The S&P 500 index and its largest ETF, VOO, posted a third consecutive daily loss, sinking to levels not seen since November last year. The blue-chip gauge closed at 6,637, down more than 5.2% from its 2026 peak.
This retreat unfolded as the Middle East crisis escalated, pushing Brent crude and West Texas Intermediate above $115 a barrel before they pared gains. Surging oil prices lifted U.S. Treasury yields, with the 10-year note hitting 4.17% and the 30-year bond reaching 4.766% — a signal that markets expect the Federal Reserve to maintain a hawkish tone this year.
JPMorgan Predicts S&P 500 Could Enter Correction Territory
Wall Street analysts are growing uneasy. In a research note, JPMorgan warned that the index could slip into a correction — defined as a 10% drop from its peak — if the conflict continues, driving the S&P 500 to 6,300, its lowest since August last year. However, analysts noted that any sign of an off-ramp in the Iran situation would invalidate the bearish call: “A definitive off-ramp to the conflict will end this tactical call as the underlying macro fundamentals remain supportive of risk-assets.”
Separately, research firm Yardeni raised its odds of a market meltdown to 35% from 20%.
A Potential Rebound: Trump Capitulation as a Catalyst
Still, the S&P 500 and VOO could bounce back. History suggests President Donald Trump closely watches equity markets and inflation. If losses persist, he may start to capitulate on trade policies. The near-term focus will be the U.S. consumer inflation report due Wednesday. Economists expect the headline CPI to rise to 2.5% year-over-year in February. A higher-than-expected reading combined with elevated oil prices could push Trump toward a compromise.
Another key catalyst is Oracle’s earnings due Tuesday. The tech giant has become a major player in artificial intelligence, boasting a large backlog, and its results could sway tech-heavy sectors of the index.