Nasdaq Composite Slips, Before Reversing As Volatility Grips Markets

The Nasdaq Composite has swung from firmly negative, into positive territory in early Monday trading, more than 1.5% off the intraday low yet continuing to trade 3.5% lower year-to-date, as soaring crude prices and weak U.S. employment data combined to reignite inflation concerns and dampen sentiment across technology shares.

Nasdaq Composite Market Reaction

The tech-heavy index opened lower at approximately 22,338, down roughly 50 points from Friday’s close of 22,387.68. The modest Monday decline follows the Nasdaq’s worst weekly performance since October 2025, when the index fell 1.6% on Friday alone amid a confluence of macro headwinds. Year-to-date, the Nasdaq has now surrendered nearly 900 points, or close to 4%, as markets grapple with an increasingly uncertain economic backdrop.

Broader U.S. equity markets mirrored the weakness, with futures on the S&P 500 and Dow Jones Industrial Average also trading in the red. Meanwhile, the CBOE Volatility Index—Wall Street’s so-called fear gauge—remained elevated in the high-20s to mid-30s range, reflecting strong demand for downside protection among institutional and retail traders alike.

Oil Shock Intensifies Inflation Worries

At the heart of Monday’s sell-off lies a dramatic escalation in Middle East tensions over the weekend. The United States ordered diplomatic staff out of Saudi Arabia as the conflict involving the U.S., Israel, and Iran intensified, with Iran appointing Mojtaba Khamenei as the new supreme leader and continuing missile and drone attacks across the Persian Gulf region.

The Strait of Hormuz—a critical chokepoint that normally handles roughly 20% of global crude supply—has become all but closed due to attacks and blockades, triggering what analysts are describing as the worst disruption to global energy supply in decades. Brent crude and West Texas Intermediate both surged approximately 30% at the Monday open, with prices briefly touching $115 to $120 per barrel before easing back toward the $103 to $109 range. Both benchmarks now trade above $100 for the first time since 2022.

The oil spike has cascaded across energy markets, with diesel, jet fuel, and liquefied natural gas prices all up more than 75% over the past week. G7 finance ministers are discussing a coordinated release of strategic oil reserves to offset the shock, though market commentators view this as a temporary fix capable of covering only a couple of weeks of normal Hormuz flows.

For technology stocks—many of which carry high valuations predicated on low inflation and accommodative monetary policy—the energy shock represents a direct threat. Higher oil and refined-product prices intensify inflation fears exactly when markets had hoped inflation was largely tamed, raising the probability of a stagflation scenario that tends to hit high-multiple, long-duration growth stocks harder than value or energy sectors.

Weak Jobs Data Compounds Growth Concerns

The oil shock arrived on the heels of Friday’s disappointing U.S. employment report, which showed the economy lost approximately 92,000 jobs in February versus expectations for a gain of around 50,000. The unemployment rate ticked up to 4.4% from 4.3%, adding to concerns that the U.S. economy may be cooling faster than anticipated.

The combination of slowing growth and accelerating inflation—the classic stagflation mix—presents central banks with a policy dilemma. Markets have sharply rolled back expectations for Federal Reserve rate cuts in 2026, with forwards now pricing only about one and a half 25-basis-point cuts for the year, down from earlier expectations of three or more reductions.

U.S. Treasury yields gapped higher to start the week as bond markets discounted the inflationary impact of sustained triple-digit oil prices. The repricing of Fed expectations is directly valuation-negative for long-duration technology stocks, whose cash flows are projected far into the future and are therefore more sensitive to discount-rate assumptions.

Global Risk-Off Sentiment Spreads

The macro turbulence reverberated across global markets overnight. Asian indices were hit particularly hard, with Japan’s Nikkei 225 down more than 5% at one point Monday, while South Korea’s KOSPI experienced double-digit percentage swings amid tech-led volatility. European markets followed suit, with the DAX, CAC 40, STOXX 600, and FTSE 100 all falling 2% to 3% as the oil spike fed inflation worries in energy-importing economies.

