Here's how the oil-price surge might be reversed

MW Here's how the oil-price surge might be reversed

By Philip van Doorn

Also in Weekend Reads: A reversing stock-market trade, tales for tax time and what to stream this month (and which streamers to cancel)

The flow of oil through the Strait of Hormuz has stalled, helping to send the price of West Texas Intermediate crude oil up 28% since the U.S. and Israel attacked Iran on Feb. 28.

Front-month contracts for West Texas Intermediate crude oil (CL00) were trading for $89.34 a barrel on Friday, up 10% from the previous day and up 33% from a settlement price of $67.02 on Friday, Feb. 28, one day before the U.S. and Israel attacked Iran's government.

Read: Prices to charter large oil tankers soar as Strait of Hormuz traffic grinds to a halt

Financial markets are always looking ahead and can overreact day to day. That raises the question of how easily the oil-price increase might be reversed if Iran's government is no longer able to block the Strait of Hormuz or when companies operating tankers are no longer afraid to move ships through that waterway.

President Donald Trump said earlier this week that the U.S. would provide protection for shipping through the Strait of Hormuz, as well as insurance coverage. Claudia Assis looked further into how difficult it might be to make Trump's oil plan work.

More coverage of the dynamic developments for the energy market:

-- Oil at 22-month high as Qatar minister warns prices could reach $150

-- Why the U.S.'s 'newfound oil' in Venezuela won't offset an Iran oil shock

-- Trump started the Iran conflict, but still has options to keep oil and gas prices in check

-- How this under-the-radar U.S. natural-gas exporter could capitalize on a potential shortage in Europe

The war and the stock and bond markets

On Friday, 10-year U.S. Treasury notes BX:TMUBMUSD10Y were yielding 4.13%, up from 3.95% a year earlier. Bond yields rise when their prices decline, and vice versa.

Financial advisers often tell their clients that bonds can lower the overall risk of a diversified investment portfolio. But this week a team of strategists at Morgan Stanley explained how increasing geopolitical risk can hurt both the stock and bond markets.

More from the daily Need to Know column:

-- How this top-performing trend-following manager got ahead of the Iran conflict and a software rout

-- The global economy is facing untold damage even if the Iran conflict ends tomorrow, warns this energy-industry expert

A reversal for a trade that worked out well last year

The iShares MSCI EAFE ETF has outperformed the Street SPDR S&P 500 ETF Trust by a wide margin since the end of 2024. But the action has reversed since the attack on Iran began on Feb. 28.

From the end of 2024 through Friday, Feb. 27, the iShares MSCI EAFE exchange-traded fund EFA, which tracks the MSCI EAFE Index of stocks in 21 developed markets excluding the U.S. and Canada, returned 44.4%, while the State Street SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 SPX, returned 18.4%, both with dividends reinvested, according to LSEG.

But in the chart above, you can see a sharp downturn for EFA since the attack on Iran began on Feb. 28.

Christine Idzelis looked deeper into this change in the action, interviewing David Kelly, chief global strategist at J.P. Morgan Asset Management, and Katie Stockton, a chartered market technician and founder of Fairlead Strategies. They explained why U.S. stocks were holding up better early in the conflict and what they expect for stocks in developed and emerging markets outside the U.S. from here.

More on Markets: Here are six reasons why stocks may shake off Iran fears and move higher in March

And two stock screens:

-- Boeing's stock stands out in this screen of aerospace and defense investments

-- Seven REIT stocks pass a strict financial screen, with dividends as high as 6.27%

An economic surprise for the U.S.

On Friday, the Bureau of Labor Statistics released its Employment Situation Summary for February, which indicated that nonfarm U.S. payrolls declined by 92,000 for the month. Economists polled by the Wall Street Journal had expected the U.S. economy to add 50,000 jobs in February.

Here is detailed live coverage of the U.S. labor market and other economic developments from MarketWatch's Washington team.

Tax tales

In the TaxWatch column, Andrew Keshner explained how filers were taking advantage of new tax deductions. He also shared this warning about choosing a tax preparer.

Play nice at tax time: Tax season can be poison for couples. Here's how to keep the peace.

Fix My Portfolio: People taking money out of their 401(k)s isn't necessarily the crisis everyone thinks it is

How even high earners can live paycheck to paycheck

Venessa Wong looked into an interesting phenomenon - people within the top 5% in the U.S. by household income are more likely to live paycheck to paycheck than people who earn less.

More personal finance coverage:

-- Robinhood's new $695 Platinum card vs. $895 Amex Platinum: Which one has better perks?

-- You can now invest in private tech stocks like Ramp and Stripe through Robinhood - but here's what you need to know

The Moneyist and a new parent who has been acting like a child

Quentin Fottrell is the Moneyist.

Quentin Fottrell - the Moneyist - often helps MarketWatch readers with questions about estate planning, healthcare and other challenges faced by older people. But this week he responded in a tough but fair way to a cry for help from a new mother whose husband had secretly started a small business through which he lost a lot of money, while also losing his job and racking up credit-card debt.

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Here's how the oil-price surge might be reversed

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