Daily Market Pulse — March 19, 2026

Our Take

The dominant narrative today is the escalating tensions between the US and Iran, with multiple headlines pointing to a potential new phase in the conflict. These stories connect to each other through the rising oil prices and the ECB's concerns about inflation. However, the market is telling us that this narrative may not be as bearish as it seems, with the VIX at 25.1 and the S&P only down 1.36%. The energy sector is benefiting from the news, with oil prices rising 3%. Traders should watch for further gains in energy stocks, such as ExxonMobil (XOM) and Chevron (CVX). On the other hand, financials are suffering, with the sector being the worst performer today. In the next 24-48 hours, traders should keep an eye on the OMX index, which is only down 0.28%, and the S&P's ability to hold above its recent lows. The contrarian angle here is that despite the bearish sentiment, the market is not pricing in a full-blown war. With only one bullish sentiment and four bearish, there may be a disconnect between sentiment and price action. A non-obvious insight is that the Pentagon's budget request for over $200 billion could actually be a bullish catalyst for defense stocks, such as Lockheed Martin (LMT) and Boeing (BA).