The U.S. dollar rallied as a safe-haven asset, while cross-asset stress encouraged de-leveraging and de-risking across global portfolios. U.S. technology stocks—large, liquid, and with recent strong gains—became a natural source of liquidity, with investors selling even positions they still favour on a long-term basis.

Weakness in Asian and European technology names, particularly in semiconductors, hardware, and consumer internet, fed back into U.S. counterparts via supply-chain and demand-expectation channels, reinforcing concerns that the AI-led boom may need to weather a macro air pocket.

AI Fundamentals Remain Intact Despite Volatility

Despite the macro-driven sell-off, underlying fundamentals in artificial intelligence and cloud infrastructure remain robust. Last week, Marvell Technology surged approximately 18% after guiding to stronger multi-year growth driven by AI infrastructure demand, underscoring the secular tailwinds still supporting major Nasdaq constituents.

Recent research estimates suggest the “Big 5” AI spenders—Microsoft, Amazon, Google parent Alphabet, Meta Platforms, and Apple—may deploy roughly $700 billion on AI infrastructure in 2026, a capex boom that directly benefits semiconductor, cloud, and hyperscale software companies within the Nasdaq.

The disconnect between strong AI-driven earnings momentum and macro-driven index weakness has created a divide in market commentary. Long-only strategists and stock pickers continue to emphasize long-term bull cases for Nvidia, Alphabet, and other AI leaders, framing the current drawdown as macro-driven rather than earnings-driven. The question for markets is whether the positioning and valuation of these crowded trades can withstand further risk-off pressure, even if the fundamental story remains compelling.

Key Earnings Tests Loom This Week

The earnings calendar for the week of March 9–13 includes several tech-relevant bellwethers that could shift sentiment. Hewlett Packard Enterprise reports Monday, Oracle on Tuesday, UiPath and Bumble on Wednesday, and Adobe on Thursday.

Oracle’s report is being closely watched as a barometer of AI and cloud infrastructure demand, with at least one major analyst recently upgrading the stock on expected earnings-per-share growth and AI positioning, despite recent share-price weakness. Adobe’s Thursday print will test whether markets still trust its AI-driven creative suite strategy after a 35% share-price decline over the past year.

In an already fragile tape, any disappointment from Oracle or Adobe on AI and cloud demand, margins, or guidance could trigger broad technology de-rating, as these names are seen as representative of enterprise IT and software spending. Conversely, solid or above-consensus prints would reinforce the idea that the earnings engine remains intact despite macro shocks, potentially flipping the narrative back toward “macro scare versus earnings reality” and supporting a short-covering rally in technology.

Nasdaq Outlook: Fear Priced In

Options markets reflect elevated fear, with heavy demand for downside protection evident in rich put pricing and elevated volatility skew. Retail and institutional chatter has focused heavily on crash risk, oil spikes, and stagflation, with many market participants piling into index and sector puts.

Historically, when options-implied crash risk and retail fear both spike simultaneously, forward six- to twelve-month returns on broad indices have often been positive, as a significant amount of bad news becomes priced into current levels. The presence of heavy hedging also means that if the geopolitical situation stabilizes—or simply stops deteriorating—the removal or decay of protective positions could provide a strong mechanical tailwind to the Nasdaq.

This week’s inflation data will be critical. Markets await Wednesday’s February Consumer Price Index report and a delayed Personal Consumption Expenditures print later in the week. Consensus expects only a modest uptick in monthly CPI, but the energy shock makes upside surprises more plausible. If core measures come in around the expected 2.4% to 2.5% year-over-year, it could weaken the case for a prolonged higher-for-longer Fed stance and spark a relief rally in duration-sensitive technology shares.

The near-term tone for the Nasdaq remains solidly risk-off, with the oil shock, weak employment data, and repriced Fed path all leaning negative for high-valuation technology. Yet the structural AI and cloud story is intact, and upcoming earnings from key bellwethers will determine whether markets view this sell-off as a macro-driven correction or the start of a deeper de-rating in tech—a distinction that will shape whether the Nasdaq’s 3.85% year-to-date decline proves a dip worth buying or the opening act of a more prolonged downturn.

Nasdaq Composite Analyst Summary