Last Week
In the 1970s the US suffered through two energy crises, first in 1973 and then again in 1979. During that 7-year time span the stock market sputtered with the Dow Jones Industrial Average declining from over 1003 to 824. The 1979 oil crisis, sometimes referred to as the second oil crisis, refers to the drop in oil production in the aftermath of the Iranian Revolution that led to an energy crisis in 1979. The Kinks wrote a cool blues song describing the mood:
“Who needs a car and a seven forty seven
When you can’t buy a gallon of gas
Who needs a highway, an airport or a jet
When you can’t get a gallon of gas
There’s no more left to buy or sell
There’s no more oil left in the well
A gallon of gas can’t be purchased anywhere
For any amount of cash
You can’t buy a gallon of gas”
Fifty years later the dynamics of the energy market has changed, most notably with the US becoming a net exporter of oil & gas, yet global supply and demand factors still determine energy prices, with the geopolitics in the Middle East causing volatility, and Iran in the center of the disruption.
With no signs of progress on peace negotiations, crude oil prices surged over 10% during the past week, leading to a 6.5% increase in the Oil & Gas sector equities, and general downward pressure on the rest of the market. The headline numbers were not so bad, with the S&P 500 and Nasdaq Composite both treading water, but it was ugly beneath the surface, as Small and MidCap stocks suffered losses of 2.4%. The number of declining issues nearly tripled the number of advancing issues, and the yield on the 10-year Treasury surged 24 basis point to 4.59%, its highest level since May 2025.
The impact of the war was clear in the economic data, with hotter-than-expected CPI and PPI inflation. Meanwhile, President Donald Trump’s visit to China concluded without major breakthroughs on trade or Iran, although China did order 200 jets from Boeing, thus answering the Kinks question from the song as to who needs a jet.
On the Chicago Sports Scene, the Cubs and Sox battled each other in the crosstown classic. The Cubs are still leading the NL Central, while the White Sox are only a game out of first in the AL Central. Before jumping on the Cubs bandwagon, we polled our diehard Cubs fans friends to see if they are for real. The unanimous consensus was that they would fade due to a depleted pitching staff. Please let us know if you have a more optimistic outlook for the North Siders. A sleeve of North Star golf balls awaits any compelling responses.
This Week
Developments in the war will continue to drive energy prices as well as other financial assets.
Nvidia’s results on Wednesday will also be in focus for the Tech sector, while results from Walmart, Target, Lowe’s, and TJX will offer a read on consumer spending.
The economic data calendar includes the flash PMI data on Thursday, which will provide insight into the economic impact of ongoing Middle East tensions.
The Federal Reserve will release minutes from its last meeting on Wednesday. Traders will parse through the minutes looking for any new hints about the future of monetary policy.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.