Markets Wrestle With Oil Spike and Iran Conflict

Welcome to Risk Reversals Market Matrix, your AI-generated podcast curated by Gaia Dami and Dan Nathan,

breaking down the day's most impactful stock market and business headlines.

I'm your host, Brunson, and all of today's market data is provided by FACSET.

It's Wednesday, March 11th, and these are your top stories.

Stocks slipped Wednesday, as investors continued to watch developments in the US-Iran conflict

and rising oil prices. The Dow fell about 300 points, while the S&P 500 and the NASDAQ were

little changed. Oil surged more than 5 percent, with West Texas Intermediate near $88 a barrel,

and Brent around $92. Even after the International Energy Agency announced a record 400 million

barrel release from reserves to offset supply disruptions. Markets remained focused on the risk

that the conflict could keep energy prices elevated, particularly with tensions around the

straight of Hormuz threatening key shipping routes. Strategists warned that if the oil spike

persists, it could weigh on earnings and valuations across global markets. Meanwhile,

February's CPI rose 2.4 percent year over year, in line with expectations.

One bright spot was Oracle, whose shares jumped about 9 percent after the company reported

better than expected earnings, and raised its fiscal 2027 revenue outlook.

But the oil story is becoming even more complicated. According to the Wall Street Journal,

Iran is exporting more oil through the straight of Hormuz than before the war,

underscoring its control over the key waterway, even as other golf producers cut output,

or look for alternative routes. Tanker Data shows Iran recently loaded about 2.1 million barrels

per day, largely sending crude to China on sanctioned shadow fleet tankers.

While those shipments remain largely unimpeded, markets remain on edge because a prolonged

disruption to the straight could remove roughly 3.8 million barrels per day from global supply.

And the ripple effects could complicate the Fed's path forward. According to Bloomberg,

while core inflation looked relatively mild in the first two months of the year,

based on the consumer price index, another key gauge tells a less encouraging story.

Economists expect the Federal Reserve's preferred measure, the PCE price index,

to show stronger inflation, potentially rising 3.1 percent year over year,

and widening the gap with CPI to one of the largest margins in decades.

The divergent stems from how the two indexes weigh categories differently,

with CPI emphasizing housing while PCE gives more weight to goods like software and jewelry

that have recently risen in price. With the Iran conflict pushing oil and energy costs higher,

economists warn inflation pressures could intensify in the coming months,

complicating the Fed's ability to justify rate cuts.

Investors are piling into tech stocks amid the broader macro uncertainty.

The Financial Times notes that the sector is being treated as a relative safe haven,

while energy-sensitive industries sell off, with technology being the only SNP 500 sector to rise

since the Iran conflict began, supported by the strong profits and balance sheets of the

magnificent 7. At the same time, software stocks are rebounding after months of heavy selling,

tied to fears that artificial intelligence could disrupt the sector.

The IGV software ETF has jumped about 13 percent since late February,

and recently posted its best week in nearly a year, as investors cover bearish bets and return

to the group. That dynamic is also showing up in credit markets. Bloomberg reports McAfee recently

repurchased about $287 million of its own bonds at a discount,

spending roughly $239 million in cash to capitalize on the sell-off in software-related debt.

On the private credit front, JP Morgan is tightening some lending to private credit funds

after marking down the value of loans tied to software companies. Bloomberg writes that because

banks lend to these funds using their loans as collateral, lower valuations reduce how much financing

they can provide, adding pressure on an industry already facing redemption requests,

and increased scrutiny around underwriting standards. Meanwhile, the Financial Times reports that

a Goldman Sachs executive said some private capital clients are quietly relieved the

Iran War is dominating headlines because it distracts from growing questions about private credit's

exposure to the software sector. Those concerns have already weighed on firms like Blue L Capital,

and even prompted Goldman to pitch hedge fund strategies to short-private loans tied to

enterprise software companies. The AI arms race among tech giants is accelerating. Meta unveiled

four new in-house artificial intelligence chips as part of its expanding data center strategy,

aiming to reduce reliance on outside suppliers like Nvidia and AMD. According to CNBC,

the chips are designed mainly for AI inference tasks such as powering recommendations,

ads, and generative AI features across Facebook and Instagram. By developing custom silicon,

manufactured by Taiwan semiconductor, Meta hopes to improve performance and lower costs as

its AI infrastructure spending ramps higher. That's your risk reversal market matrix. Be sure to

follow us to get alerts on new episodes every day. All of the articles mentioned on today's podcast

can be found in the show description. To get Guy Adami and Dan Nathan's market analysis,

on these topics and more, listen to market call on risk reversals YouTube page Monday through Thursday.

Story curation by risk reversal, scripts by perplexity pro, voice by 11 laps. I'm Brunson.

Thanks for listening.