One Variable Rules This Market: Oil, Iran, and the Week That Showed Investors What Really Matters

April 5, 2026 | David Berkowitz, CFA | VAP Wealth Advisors

TL;DR

• The S&P 500 snapped a five-week losing streak with a 3.4% gain through Thursday, April 2, led by mega-cap tech and semiconductors — then the weekend changed everything.
• WTI crude spiked $11.42 in a single session to $111.54 on Thursday — the largest single-day dollar gain since 1983 — after Trump’s Wednesday night address on Iran.
• March nonfarm payrolls came in at +178,000 , versus a +59,000 consensus, and were released on Good Friday, when markets were closed. Monday’s open will be the first reaction.
• The Fed’s March dot plot shifted to just one 25-basis-point cut for 2026, with CME FedWatch now showing an 89.2% probability that rates stay unchanged in June.
• Trump gave Iran a 48-hour ultimatum to reopen the Strait of Hormuz, expiring Monday morning. Iran rejected it. This single variable will set the tone for the week.
• A downed F-15E crew member was rescued after 36 hours behind enemy lines in Iran in a CIA-assisted special operations extraction — the most dramatic military event of the conflict so far.

David Berkowitz, CFA, is the founder of VAP Wealth Advisors and creator of the Berk on Value brand. He manages the ValueAligned Portfolio (VAP) model portfolio and produces free educational investing content on YouTube, his blog at vapwealthadvisors.com, LinkedIn, and Instagram. This analysis reflects his experience as a practicing financial advisor and portfolio manager focused on value-based, long-term investing.

One variable controls everything right now

Markets in 2026 run on a single transmission mechanism. Iran war → oil prices → inflation expectations → Fed policy → valuations. Every other data point — jobs, manufacturing, consumer confidence, earnings — exists in relationship to that chain.

The week of March 30 through April 2 proved it in real time. When de-escalation signals circulated Monday through Wednesday, the market’s response was automatic: sell oil, buy growth, sell defensive hedges, buy duration-sensitive assets. Ten of eleven S&P 500 sectors rallied. Technology surged 4.67%. Communication services rose 4.35%. The Nasdaq Composite gained 4.4%.

Then, on Wednesday night, Trump addressed the nation on Iran. He committed to ongoing military operations with no ceasefire timeline. Thursday, WTI crude jumped $11.42 to $111.54 in a single session. Brent settled near $110. The largest single-day dollar gain for oil since 1983 reminded everyone that the war is not resolved.

Iran has deployed anti-ship cruise missiles to islands controlling the Strait of Hormuz, creating what amounts to a virtual blockade of the world’s most critical oil chokepoint. Roughly 20% of the world’s daily oil supply transits those waters. The national average gasoline price has hit $4.10 per gallon, up from $3.19 a month ago. California drivers are paying $5.91.

Goldman Sachs estimates Brent could average $110 in March and April, with a scenario where it tests $135 to $150 if disruptions persist into mid-May. That price range would trigger a global recession.

A blockbuster jobs report nobody could trade

The Bureau of Labor Statistics released the March Employment Situation Report on Good Friday, April 3 — when U.S. equity markets were closed for the holiday. Monday morning will be the first market reaction.

March nonfarm payrolls came in at +178,000, nearly three times the consensus estimate of +59,000. The unemployment rate fell to 4.3%, down from 4.4% in February. Health care led job creation at +76,000, with roughly 35,000 of those coming from the resolution of a physicians’ strike that had depressed February’s numbers. Construction added 26,000, and transportation and warehousing added 21,000.

The headline beat comes with context. February’s payrolls were revised sharply downward to -133,000 from -92,000. Federal government employment continued declining as DOGE budget cuts removed workers from the payroll. The average monthly gain over the past three months sits near 68,000, and over the past full year, the economy has added only about 260,000 total jobs — roughly 22,000 per month.

A strong labor market removes one of the Fed’s primary rationales for cutting rates. The Fed already raised its PCE inflation forecast to 2.7%. Oil at $111 raises it further. Markets are now pricing a meaningful probability of zero cuts in 2026.

The Fed is boxed in

The Federal Reserve has held the fed funds rate at 3.50%–3.75% since December 2025, when it finished a cycle of cuts that lowered rates by 175 basis points from September 2024. At the March 18 FOMC meeting — an 11-to-1 vote to hold — the median projection shifted to just one 25-basis-point cut for the rest of 2026.

Those projections were set before oil hit $111.54 on Thursday. CME FedWatch data shows a 89.2% probability that rates will remain unchanged at the June meeting. Futures price roughly a 48% chance of zero cuts in all of 2026. Some economists are openly discussing a potential rate hike if oil prices remain elevated into summer.

