US equities slide into correction territory as Middle East tensions escalate

Major US indices deepen losses as geopolitical risks intensify

United States (US) equity markets closed lower on Friday and for the week, frustrated with the lack of meaningful progress toward reopening the Strait of Hormuz, even after President Trump extended the deadline for potential strikes on Iranian energy infrastructure to 6 April.

With just two full sessions left before month‑ and quarter‑end, the numbers are nothing short of brutal. The S&P 500 has fallen 7.41% for March and 6.96% for the first quarter (Q1) of 2026. The Nasdaq 100 has dropped 7.32% month‑to‑date and 8.38% for the quarter, while the Dow Jones has tumbled 3811 points (7.78%) in March and 6.03% for the quarter.

Both the Dow Jones and Nasdaq 100 have now slipped into correction territory (–10%). The questions now are whether the S&P 500 joins them – and whether the Nasdaq 100 and S&P 500 can avoid sliding into a bear market (–20%) for the second time in 12 months (since the Liberation Day tariffs fiasco). That, of course, will depend heavily on how events unfold in the Middle East.

Regional escalation intensifies market pressure

Over the weekend, the situation has escalated further. The Iran‑aligned Houthis announced they are joining the conflict, firing ballistic missiles toward Israel and signalling they may close the Bab el‑Mandeb Strait – a critical route carrying millions of barrels of oil shipments daily. Reports also suggest the Pentagon is preparing contingency plans that could involve extended ground operations in Iran, with a continued buildup of US marines and equipment in the region.

This cocktail of heightened tensions saw Nasdaq futures fall 235 points (1%) on the reopening this morning before a modest bounce, while WTI crude oil surged to a three‑week high of $103.38 before easing slightly to trade at $102.23 (+2.62%).

Aside from Middle East headlines, attention this week will be firmly on labour‑market data, culminating in Friday’s non‑farm payrolls release for March.

Non‑farm payrolls

Date: Friday, 3 April at 11.30pm AEDT

For February, US non‑farm payrolls unexpectedly contracted by 92,000 jobs after a downwardly revised 126,000 rise in January, much worse than forecasts of a 60,000 gain. The unemployment rate rose to 4.4%, up from 4.3% in January, inching closer to November’s four‑year high of 4.5%.

After the February shocker, the March report will be watched closely for confirmation that the slowdown is temporary and not the start of something more structural, especially with the Federal Reserve (Fed) already signalling a data‑dependent approach amid elevated uncertainty from the Middle East.

The March report is forecast to show a modest rebound of around 55,000 jobs, with the unemployment rate remaining at 4.4%. The US interest rates market is currently pricing in roughly a 25% chance of a Fed rate hike before year‑end.

US unemployment rate chart

Nasdaq 100 technical analysis

The Nasdaq 100 commenced a correction after reaching its late‑October peak at 26,182, a move later reinforced by a clear double top near 26,165 in late January.

The decline has intensified in recent weeks as the index first broke below its 200‑day moving average (MA), currently sitting at 24,410, and then broke below the 21 November low at 23,854.

Those breaks served as a warning that the correction could run significantly deeper – and it has – with the index falling to within 88 points of our downside target of 23,000 on Friday night.

From here, the index needs to reclaim the 200‑day MA at 24,410 and the horizontal resistance zone just above it at 24,550 – 24,650 to negate the downside risks.

Unless that happens, the risks are tilted toward further weakness, with the next major support sitting at 22,200 – 22,000.

Nasdaq 100 daily candlestick chart

Dow Jones technical analysis

In our Wall Street updates earlier this month, we noted that the Dow Jones had traced out a classic head‑and‑shoulders topping pattern from the 50,512 high, with the neckline around 48,500 – 48,400.

The daily close below that neckline in early March triggered a decisive slide lower. The index hit our 46,500 target for the pattern in mid‑March before continuing its descent into Friday’s low of 45,063. This level is reinforced by the 45,073 high from December 2024 and the 45,054 high hit in January 2025.

Looking ahead, the price action around this 45,000 support zone will be crucial. If the 45,000 support can hold on a sustained basis, it is reasonable to expect a bounce back toward resistance at 46,600ish, where the 200‑day MA now sits. However, if the 45,000 level gives way, the technical picture darkens significantly, with little in the way of support until 44,000.

Dow Jones daily candlestick chart

• _{Source: TradingView. The figures stated are as of 30 March 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}