US Stock Market Close: Iran War Escalation Intensifies Inflation Concerns, S&P 500 Index Falls for Third Consecutive Week

Caixin News, March 14 (Editor: Niu Zhanlin)
On Friday, U.S. Eastern Time, the three major U.S. stock indices all closed lower, ending a volatile week. This week, crude oil prices fluctuated sharply, causing significant stock market swings as investors assess the impact of the Iran conflict on global oil supplies.

All three major U.S. stock indexes posted daily and weekly declines, with the Russell 2000 small-cap index closing at its lowest level this year.

After fluctuating throughout the day, crude oil prices ultimately rose, even as President Trump temporarily eased sanctions on Russian oil to alleviate market concerns over supply shortages.

Paul Nolte, Senior Wealth Advisor and Market Strategist at Murphy & Sylvest, said: “The recent volatility in energy markets can almost be compared to any two-week period of intense fluctuation in cryptocurrency history. So, it’s hard to say whether this volatility is driven by fundamentals.”

He added: “Market sentiment is currently very high, making it difficult to make rational trading or investment decisions in such an environment. The better approach is to stay on the sidelines temporarily, wait for the situation to develop and gradually stabilize, which could take several weeks.”

The settlement price for near-month WTI crude oil futures was $98.71 per barrel, up 3.11% intraday. Brent crude oil rose 2.67% to $103.14 per barrel.

On Friday, Trump vowed that “very severe strikes” would be carried out against Iran next week, coupled with reports that the conflict has spread to Lebanon, Kuwait, Iraq, the UAE, Bahrain, and Oman, dampening hopes for de-escalation and recent resolution.

Additionally, reports indicate that as Iran continues to block the Strait of Hormuz, the Pentagon is deploying more Marine Corps units and warships to the Middle East. Three U.S. officials disclosed that Defense Secretary Lloyd Austin approved the Central Command’s request to send an amphibious ready group and its accompanying Marine expeditionary unit.

On the economic data front, the U.S. Commerce Department sharply downgraded Q4 GDP growth, highlighting a series of disappointing economic indicators. The Personal Consumption Expenditures (PCE) report showed that the Fed’s preferred inflation measure remained nearly unchanged, while other data indicated weak demand for durable goods.

Despite weak economic data, expectations remain that the Federal Reserve will keep key interest rates unchanged after next week’s monetary policy meeting. With oil prices surging and further fueling inflation risks, the likelihood of rate cuts in the near term is decreasing.

Peter Cardillo, Chief Market Economist at Spartan Capital Securities, said: “Inflation remains high, and once energy prices gradually feed into the broader economy, the Fed is likely to keep rates steady for a longer period.”

Market Dynamics

At the close, the Dow fell 119.38 points, or 0.26%, to 46,558.47; the Nasdaq dropped 206.62 points, or 0.93%, to 22,105.36; the S&P 500 declined 40.43 points, or 0.61%, to 6,632.19.

Among the 11 major sectors of the S&P 500, technology declined the most, while utilities gained the most. Due to increasing concerns over credit quality, the financial sector of the S&P 500 fell 3.4% this week.

Hot Stocks Performance

Large tech stocks mostly declined: Apple down 2.21%, Nvidia down 1.58%, Microsoft down 1.57%, Tesla down 0.96%, Amazon down 0.89%, Google A down 0.42%.

Meta fell 3.8%, as the company announced that its self-developed AI model “Avocado” will be delayed from March to at least May.

Design software maker Adobe dropped 7.6% after announcing that long-time CEO Shantanu Narayen will step down after appointing a successor, reigniting market concerns over potential AI disruption.

Rivian declined 2.9%, despite launching the R2 platform to boost sales. The company has been troubled by high production costs, exacerbated by tariffs, supply chain disruptions, recalls, and policy changes under the Trump administration.

The Nasdaq Golden Dragon China Index rose 0.76%, up 2.69% for the week. Among popular Chinese concept stocks, NIO gained 5.59%, Tencent Music 3.7%, Zhongtong Express 2.4%, Canadian Solar 2.1%, and Fangdd dropped nearly 5%.

Company News

【Amazon Partners with Cerebras to Deploy AI Inference Chips】
U.S. tech giant Amazon announced on Friday a partnership with AI chip startup Cerebras Systems to integrate their computing chips into a new service aimed at accelerating chatbots, programming tools, and other AI applications. Under the plan, Cerebras chips will be deployed in Amazon Web Services (AWS) data centers and connected to Amazon’s in-house Trainium 3 AI chips via Amazon’s custom networking technology. Amazon and Cerebras will collaborate on a key aspect of AI— inference, the process where trained AI models receive user requests and generate responses. The task will be split into two steps: first, “pre-filling,” converting natural language requests into tokens used by AI computers; second, “decoding,” where the AI generates the desired answer.

【Elon Musk Apologizes and Promises ‘Digital Pillar’ Launch in Six Months】
After widespread talent departures from his AI company xAI, the often rebellious world’s richest man Elon Musk showed rare self-reflection. Recently, after xAI merged with SpaceX, many of the “11 Musk disciples” who co-founded the AI firm left en masse. In response to the chaos, Musk publicly stated that xAI was not initially built correctly, and is now being rebuilt from the ground up. He also mentioned that Tesla experienced similar issues in the past. Musk confirmed that the “Digital Pillar”—Tesla’s version of “Lobster”—will be ready for user experience in about six months.

(Caixin News, Niu Zhanlin)