White House & Policy - March 01, 2026 (EOD)

 ## Policy Recap The administration escalated military actions in the Middle East today, with coordinated strikes by U.S. and Israeli forces targeting Iranian assets. This marks a significant intensification of the ongoing conflict with Iran, following the reported death of Iran’s Supreme Leader Ali Khamenei. The president confirmed the U.S. military’s involvement and casualties, emphasizing that combat operations will continue until all strategic objectives are met. This military escalation has introduced heightened geopolitical risk and uncertainty into the markets. On the legislative front, there was no major congressional activity directly related to the conflict or other policy initiatives today. However, the administration’s firm stance on Iran and the announcement of ongoing military operations have dominated the policy landscape. The market digested these developments with caution, reflecting concerns about potential disruptions to global energy supplies and broader geopolitical instability. Investors also noted the administration's support for increased defense spending, which is expected to benefit defense contractors. Meanwhile, the administration’s approach to energy policy remains focused on balancing domestic production with strategic reserves, a dynamic underscored by the recent surge in oil prices. Overall, policy news today was dominated by geopolitical conflict, with markets reacting to the heightened risk environment. ## Market Reaction The broad market declined on the back of the escalating U.S.-Iran conflict. The S&P 500 (SPY) closed down 0.48% at $685.99, while the Nasdaq 100 (QQQ) fell 0.63% to $605.38. The Dow Jones (DIA) was the weakest major index, dropping 1.05% to $489.66. Small caps underperformed sharply, with the Russell 2000 (IWM) down 1.72% to $261.41, reflecting risk aversion among more speculative assets. Bond markets responded with a flight to safety, pushing the 20+ Year Treasury ETF (TLT) up 0.55% to $90.77. The U.S. dollar gained slightly, reflecting its safe-haven status amid geopolitical tensions, with the UUP dollar index ETF essentially flat at $27.08 but showing intraday strength. Oil prices surged sharply, with the USO crude oil ETF rising 2.73% to $81.95, driven by fears of supply disruptions through the Strait of Hormuz. Gold also rallied as investors sought refuge from market volatility, with GLD up 1.31% to $483.75. Intraday swings were pronounced, with markets initially rallying on hopes of de-escalation but then selling off as the conflict intensified. Overall, risk sentiment shifted negatively, with investors favoring defensive assets and sectors tied to energy and defense. ## Sector Scorecard - **Financials (XLF):** Declined 2.04% to $51.43. The sector was pressured by concerns over geopolitical risk and potential credit exposure to volatile regions. Bank stocks like **BAC** (-4.85%) and **WFC** (-5.80%) were notably weak amid risk-off flows and uncertainty about the economic impact of the conflict. - **Energy (XLE):** Gained 1.58% to $55.92, buoyed by the surge in oil prices due to the conflict. Major integrated oil companies such as **XOM** (+2.94%) and **CVX** (+1.60%) outperformed, benefiting from the prospect of higher energy prices and potential supply constraints. - **Industrials (XLI):** Slightly up 0.25% to $177.14. Defense contractors led gains, with **LMT** (+2.70%), **RTX** (+2.62%), and **GD** (+1.51%) rallying on expectations of increased defense spending and military activity. - **Technology (XLK):** Fell 1.60% to $138.76, pressured by broad risk aversion and concerns about the impact of geopolitical tensions on global supply chains and demand. Key tech names like **AAPL** (-3.44%) and **NVDA** (-3.83%) were notable decliners. - **Healthcare (XLV):** Rose 1.77% to $160.20, benefiting from its defensive characteristics amid market uncertainty. Pharmaceutical and biotech stocks such as **LLY** (+2.57%) outperformed as investors sought stable earnings. ## Winners & Losers ### Today's Policy Winners **$XOM** +2.94% - Benefited from rising oil prices amid Middle East conflict fears. **$LMT** +2.70% - Defense contractor gains on expectations of increased military spending. **$RTX** +2.62% - Rally on defense sector strength tied to ongoing U.S. military operations. **$LLY** +2.57% - Healthcare sector defensive demand amid market volatility. **$COST** +1.89% - Retailer seen as a safe haven amid consumer uncertainty. ### Today's Policy Losers **$BAC** -4.85% - Financial sector hit by risk-off sentiment and geopolitical uncertainty. **$WFC** -5.80% - Similar pressures on banking stocks due to market volatility. **$AAPL** -3.44% - Tech sector weakness amid risk aversion and supply chain concerns. **$NVDA** -3.83% - Decline tied to tech sell-off and geopolitical risk impacting growth stocks. **$U** -7.35% - Unusual large drop possibly linked to policy uncertainty or sector-specific issues. ## Trade & Tariff Update No new trade or tariff developments were reported today. However, the escalating conflict in the Middle East has raised concerns about potential disruptions to global trade routes, particularly through the Strait of Hormuz, a critical chokepoint for oil shipments. This risk has contributed to the surge in energy prices and added a layer of uncertainty for import/export sensitive companies, though no direct tariff actions were announced. ## Tomorrow's Policy Calendar - Congressional hearings expected on the administration’s Middle East strategy and defense budget implications. - Potential executive orders related to sanctions enforcement on Iran and allied entities. - Treasury Department to release updates on economic sanctions and export controls. - Key speeches from administration officials on energy policy amid rising oil prices. - Monitoring of any legislative proposals addressing market volatility or emergency funding related to the conflict.