Week in Markets: F-15 Down Over Iran, S&P Rallies 3.4%, NFP +178K on Closed Markets

The S&P 500 had its best week in four months while an American fighter jet burned in Iranian mountains. Markets gained 3.4%, breaking a five-week losing streak, as Powell reassured that no rate hike was coming. But outside trading screens, the war deepened on every front. Iran fired its largest missile barrage during Passover. Kuwait's biggest refinery and corporate headquarters went up in flames. Fuel rationing began across Europe and Asia. And Trump gave Tehran 48 hours to open Hormuz or face "hell."

The week produced more data than most months. NFP on Friday shocked with +178,000, triple the consensus, but markets were closed for Good Friday and could not trade the number. ISM manufacturing printed 52.7, expansion continuing, yet the Prices Paid component hit 78.3, the highest since June 2022. A stagflation signal buried in a strong headline. ADP, JOLTS, and jobless claims all landed in the same four-day window. Every number was overshadowed by what happened between the data points: Trump's first primetime address on the war, Iran's Passover barrage, a downed F-15E, and a search-and-rescue operation in hostile territory that lasted more than 24 hours.

The relief rally was real but narrow. It rested on two pillars: Powell's "wait and see" stance that killed the rate hike narrative, and Iran-Oman talks that raised faint hopes of a Hormuz diplomatic track. Remove either pillar, and the math changes. As of Saturday April 4, both pillars are under stress. Trump's 48-hour ultimatum expires Tuesday. The April 6 deadline looms. And Monday's open must price NFP, the weekend's geopolitical developments, and whatever happened in the 56 hours when no US exchange was operating.

Macro Pulse

Powell Resets the Rate Debate

The most market-moving event of the week happened on Monday. Fed Chair Powell spoke at Harvard, addressing an undergraduate economics class, and delivered a message that unwound weeks of rate hike fears. His core statement: interest rates are "in a good place" to wait and see how the situation evolves. No hike. No cut. Patience.

The market reaction was immediate. Treasury yields fell 10 basis points across the curve. CME FedWatch repriced: the probability of a hold at the April 28-29 FOMC meeting jumped to 98%. The greater-than-50% probability of a rate hike by year-end, which crossed that threshold just the previous Friday, collapsed. One cut is now priced for late 2026, most likely September or November.

Powell also flagged the $3 trillion private credit market as something the Fed is watching "super attentively," though he stopped short of signaling systemic risk. The takeaway for markets: the Fed will not compound the oil shock with a rate hike. The bar for tightening is high, even as energy-driven inflation pushes headline numbers higher.

The Jobs Paradox

Friday's Non-Farm Payrolls number landed with the force of a headline and the nuance of an asterisk. The economy added 178,000 jobs in March, tripling the 56,000-60,000 consensus. The unemployment rate ticked down to 4.3% from 4.4%. On the surface, this is the kind of number that settles the recession debate. Beneath the surface, it is anything but.

Of the 178,000 jobs, 76,000 came from healthcare, primarily from workers returning after the Kaiser Permanente strike that had pulled 37,000 physicians off payrolls in February. That single factor accounts for 43% of the headline beat. Remove the strike return, and the underlying gain is closer to 100,000, a reasonable number but not the blowout the headline suggests.

February's already-shocking -92,000 was revised further down to -133,000. January was revised up from +126,000 to +160,000. The two-month net revision is -7,000, marginal, but the February deterioration matters for narrative: the labor market's worst month since the pandemic was worse than initially reported.

Average hourly earnings rose 0.2% month-over-month and 3.5% year-over-year, both below expectations of 0.3% and 3.7% respectively. The wage deceleration is the best data point in the report. With oil at $112, the Fed needs every bit of wage disinflation it can find. The 3.5% annual wage growth is the lowest since May 2021.

The critical wrinkle: the report was released at 8:30 AM on Good Friday. No equities market was open. No ETFs traded. The entire reaction, whatever it turns out to be, is compressed into Monday's open. A number this strong normally triggers an intraday repricing. Instead, it sits undigested over a holiday weekend that also includes the April 6 Iran deadline.

Input Costs Surge

ISM Manufacturing PMI came in at 52.7% on Wednesday, above the 52.3% consensus and up from 52.4% in February. The third consecutive month of expansion. Production at 55.1 and New Orders at 53.5 signal continued activity. But the alarm is in a different line item.

The Prices Paid sub-index hit 78.3%, up 7.8 percentage points from February's 70.5%. In two months, Prices Paid has risen 19.3 points. This is the highest reading since June 2022, when the last inflation cycle was peaking. Raw materials prices have now increased for 18 consecutive months. Oil at $112 is flowing directly into input costs, and manufacturers are absorbing it.

