penalized software stocks on AI fears. With valuations reset and fundamentals remaining intact (as evidenced by CRWD's beat), the risk/reward has shifted to the upside. LONG. Software is now a defensive contrarian play against the hardware/semiconductor volatility. Persistent high interest rates (10-year yield) compressing growth valuations.
Rebecca Babin
Senior Energy Trader, CIBC Private Wealth
Iraq has begun shutting in production because they cannot move crude through the Strait of Hormuz. Storage capacity in the UAE and Saudi Arabia is limited (20-25 days max). Even with US Naval escorts proposed, the physical constraint of "stranded assets" (oil stuck in storage) creates an immediate supply shock. The market must price in the risk that storage hits capacity, forcing further production shutdowns. LONG. The risk premium in crude is justified until ships physically start moving at scale. Rapid de-escalation or immediate success of US Naval escorts lowering insurance costs quickly.
Michael Lasser
Hardline Retail Analyst, UBS
Target (TGT) issued a better profit forecast and is investing $2B in store remodels and labor. Best Buy (BBY) is stabilizing and pivoting to a "marketplace" model for third-party products and retail media. Target's issues were self-inflicted (inventory, store experience); the new capex fixes these specific operational flaws. Best Buy is finding new high-margin profit pools (retail media) to offset flat electronics demand. LONG. Both are executing idiosyncratic turnarounds that are working despite a choppy consumer environment. Consumer spending contraction due to inflationary pressure from oil prices.
Moderna agreed to pay a $2.25B settlement but expects to end 2026 with up to $5B in cash. The settlement removes a major legal overhang/uncertainty that was likely depressing the stock. The market reaction (+10%) confirms investors view this as "bad news is out of the way." LONG. Relief rally on clarity. Pipeline failures or faster cash burn than anticipated.
Ross Stores reported a beat on EPS ($1.67 vs $1.63 est) and a significant beat on Comparable Sales (+9% vs +4.92% est). In a K-shaped economy where consumers are squeezed by inflation (oil/gas), discount retailers (off-price) capture trade-down volume. A 9% comp suggests massive market share gains. LONG. Defensive play on the consumer trade-down thesis. Supply chain costs increasing due to shipping disruptions.
Up Next
This Bloomberg Markets video, published March 03, 2026, features Martin Hoffmann, Michael Ball, Scott Chronert, Rebecca Babin, Michael Lasser, Anchors (Breaking News), Anchors / Bailey Lipschultz discussing ON, TSLA, MU, WDC, IGV, CRWD, USO, XLE, BBY, TGT, MRNA, ROST. 7 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Martin Hoffmann, Michael Ball, Scott Chronert, Rebecca Babin, Michael Lasser, Anchors (Breaking News), Anchors / Bailey Lipschultz · Tickers: ON, TSLA, MU, WDC, IGV, CRWD, USO, XLE, BBY, TGT, MRNA, ROST