A central bank forced to tighten into a slowing economy — that is the genuine tail risk. The ISM Manufacturing Prices Index surged to 78.3 from 70.5, the highest reading since June 2022. Energy costs are feeding directly into input prices across the manufacturing base. Meanwhile, the Conference Board’s Expectations Index slipped to 70.9, remaining below 80 for the 14th consecutive month. A reading below 80 on expectations has historically preceded recessions.

The weekend that changed Monday’s calculus

What happened after Thursday’s market close matters more for Monday’s open than any data released during the trading week.

Saturday, April 4: Trump posted that Iran has 48 hours to reopen the Strait of Hormuz “or all hell will rain down on them.” Iran’s government rejected the ultimatum. Ceasefire mediation attempts by Pakistan, Turkey, and Egypt hit dead ends. Qatar declined to serve as a mediator. The deadline expires approximately Monday morning.

The F-15 rescue: On Friday, a U.S. F-15E Strike Eagle was shot down over southwestern Iran — the first manned American aircraft lost in the conflict. One crew member was recovered quickly. The second, a colonel, spent more than 36 hours behind enemy lines. The CIA ran a deception campaign inside Iran, spreading false information to confuse search forces. U.S. special operations extracted the colonel safely Saturday evening.

The military casualty picture as of Saturday: 365 U.S. troops wounded, 13 service members killed in action. The conflict has entered its sixth week, with no credible path to a ceasefire in sight.

What the ValueAligned Portfolio did this week

The VAP holds 35 stocks. Thirty-two advanced. Three declined by more than 1%. The split was sharp: growth and quality compounders led, energy lagged.

Top performers

Bottom performers

ServiceNow at -33.4% YTD is the portfolio’s most acute near-term challenge. The Stifel downgrade cut the price target from $180 to $135, citing “meaningfully weaker” federal government spending. DOGE budget cuts directly reduce federal IT spending, and NOW’s federal revenue exposure is material. The broader “SaaSpocalypse” fear — that AI agents will reduce the number of software seats enterprises need — has layered on top.

NOW is down roughly 60% from its December 2024 peak. That is extraordinary destruction for a company that still has $10 billion-plus in annualized contract value. The April 22 earnings call will be existential: management needs to quantify the federal impact and demonstrate AI product momentum.

What to watch next week

Iran ultimatum expiration (Monday morning): The 48-hour deadline ends Monday morning. Military escalation, a face-saving de-escalation, or an extended standoff — each carries materially different implications for oil, risk appetite, and every rate-sensitive asset.

CPI for March (expected mid-week): The first official inflation reading to reflect the full force of the oil shock. A print significantly above expectations could extinguish any remaining talk of near-term Fed cuts.

TSMC earnings (April 16): The most important single datapoint of early earnings season. What TSMC says about AI chip demand and pricing will set expectations for AMD, NVDA, AVGO, and NXPI — all VAP holdings.

ServiceNow earnings (April 22): The stock’s current valuation already reflects considerable pessimism. Management needs to re-anchor expectations, or the decline continues.

Two scenarios for the week ahead

Bull case: Iran backs down from the Strait confrontation, oil drops toward $90, CPI is firm but not catastrophic, and TSMC confirms AI capex holds. Growth names continue recovering from oversold levels. The S&P 500’s YTD loss narrows.

Bear case: Iran escalates, oil spikes past $120, CPI accelerates sharply, and the Fed signals cuts are off the table indefinitely. Services PMI cracks below 50, and TSMC reports softer AI demand. The week’s rally is a classic bear-market bounce — real, but not the start of a new trend.

The businesses haven’t changed

The geopolitical weekend news means Monday morning’s open will price a set of outcomes that did not exist at Thursday’s close. That is not a reason to make reactive decisions.

Alphabet, AMD, NVIDIA, TSMC, Eli Lilly, Copart, Kinsale Capital, S&P Global — their earnings power, their balance sheets, their competitive positions: all intact. Market prices moved. Business values moved far less.

Artemis 2 is flying around the far side of the Moon on April 6. The first humans to see the lunar far side since 1972. That mission took decades of institutional persistence across administrations, budgets, and setbacks. Long-term investors operate on a similar horizon. The businesses in this portfolio were built the same way.

Three takeaways:

• The Iran ultimatum is the only thing that matters on Monday morning. Have a plan for both escalation and de-escalation.
• Earnings season will clarify the AI capex picture. ASML on April 15 and TSM on April 16 are the first real data points. What these companies say about 2026 orders will either confirm or complicate the recovery trade.
• The portfolio is positioned for a range of outcomes. Energy exposure has generated extraordinary YTD gains. Growth exposure has recovered from oversold levels. Stay the course.

