SOTS 2nd Hour: U.S.-Iran Impact - From Stocks to Geopolitics to Energy 3/2/26

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Department of Health and Human Services and the Ad Council.

Sara Eisen (0:51)

Good Monday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. We are live at Post 9 of the New York Stock Exchange. Stocks are under pressure as the markets react to the US and Israeli strike on Iran over the weekend. The S&P 500 down half a percent. One bright spot in this market is energy because oil prices are surging. Most everything else is lower, although information technology is holding up well. You've got some strength in names like Palantir, no surprise, up five percent, sort of a defense tech play. NVIDIA is higher though as well, and so are some of the other semiconductors. But consumer discretionary, that's what's weak, down two percent. Communication services and financials, all the cyclical groups. Treasuries also making a move. They're buying the safe haven US dollar, but selling treasuries potentially on this inflation trade, with higher oil prices, higher inflation. The 10-year yield goes back above four percent. We've got full coverage of the war in Iran, the impact on global markets. Great line up of experts coming for you. Ian Bremmer from the Eurasia Group, former Defense Secretary Mark Esper, former Israel ambassador to the US, Michael Oren. We're going to get through all the key details that investors are looking for.

Carl Quintanilla (1:59)

First up, though, busy day for some manufacturing surveys. Let's get back to Rick Santoli. Hey, Rick.

Rick Santelli (2:05)

Hi, Carl. Indeed, now, these are the ISM PMIs, and these are fresh February reads on the headline manufacturing, expecting 51.5. In the rear-view mirror, 52.6. We come in at 52.4.

And if we look at prices paid, we'd rather have these go down, but zoom, zoom, zoom, 70.5. Well ahead of the 60-ish we're looking for, 59 in the rear-view mirror, 70.5 would be the warmest since June of 22 And if we look at new orders, 55.8, better than expectations, but lacking in terms of sequential, 57.1 in the rear-view mirror. 55.8 would be the weakest since December of last year, when we were sub-50 at 47.4. And if we look at employment on a week where it's very key, we get the big jobs report this week. Well, 48.3 expected, 48.8 better than expected, and 48.1 in the rear-view mirror. So it's better than expected, it's better than the rear-view mirror. Here's the problem, it's the 29th consecutive month under 50 Interest rates are moving up, parallel shift on the yield curve, the short end and the long end are each down about eight basis points. Sara, back to you.

Sara Eisen (3:24)

Okay, Rick, thank you very much. Rick Santelli. So where do we look on a day like today? You have to start in the energy market because that is driving a lot of the price action and a lot of the concerns about the economic impact of this war. Look at Brent crude oil, for instance. That's the global benchmark. It is surging gas prices, especially in Europe, surging as well. After Qatar made that announcement that they would be pausing. Remember, Qatar is a big gas supplier to Europe. What the market is telling you is that this is going to hurt inflation, the consumer discretionary travel stocks under pressure a lot this morning. You know, Wolf Research put out a pretty good analysis. They cited the Federal Reserve's FRB US model for a $20 increase in energy prices. For every $20 increase, you see a 7 basis point hit to the level of real GDP, and nearly 40 basis point boost to headline CPI year over year. So they actually put out a projection of what, say, a $20 increase in oil prices would mean for CPI, for inflation. And you can see, I mean, there's an elevated effect for, you know, the better part of the year if this sustains Q2, Q3, Q4. We're talking about almost 0.4% increases in overall CPI. They say general rule of thumb is for every $1 barrel increase in crude, there's a rise in gas prices of 2 to 2.5 cents per gallon. In other words, consumer feels it.