Meanwhile, the JOLTS report showed job openings at 6.882 million, down 358,000. The hiring rate fell to 3.1%, its lowest since April 2020. Initial jobless claims printed 202,000, well below the 212,000 forecast and near a two-year low. ADP private payrolls beat at +62,000 versus +40,000 expected.

The picture these data points paint together: the economy is still expanding, the labor market is not collapsing, but the cost structure is deteriorating fast. Manufacturing is growing while input inflation accelerates. Jobs are being created, but hiring intent is at pandemic-era lows. This is the stagflation-lite scenario that Bank of America has now officially flagged.

Sources - Macro Pulse: CNBC: Powell at Harvard | BLS: Employment Situation | CNBC: Payrolls +178K | ISM: Manufacturing PMI | BLS: JOLTS | CME FedWatch

The War Goes Deeper

Trump Addresses the Nation

On Tuesday evening, Trump delivered his first formal address to the nation on the Iran war from the Cross Hall of the White House. The roughly 20-minute speech laid out his case for continued strikes. Key messages: the war is "nearing completion," military objectives are "nearly all achieved," and the US will "hit them extremely hard over the next two to three weeks." He threatened to expand strikes to power plants and desalination facilities if Iran does not comply.

Asian markets reacted immediately. The Nikkei fell 2.1%. South Korea's Kospi dropped 3.9%. Brent crude spiked over 4% to above $105. The speech confirmed what markets feared: there is no imminent off-ramp. The administration's timeline stretches weeks, not days.

The Passover Barrage

On Thursday evening, as Israelis sat down for Passover Seder, Iran launched its largest missile barrage since the war began. Twenty ballistic missiles targeted central Israel in six salvos. One carried a cluster warhead that scattered submunitions across Bnei Brak, Ramat Gan, and Givatayim. Fifteen people were injured, including a gravely wounded 11-year-old girl. Hezbollah simultaneously fired over 150 rockets into northern Israel. The Houthis contributed one additional missile.

The timing was deliberate. The barrage came in response to US-Israeli strikes earlier that day on Iranian bridges, petrochemical facilities, and pharmaceutical production. Israeli Minister of Defense Katz confirmed strikes on the Bileghan bridge connecting Tehran to Karaj, aiming to cut missile transfer routes to western Iran.

Gulf Infrastructure Under Fire

Iran expanded its target set to Gulf state energy infrastructure throughout the week. On Wednesday, drones and missiles struck Kuwait, Bahrain, and the UAE. Bahrain's AWS data centers sustained additional damage. A strike on UAE's Habshan gas facilities killed one Egyptian national and injured four.

On Friday, Iranian drones hit the Mina Al-Ahmadi refinery, Kuwait's largest, for the third time since the war began. Fires broke out across multiple operational units. The same day, a desalination plant was struck. By Saturday, the Kuwait Petroleum Corporation headquarters itself was set ablaze by a drone strike. Two power plants were also hit. Amazon Web Services confirmed that two of its UAE data centers were "directly struck" and a third in Bahrain damaged by a nearby impact.

The IEA's executive director Fatih Birol warned on Wednesday that "the loss of oil in April will be twice the loss of oil in March." The agency had already triggered the largest emergency oil reserve release in its history: 411.9 million barrels coordinated across 32 member nations.

First Fighter Jet Lost Since 2003

During a nighttime mission on Friday, an F-15E Strike Eagle was shot down over southern Iran. It was the first American military aircraft brought down by enemy fire since the 2003 invasion of Iraq. A second aircraft, an A-10 Warthog, was hit near the Strait of Hormuz. Its pilot ejected over the Persian Gulf and was recovered quickly.

The F-15E's pilot was rescued within hours. The second crew member, a weapons systems officer, remained missing for more than 24 hours, wounded and hiding in Iranian mountains. A Delta Force and SEAL Team Six operation extracted him on Saturday in what senior officers described as one of the most difficult combat search-and-rescue missions in recent history. The CIA had broadcast disinformation inside Iran claiming both crew members had already been found.

Hormuz and Diplomacy

Strait of Hormuz traffic rose slightly, with 53 transits recorded for the week versus 36 the previous week, but this remains 90% below normal levels. Iran's selective transit regime continues: Chinese, Russian, Indian, Iraqi, and Pakistani ships may pass. Everyone else pays in yuan or does not pass.

Two diplomatic tracks emerged. Iran and Oman held talks on Saturday between deputy foreign ministers, discussing a protocol to monitor ship passage through the strait. No agreement was reached, but the existence of the channel moved markets. Meanwhile, China and Pakistan submitted a five-point peace plan to the UN and major capitals, positioning Beijing as a mediator. China blocked a UN Security Council resolution proposed by Bahrain that would have authorized force to reopen Hormuz. France joined China and Russia in opposition.

The Philippines secured a separate guarantee from Iran for "safe, unhindered, and toll-free" passage for Filipino vessels and sailors through the strait.

