Things you need to know
- Friday’s Market Selloff Wasn’t About One Thing — It Was About Three
- Weak jobs data, surging oil prices, and sudden stress in private credit forced investors to reassess the risk landscape.
- Markets around the world remain under pressure.
- Iran names the dead Ayatollah’s second son as the new Supreme Leader and its more of the same.
- Bonds down, gold down.
- Try the Angry Lobster.
Every now and then the market reminds investors that it rarely moves on just one headline. Friday, March 6th was one of those days.
Three different stories hit the tape almost simultaneously — a weak jobs report, a surge in oil prices tied to rising geopolitical tensions, and growing concern about stress building in parts of the private credit market. Any one of those headlines alone might have created some volatility, but together they forced investors to step back and reassess the broader risk landscape.
And so yes — stocks had a tough day on Friday.
The Dow lost 453 points, or 1%, the S&P 500 gave back 90 points, or 1.3%, the Nasdaq dropped 360 points, or 1.6%, the Russell choked — falling 60 points, or 2.3%, while the Transports had a stroke — tumbling 673 points, or 3.5%. The Equal Weight S&P lost 106 points, or 1.3%, and the Mag 7 gave back 584 points, or 1.8%.
Volatility surged as well. The VIX ended the day up 25%, closing just a hair below the 30 level — a line we discussed on Friday. And here’s what I said then:
“The VIX is now trading at 25.54 and that is causing U.S. futures to decline again. A move up and through 30 — which happened back in April 2025 during the ‘Tariff Tantrum’ — will cause stocks to trade lower again.”
Well, overnight that’s exactly what happened.
The VIX surged to a high of 35.30, up nearly 20%, confirming that fear was accelerating across global markets. This morning, as of 5:30 a.m., the VIX has pulled back slightly but remains elevated — up about 12% at 33.25 — and that level of volatility is continuing to pressure markets around the world.
Asian markets felt it first.
Japan fell 5.2%, Taiwan dropped 4.4%, South Korea slid 6%, Hong Kong lost 1.3%, and Australia declined 2.8%. The only relative outperformer was China, which was down just about 1%.
In Europe, where it is approaching midday, markets are under pressure as well. The selling is broad-based, with the Euro Stoxx index and the major continental markets — France, Germany, Spain, and Italy — all down more than 2.5%, while the UK is off about 1.8%.
Investors there are reacting to the same catalyst pressuring global markets — mounting concern that the escalating Middle East conflict shows no clear path toward de-escalation.
And the selling is ready to hit the United States. Futures are under pressure, although off the overnight lows. At 5:45 a.m., Dow futures are down 486 points, the S&P is down 62, the Nasdaq off 255, and the Russell down 42.
What’s important to note is that buyers who had been defending the 6840 trendline for weeks appear to be stepping aside. When that happens, markets can move quickly.
Retail investors become emotional, technical levels begin to break, and once those trendlines snap the algos pile on, triggering wave after wave of selling that feeds on itself. Buy algorithms that see this coming cancel bids and step lower — leaving a void in prices.
And boom — down we go.
What begins as orderly selling can quickly turn emotional. Investors start abandoning positions not because fundamentals changed overnight, but because market psychology shifts. It begins to feel like capitulation — selling assets at almost any price simply to avoid deeper losses.
The key thing to watch now is volume. True capitulation usually reveals itself through extremely high, fear-driven trading — a classic “get me out at any price” moment. That behavior signals panic rather than strategy.
If we begin to see that type of activity, it often means the market is flushing out the weakest hands.
Remember — capitulation often ends with a vertical drop. That happens because margin calls get triggered, forcing more selling. Risk models get triggered, forcing more selling. And the entire move is amplified by algorithms that accelerate the decline.
Ironically, it is often those moments of maximum fear that mark the bottom.
For weeks now we’ve been discussing the steady drumbeat of economic data and the surge in oil prices — a move driven largely by rising geopolitical tensions. But in recent days that story has intensified dramatically as conflict involving Iran threatens to spill across the broader Middle East.
Energy markets are doing what they always do in moments like this — pricing risk first and asking questions later.
One of the most important questions now is the Strait of Hormuz. Traders are contemplating the possibility of supply disruptions across the region. We discussed this last week — will Iran attempt to block the Strait?
Even if it never actually closes, the risk alone is enough to send prices sharply higher. The concern is not necessarily about supply disappearing tomorrow — it’s about what could happen if the conflict widens and shipping lanes become threatened.
Overnight oil surged nearly 30% to $119.48, in what looked like outright panic buying. This morning WTI is trading near $98.70 — still up about $7 as the chaos continues.
For investors and central banks, the implications are significant. And next week is the March FOMC meeting – so don’t expect to hear from any FOMC members.
Higher oil prices feed directly into inflation expectations. Gasoline prices rise, transportation costs climb, and those increases ripple through the broader economy.
That creates a complication for the Fed. For months the narrative has been that slowing economic growth might eventually give the Fed room to ease policy. But if energy prices begin pushing inflation higher again, the Fed could find itself in a policy bind.
And then there was the latest NFP report. February payrolls surprised markets with a negative 92,000 reading, a sharp miss versus expectations for +55,000 jobs. Unemployment ticked up slightly to 4.4%, which remains historically low, but the headline job losses were enough to shift the conversation.
