S&P 500 Falls for Third Straight Week as Oil Shock and Iran Conflict Deepen

A Third Consecutive Week of Declines

Stocks experienced heightened volatility last week as the conflict in Iran and related disruptions to global oil supply continued to weigh on markets. The major U.S. stock indexes fell for the third consecutive week. The S&P 500 lost 1.6% for the week and is now off 3.1% on the year to date. The Nasdaq lost 1.3% and is off nearly 5% for the year so far.

The three-week string of declines for the S&P 500 left the index nearly 5% below its record high reached on January 27. The Nasdaq was nearly 8% below its October 29, 2025 record.

Oil Remains a Wild Card

Oil prices were volatile last week. WTI crude futures approached $120 per barrel before retreating after President Donald Trump signaled early in the week that the conflict could end soon. Despite that, oil prices remain about 45% above their pre-conflict level, and markets are concerned that they could stay elevated longer than previously anticipated.

While geopolitical shocks have historically had short-lived market effects, the magnitude of current disruptions suggests it may take time for prices to return toward the 2025 average of roughly $65 per barrel.

Since the conflict began, Japan, Korea, and the euro area have each declined by 8% or more, and each region imports more than half of their total energy needs.

Volatility Eases Slightly but Stays Elevated

The CBOE VIX index eased slightly for the week but remained elevated, finishing at 27.2, down from 29.5 at the end of the previous week. As recently as January 23, the VIX was below 16.

While stocks remain captive to oil prices in both directions, markets have been relatively resilient at the index level. That’s not true for individual stocks, many of which suffered double-digit losses over the last two weeks. Continue to expect violent rotations at times given how much short attention span money there is among traders.

One sector in the spotlight is consumer discretionary, already one of the worst performers of the year but potentially subject to more downward pressure if consumers push back amid higher gas prices. The energy sector, meanwhile, is becoming the momentum trade, meaning its strength is feeding off of how well it has been doing.

My Technical Read: A Critical Level Is Fast Approaching

Technically, the S&P 500’s November closing low of 6,538 could be a level to watch. The 200-day moving average at 6,600 may be the first point of support on another descent. The S&P 500 hasn’t closed below its 200-day moving average since last May.

The SPX 50-day moving average, which we follow closely, is substantially above current levels at 6,884. Price resistance levels sit at 6,710, 6,740, 6,785, and 6,845. SPX support appears near Friday’s closing level at 6,622-25, then sharply lower near the 6,522-34 zone. Technically, a violation of that key zone could quickly lead to an index plunge near 6,445-50 and even 6,275-80.

In any case, as we always do at TheTechTrader.com, we will “Trade What We See, Not What We Think.”

— HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com