48 Hours to "Hell"

On Saturday April 4, Trump issued a new ultimatum from Truth Social: Iran has 48 hours to "make a deal or open the Strait of Hormuz, otherwise they are going to live in hell." In an interview with the Wall Street Journal, he threatened to strike "every power plant and every other plant they have in the whole country."

Meanwhile, the IRGC declared it was finalizing preparations for a "new Persian Gulf order," stating that Hormuz "will never return to its former state." The gap between Washington's ultimatum and Tehran's posture remains as wide as it was five weeks ago.

Saturday also brought a strike near Iran's Bushehr nuclear power plant, the fourth incident at the site since the war began. One security worker was killed. The IAEA's Rafael Grossi expressed "deep concern." Iran warned of a "radioactive catastrophe" if strikes continue.

Fuel rationing has begun. Italy imposed restrictions at four airports. Ryanair's CEO predicted 5-10% summer flight cancellations if Hormuz remains closed. Australia's Prime Minister addressed the nation on fuel reserves. South Korea's president called for citizens to "save every drop."

Russia-Ukraine: Spring Offensive Stalls

A quieter development, but significant: Ukraine's president Zelensky stated Friday that the frontline situation is "the best for Ukraine in 10 months," citing British MI6 assessments. Russian losses in March reached approximately 32,000 for less than 75 square kilometers gained, the worst casualty-to-territory ratio of the war. Total Russian losses since 2022 are estimated at 1.3 million personnel. The spring offensive that began with the massive March 24 drone barrage has failed to produce meaningful territorial gains. US-Ukraine-Russia negotiations remain paused since mid-March as Washington's focus shifts entirely to Iran.

Sources - Geopolitics: CNBC: Trump Iran Speech | Times of Israel: Passover Attack | Al Jazeera: Kuwait Refinery | Military Times: F-15 Shot Down | Al Jazeera: Oman-Iran Talks | Al Jazeera: Trump 48h Deadline | Time: Fuel Rationing | Zelensky: Ukraine Pravda

Markets

Equities: The Relief Rally

The S&P 500 closed at 6,582.69 on Thursday, up 3.4% on the week. It was the first positive week since the war began and the largest weekly gain in four months. The Nasdaq surged 4.4% to 21,879.18, its best week since December. The Dow gained 3.0% to 46,504.67. The VIX dropped from 31.05 to 24.54, a 21% decline, reflecting a meaningful reduction in fear.

The rally was front-loaded. Tuesday saw the S&P's best single day since May, driven by Powell's reassurance and emerging signals of Iran-Oman talks. Wednesday's Trump address reversed some gains as oil spiked. Thursday traded violently, with the S&P dropping 1.5% at its lows before ripping higher on reports that Iran was drafting a Hormuz monitoring protocol with Oman.

Energy stocks led, up 6.2% on the week and now up 41% year-to-date. Defense continues to outperform. Tesla fell 5.5% on Thursday after reporting Q1 deliveries of 358,023 vehicles, missing the 365,645 consensus. Tech underperformed, with communication services down 7.2%.

Markets were closed Friday for Good Friday. Monday's open will be the first opportunity to trade NFP, the weekend's geopolitical developments, and the April 6 deadline result simultaneously.

Oil: WTI Surpasses Brent

Oil remained the week's dominant asset, but the internal dynamics shifted. WTI crude surged above $112 per barrel on Thursday, the highest since June 2022, and traded at a rare premium over Brent. Brent held near $112.42, essentially flat from the previous week's close. The convergence is unusual: Brent typically trades several dollars above WTI. Analysts at B. Riley Wealth noted that "WTI is currently the primary vehicle for traders betting on the duration of US involvement in the Iran conflict."

Gold rebounded to $4,676 per ounce, up 5.6% from last week's $4,430. It remains well below its all-time high of $5,161 hit in late February, but the recovery suggests the margin-call liquidation phase from the previous two weeks may be fading. Silver followed at approximately $72, up roughly 6%.

OPEC+ approved a symbolic production increase of 206,000 barrels per day for May on Saturday, identical to April's hike. The increase is largely meaningless: the key producing members, Saudi Arabia, UAE, Kuwait, and Iraq, cannot export through Hormuz. Total disruption remains estimated at 12-15 million barrels per day.

Liberation Day Anniversary

Thursday marked one year since Trump's "Liberation Day" tariffs. The anniversary brought new trade measures: pharmaceutical tariffs set at 100% with broad exemptions for companies committing to US manufacturing, and adjustments to steel, aluminum, and copper duties. The Dow ended Thursday's session down 0.13%, partly weighed by the tariff headlines. But in the context of $112 oil and an active war, trade policy barely registered.