Investors are now asking: is this simply a noisy data point, or the first sign that the labor market is beginning to crack?
And then – just as investors were digesting weaker economic data and rising oil prices, attention shifted again — this time to private credit.
Reports suggest that the stress markets had already priced into that sector may not be sufficient to absorb the actual pressure building in the system, triggering a selloff across leveraged finance.
Stocks tied to that market reacted quickly: BlackRock fell 7.7%, Blue Owl declined 5.1%, Carlyle dropped 5.3%, TPG lost 4.2%, and KKR fell 4.4%.
A little history explains the sensitivity. Over the past decade — particularly after the Global Financial Crisis — private credit exploded in size as banks pulled back from riskier lending. Private funds stepped in to fill the gap. In a world of near-zero interest rates, that model worked. Capital was cheap, refinancing was easy, and credit conditions were forgiving.
But today the environment is very different. Borrowing costs are higher and economic growth appears to be slowing. That combination worries investors because when growth slows, highly leveraged borrowers can suddenly find it much harder to service their debt.
And that’s why the private credit story matters to the broader market.
Put it all together and Friday’s reaction begins to make a lot more sense. Markets are processing weaker economic data, rising oil prices, geopolitical risk, and concerns about leverage in parts of the financial system — all at the same time.
And when that happens, markets rarely sit still.
The key for investors right now is perspective. Geopolitical shocks tend to move markets sharply in the short term because they create uncertainty — and markets hate uncertainty. But from their most recent highs (not year-to-date), the moves are still relatively contained:
The Dow is down 6.8%, the S&P 500 off 4.1%, the Nasdaq down 7%, the Russell lower by 7.3%, and the Equal-Weight S&P down 3.1%.
In other words, while the headlines feel dramatic, the market action still falls within what would be considered a normal corrective pattern.
Volatility may feel uncomfortable, but it is also a reminder that discipline — not emotion — ultimately drives long-term investment success.
For long-term investors, moments like this are a reminder that markets always react to headlines in the short run, but over time they respond to fundamentals — economic growth, corporate earnings, and policy decisions.
Right now those forces are colliding with geopolitical risk, and until the picture becomes clearer, investors should expect markets to remain sensitive to every new headline.
The takeaway? Markets hate uncertainty — and Friday delivered plenty of it. Investors and algorithms alike are recalibrating expectations. The key question now is whether this represents the beginning of a broader shift in the economic narrative — or simply another wave of short-term market noise. As always, time — and the next round of data — will tell.
Meanwhile bonds continued to weaken. TLT lost 0.4%, TLH slipped 0.3%, pushing the 10-year yield to 4.18% and the 30-year yield to 4.79%. Key levels to watch remain 4.5% and 5% respectively.
Gold is also under pressure — down $68, or 1.3%, to $5,103. The reason? A surging dollar.
Remember — commodities typically move inversely to the dollar. A stronger dollar pressures commodities, while a weaker dollar supports them.
This morning the dollar index is up 30 cents at 99.30, still well above all three trendlines.
The other issue is that surging oil prices could reignite inflation concerns. While that might normally support gold, the stronger dollar is what markets are focusing on for now.
The S&P closed at 6,740, leaving us squarely between the long-term trendline at 6,582 and the intermediate trendline at 6,840.
As I said Friday morning, buyers defending that intermediate trendline appeared to be getting exhausted, which suggested the market might test lower.
The next key level is the 200-day moving average near 6,582, roughly 2% below current levels. Even if we reach it, that would represent only about a 6.5% pullback from the highs — hardly catastrophic in the context of this market.
Yes, individual stocks will experience larger declines — and that is where opportunity begins to emerge.
The key question investors must ask is simple: Are those declines justified by fundamentals, or are they simply the result of investor anxiety? Because those are two very different scenarios — and two very different opportunities.
The tone remains skittish, and headlines will continue to drive sentiment. A test of the long-term trendline around 6,580 is not out of the question.
Call me at 561-931-0190 and let’s talk about whether the risk in your portfolio actually matches your tolerance — because this works both ways.
You may be taking too much risk… or not enough to reach your goals.
Take good care,
Kp
[email protected]
Source: Bloomberg, CNBC, Reuters, Wall Street Journal
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Angry Lobster – Thought this might be a good recipe today!
For this you need: 1 (2 pound) whole Maine lobster, cup olive oil, minced garlic, chopped fresh basil, lemon zest, red chili flakes (suggests anger), minced red onion, and lemon juice.
You have to prepare the lobster for marinating – so to do so you will need to break the claws off the body and crack them open. Then slit the underside of the body. Mix all of the ingredients together to make a nice marinade…..put the lobster in a large bowl and pour the marinade and let sit in the fridge for at least 4 hrs.
Light the grill…. let it get nice and hot.
Now when ready – remove the lobster – and place on the grill – allow to cook for 3 mins…. turn all of the pieces just once…claws and body…. cook for about another 4 mins…..just an fyi…a good rule of thumb for grilling lobster – is about 7 min/lb. So, a 2 pounder would cook for 6 mins and then 8 mins…capisce?
Buon Appetito.