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March 20, 2026 – 20:25

(Bloomberg) — Turmoil in the Middle East sparked fresh losses in stocks and bonds, with fears about an escalation of the war in Iran boosting oil prices as anxiety builds around the potential economic fallout of the conflict.

The S&P 500 fell about 1.5%, extending declines as CBS reported the US is preparing to deploy ground forces into Iran. US officials said the White House is sending hundreds of Marines as it weighs a plan to seize Iran’s Kharg Island. In an interview with Fox, President Donald Trump declined to comment on whether the US was considering taking over the oil-export site. Brent topped $112.

A rout in Treasuries deepened, with traders pricing in a 50% chance of a Federal Reserve hike by October. Gold headed for its worst week in four decades.

Markets have been rocked by disruption to supply out of the Persian Gulf, with the Strait of Hormuz near a standstill. Iranian officials have become reluctant to even discuss reopening the Strait as they focus on surviving the attacks, according to a person involved in direct, high-level contacts with Tehran.

Trump lashed out at military allies for not joining the war or helping to unblock the waterway, with the Islamic Republic keeping up strikes on energy assets.

“Investors initially thought that the Iran war would be short,” said Jose Torres at Interactive Brokers. “But as aggressions intensify amid no light at the end of the tunnel, the pain on Wall Street continues.”

Fed Governor Christopher Waller said he’s cautious about how elevated oil prices will impact inflation, though jobs weakness may still warrant rate cuts. Fed Vice Chair for Supervision Michelle Bowman told Fox Business she supports three reductions in 2026 and expects strong growth, but is keeping an eye on the war.

“The Fed is caught between slowing growth and renewed inflation pressure, with neither side clearly dominant,” said Julia Hermann at New York Life Investment Management.

Gold Selloff Worsens Headache for Haven Seekers: Equity Insight

“The stock market remains in negative territory for the year, and has made new 2026 lows this week, which suggests that the market may not have yet found its bottom and is still in the process of sorting out and pricing in the duration of the Middle East conflict,” said David Laut at Kerux Financial.

Since the outbreak of the war, the S&P 500 has fallen about 5%, heading toward its fourth straight week of losses. Traditional havens are not protecting investors, with bonds losing value as traders react to inflation and federal budget concerns while gold has tumbled, noted Mark Hackett at Nationwide.

Money market funds are the safe haven of choice, Hackett added, suggesting investors are parking money on the sidelines rather than engaging in a structural allocation shift.

Bond traders are scrambling for a new strategy after the oil shock triggered scuppered a popular wager on Fed cuts. By Friday, sentiment had flipped to such a degree that traders now bet the central bank might need to hike to combat inflation.

“We disagree with this assessment as the spike in oil prices should delay Fed rate cuts amid stagflationary pressures, but a sufficient move higher in oil could create a financial conditions shock that may require the Fed to respond with cuts,” said Gennadiy Goldberg at TD Securities.

Corporate Highlights:

FedEx Corp. raised its full-year profit forecast, signaling the plan to restructure its delivery network is gaining traction. The US charged a Super Micro Computer Inc. co-founder with illegally diverting billions of dollars in Nvidia Corp.-powered servers to China. Nvidia Corp.’s $20 billion licensing deal with Groq is being probed by a pair of Democratic senators over whether it violates antitrust laws. What Bloomberg Strategists say…

“The Iran conflict has triggered an abrupt repricing of monetary policy expectations, creating tighter financial conditions and leaving the S&P 500 at risk of turning a controlled drawdown into a full correction.”

—Michael Ball, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 fell 1.6% as of 3:23 p.m. New York time The Nasdaq 100 fell 2% The Dow Jones Industrial Average fell 1.1% The MSCI World Index fell 1.5% Currencies

The Bloomberg Dollar Spot Index rose 0.5% The euro fell 0.3% to $1.1554 The British pound fell 0.7% to $1.3331 The Japanese yen fell 1% to 159.34 per dollar Cryptocurrencies

Bitcoin fell 0.8% to $69,914.41 Ether fell 0.9% to $2,126.44 Bonds

The yield on 10-year Treasuries advanced 14 basis points to 4.39% Germany’s 10-year yield advanced eight basis points to 3.04% Britain’s 10-year yield advanced 15 basis points to 4.99% Commodities

West Texas Intermediate crude rose 2.7% to $98.15 a barrel Spot gold fell 3.4% to $4,492.82 an ounce ©2026 Bloomberg L.P.