Endnotes

1. snapped a five-week losing streak with a 3.4% gain – CNBC analysis of S&P 500 monthly performance and April outlook https://www.cnbc.com/2026/03/31/the-sp-500-is-wrapping-up-a-tough-month-why-april-could-be-better.html
2. spiked $11.42 in a single session to $111.54 – MarketPulse analysis of crude oil price action 32 days into Iran war https://www.marketpulse.com/markets/crude-oil-wti-brent-keep-playing-tricks-on-markets-32-days-into-the-iran-war/
3. came in at +178,000 versus a +59,000 consensus – Bureau of Labor Statistics March 2026 Employment Situation Summary https://www.bls.gov/news.release/empsit.nr0.htm
4. shifted to just one 25-basis-point cut for 2026 – Federal Reserve FOMC Projections, March 18, 2026 https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20260318.htm
5. gave Iran a 48-hour ultimatum to reopen the Strait of Hormuz – Axios report on Trump’s threat against Iran https://www.axios.com/2026/04/04/trump-iran-hell-threat-deadline
6. rescued after 36 hours behind enemy lines in Iran – Washington Post account of U.S. pilot rescue operation https://www.washingtonpost.com/national-security/2026/04/04/us-pilot-rescue-iran-f15-crash/
7. jumped $11.42 to $111.54 in a single session – Federal Reserve Bank of St. Louis FRED WTI crude oil data series https://fred.stlouisfed.org/series/DCOILWTICO
8. a virtual blockade of the world’s most critical oil chokepoint – FactCheck.org analysis of Strait of Hormuz impact on U.S. https://www.factcheck.org/2026/03/how-iran-blocking-the-strait-of-hormuz-affects-the-u-s/
9. national average gasoline price has hit $4.10 per gallon – AAA report on gas prices exceeding $4/gallon https://gasprices.aaa.com/for-the-first-time-in-four-years-national-average-exceeds-4-gallon/
10. Goldman Sachs estimates Brent could average $110 in March and April – TheStreet report on Goldman’s revised 2026 Brent crude forecast https://www.thestreet.com/investing/goldman-sachs-revamps-brent-crude-forecast-for-the-rest-of-2026
11. unemployment rate fell to 4.3% – CNBC Jobs Report March 2026 coverage https://www.cnbc.com/2026/04/03/jobs-report-march-2026-.html
12. revised sharply downward to -133,000 from -92,000 – Morningstar analysis of March 2026 jobs data and revisions https://www.morningstar.com/economy/march-us-jobs-report-178000-rise-payrolls-much-stronger-than-expected
13. Fed already raised its PCE inflation forecast to 2.7% – Federal Reserve FOMC Projections, March 18, 2026 https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20260318.htm
14. held the fed funds rate at 3.50%–3.75% since December 2025 – Federal Reserve FOMC Statement, March 18, 2026 https://www.federalreserve.gov/newsevents/pressreleases/monetary20260318a.htm
15. just one 25-basis-point cut for the rest of 2026 – CNBC coverage of March 2026 Fed rate decision https://www.cnbc.com/2026/03/18/fed-interest-rate-decision-march-2026.html
16. CME FedWatch data shows an 89.2% probability – CME Group FedWatch probability tool https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
17. ISM Manufacturing Prices Index surged to 78.3 – ISM PMI Reports Roundup for March 2026 Manufacturing https://www.ismworld.org/supply-management-news-and-reports/news-publications/inside-supply-management-magazine/blog/2026/2026-04/ism-pmi-reports-roundup-march-2026-manufacturing/
18. Conference Board’s Expectations Index slipped to 70.9 – Conference Board Consumer Confidence press release, March 2026 https://www.prnewswire.com/news-releases/us-consumer-confidence-inched-up-again-in-march-302730107.html
19. posted that Iran has 48 hours to reopen the Strait – CBS News report on Trump’s Iran ultimatum https://www.cbsnews.com/news/trump-reminds-iran-ultimatum-reopen-strait-of-hormuz/
20. shot down over southwestern Iran – Washington Post report on F-15E crash and rescue operations https://www.washingtonpost.com/national-security/2026/04/04/us-pilot-rescue-iran-f15-crash/
21. The CIA ran a deception campaign inside Iran – Time magazine account of the F-15E rescue operation https://time.com/article/2026/04/05/-safe-and-sound-how-a-u-s-airman-shot-down-in-iran-was-rescued-from-a-mountain-crevice/
22. Stifel downgrade cut the price target from $180 to $135 – GuruFocus report on Stifel ServiceNow price target cut https://www.gurufocus.com/news/8768627/stifel-lowers-price-target-for-servicenow-now-to-135-now-stock-news
23. Artemis 2 is flying around the far side of the Moon on April 6 – NASA official press release on Artemis II launch https://www.nasa.gov/news-release/liftoff-nasa-launches-astronauts-on-historic-artemis-moon-mission/