Sources - Markets: Advisor Perspectives: Best Week in Four Months | Fortune: Oil Price April 3 | Rigzone: WTI Surpasses Brent | Fortune: Gold Price April 2 | CNBC: Stock Market April 2

Crypto

Prices: Stuck in the Fear

Bitcoin ended the week near $66,650, up roughly 0.7% from last week's $66,200. In a week where the S&P gained 3.4%, crypto's inability to participate in the relief rally is telling. Ethereum traded at approximately $2,060, flat. Solana held in the low $80s. The total crypto market cap fluctuated between $2.30 and $2.44 trillion. Bitcoin dominance crept up to 56.3% from 55.9%.

The Fear and Greed Index hit 8 on Wednesday, its lowest reading since the COVID crash of March 2020. The Extreme Fear streak now exceeds 47 consecutive days, surpassing the FTX collapse era. The 30-day BTC-SPX correlation rose to 0.74, the highest of 2026, confirming crypto remains locked in risk-asset mode with no independent catalyst to break free.

Drift Protocol: $285M in 12 Minutes

The week's defining crypto event was not a price move but a theft. On Wednesday, April 1, Drift Protocol, the largest perpetual DEX on Solana, was drained of $285 million in 12 minutes. It was the biggest DeFi exploit of 2026 and the second-largest in Solana's history, behind only the $326 million Wormhole hack of 2022.

The attack was attributed with medium confidence to North Korean state-sponsored hackers (UNC4736). It began with six months of social engineering: initial contact at a crypto conference in fall 2025, multiple in-person meetings across countries, a poisoned GitHub repository, and a fake wallet app delivered via Apple TestFlight. The attackers manufactured a fictitious token, CarbonVote Token, with seeded liquidity and wash trading, tricking Drift's oracles into treating it as legitimate collateral worth hundreds of millions.

Drift's TVL collapsed from $550 million to under $250 million within an hour. The DRIFT token dropped 40%. A dozen Solana protocols with Drift exposure paused operations. Funds were bridged to Ethereum within hours of the attack.

ETF Flows and Institutional Moves

Bitcoin ETF flows were mixed. Monday saw +$98.4 million in net inflows, driven by BlackRock's IBIT as Q1-end rebalancing flowed in. Tuesday reversed with -$173.7 million in outflows, IBIT alone shedding $86.5 million. Wednesday posted a modest +$9 million. Thursday and Friday were offline for Easter.

The bigger story was structural. Charles Schwab announced "Schwab Crypto" on Thursday, a spot Bitcoin and Ethereum trading service planned for H1 2026. The platform opens access to Schwab's 46 million clients and $11.9 trillion in assets. The Ethereum Foundation completed its 70,000 ETH staking target, depositing $93 million in a single day on Thursday. The staking program generates an estimated $3.9-5.4 million annually, replacing treasury sales as a revenue source and reducing ETH selling pressure.

Goldman Sachs analyst James Yaro published a note Friday calling the "leveraged washout complete" and identifying institutional accumulation at $68,000 as a critical support level. Bitcoin exchange reserves have fallen to their lowest since November 2018, approximately 2.7 million BTC, down from 3.4 million a year ago.

Circle announced cirBTC, a new wrapped Bitcoin token backed 1:1 with on-chain verifiable reserves, targeting market makers and lending protocols. The CFTC filed civil suits against Arizona, Connecticut, and Illinois, seeking to block state gambling laws from applying to prediction markets like Kalshi and Polymarket.

Sources - Crypto: Fortune: Bitcoin April 3 | Bloomberg: Drift Exploit | TRM Labs: DPRK Attack | CoinDesk: Schwab Crypto | CoinDesk: EF Staking | Goldman: Bottom Signal

Week Ahead: April 6 to April 10

Monday April 7 will be the most volatile open of 2026. Three forces converge simultaneously: the undigested NFP report (+178K), whatever happens when Trump's April 6 deadline expires Sunday evening, and two full days of weekend geopolitical developments that no market could price. The S&P 500 could gap in either direction by 2% or more.

Friday's CPI is the week's most important data release. The consensus is staggering: headline CPI at 1.0% month-over-month and 3.4% year-over-year, up from 0.3% and 2.4% respectively. This would be the first reading to fully capture the impact of $100+ oil on consumer prices. If it prints at or above forecast, the stagflation narrative hardens into consensus. If it surprises to the downside, markets get another reason to extend the relief rally.

The FOMC minutes from the March 18 meeting will be parsed for any discussion of contingency scenarios related to oil-driven inflation. The market wants to know if any governors discussed the conditions under which a hike would be considered, even after Powell's Monday reassurance.

But the dominant variable remains geopolitical. A third extension of the Iran deadline would likely sustain the current cautious optimism. A strike on Iranian power plants would send oil toward $130 and reset everything. The market is pricing the former, but the latter remains possible.

Sources - Week Ahead: ForexFactory Calendar | CNBC: Trump Iran Deadline

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