Last week’s holiday-shortened trading period was shaped by ongoing geopolitical tensions and surprisingly resilient domestic economic data.

Better-than-expected employment figures helped steady investor sentiment and revived the soft-landing narrative, even as elevated interest rates continued to cap how far markets could rally.

Beneath the surface, investors leaned toward higher-quality companies and more defensive sectors, while rate-sensitive growth stocks remained volatile.

Here’s a closer look at what drove markets last week and what lies ahead.

Stock Index Performance

  • The S&P 500 advanced 3.36%.
  • The Nasdaq 100 climbed 3.95%.
  • The Dow Jones Industrial Average gained 2.96%.

What’s Driving Markets Right Now

Oil Markets and the Iran Shock. The U.S.-Israel conflict involving Iran has pushed oil prices back above $100 per barrel, with Brent crude rising more than 60% during March amid fears of supply disruptions near the Strait of Hormuz. For investors, the implications are clear: higher energy costs can delay the decline in inflation and weigh on consumer spending.

Sentiment Stabilizes After a Volatile Stretch. After a difficult period, investor confidence began to recover. Treasury yields remained elevated as markets adjusted to the Fed’s outlook of just one rate cut in 2026, putting early pressure on growth and technology stocks. However, sentiment improved as the week progressed, supported by strong ADP employment data and solid retail and manufacturing reports.

Strong Jobs Report, With Some Caveats. March’s jobs report delivered a positive surprise, with employers adding 178,000 positions—roughly double expectations. Gains were led by healthcare, construction, and transportation sectors. However, February’s data was revised lower, and the average workweek shortened slightly. Overall, the labor market appears steady enough to ease recession concerns but not strong enough to shift the Fed’s current policy stance.

The Week Ahead

Markets will focus on upcoming inflation data, particularly the March Personal Consumption Expenditures (PCE) index set for release on Thursday, April 9. In addition, minutes from the Federal Open Market Committee’s March meeting will be released on Wednesday, April 8, offering further insight into policymakers’ thinking.

Investors will be watching closely for signals on whether recent inflation pressures are temporary or more persistent. Stronger-than-expected readings could reinforce a “higher for longer” interest rate environment, while softer data may support the view that inflation is gradually cooling.

As first-quarter earnings season begins, attention will shift to corporate performance and outlooks. Commentary on demand, margins, energy costs, and geopolitical risks will provide valuable clues about whether recent market volatility reflects a temporary reset or the beginning of a more challenging environment for equities.

The weeks ahead may test investor patience, as inflation data, earnings reports, geopolitical developments, and Fed commentary continue to shape market direction. Maintaining a long-term perspective and staying diversified remain key strategies in navigating this environment.

If you have questions about your portfolio or would like to discuss your investment strategy, I’m here to help.