Nasdaq Confirms Correction as Middle East War Fears Trigger Broad Sell-Off; Energy and Materials Surge on Geopolitical Premium

• S&P 500 fell 1.74%, NASDAQ 100 dropped 2.38%, and Dow Jones declined 1.01% on the day.
• Nasdaq Composite confirmed a correction, sinking 10% below its all-time record high.
• Margin debt fell 2.0% in February, marking the first decline in ten months — a potential early warning signal.
• Wall Street moved aggressively into cash, positioning for a possible market rebound.
• Trump administration reportedly studying scenarios where oil reaches $200/barrel.

U.S. equities suffered their steepest single-day decline since the onset of the U.S.-Israel war on Iran, with the Nasdaq Composite officially entering correction territory after falling 10% below its record high. The S&P 500 dropped 1.74%, the NASDAQ 100 plunged 2.38%, and the Dow Jones Industrial Average declined 1.01% as cease-fire doubts mounted and investors fled risk assets.

Both stocks and bonds fell simultaneously, a sign of broad-based de-risking rather than a simple rotation. Wall Street piled into cash positions in anticipation of a potential rebound, according to Bloomberg reporting. Margin debt declined 2.0% in February — the first drop in ten months — suggesting institutional leverage was already being unwound ahead of today's sell-off.

President Trump commented that the oil and stock market reaction to the Iran conflict has not been as severe as he initially expected, while reports emerged that the Trump administration is exploring the implications of oil reaching $200 per barrel, underscoring the severity of geopolitical tail risks currently being priced into markets.

• Materials (XLB) +4.51% and Energy (XLE) +3.73% were the top-performing sectors over the past week.
• Technology (XLK) -2.08% and Communication Services (XLC) -3.05% were the worst weekly performers.
• Utilities (XLU) +1.52% benefited from defensive positioning amid geopolitical uncertainty.
• Financials (XLF) -0.06% and Healthcare (XLV) +0.28% held near flat, acting as relative safe havens.
• Real Estate (XLRE) -0.74% underperformed, likely pressured by rising rate expectations tied to inflation fears.

The weekly sector performance data reveals a dramatic rotation away from growth and technology toward commodity-linked and defensive sectors. Materials (XLB) led all sectors with a 4.51% weekly gain, followed by Energy (XLE) at 3.73%, both massively outperforming the S&P 500 baseline of -0.45%. Utilities (XLU) gained 1.52% and Consumer Discretionary (XLY) rose 0.99%, reflecting a mix of defensive positioning and selective consumer strength.

On the losing side, Communication Services (XLC) was the worst performer at -3.05%, followed by Technology (XLK) at -2.08% and Real Estate (XLRE) at -0.74%. The underperformance of tech and communications — the sectors most sensitive to growth expectations and risk appetite — confirms the risk-off tone dominating the market. Healthcare (XLV) at +0.28% and Financials (XLF) at -0.06% held relatively steady, acting as moderate safe havens.

The energy surge is directly tied to the Iran conflict and fears of supply disruption, while materials strength likely reflects both commodity inflation expectations and a flight to hard-asset exposure. This rotation pattern is consistent with a stagflationary environment where inflation expectations rise while growth expectations deteriorate.

• MU: Morgan Stanley reiterated Overweight; bearish analysts flagged DRAM order softness and cyclical overextrapolation risk.
• AVGO: AI thesis reportedly playing out faster than expected, drawing bullish analyst commentary.
• NBIS: Two bullish reports cite Meta/Nvidia deals and mispricing; $140 price target issued.
• JEF: Goldman Sachs lowered price target to $47.00.
• BAC: Jefferies Financial Group initiated with a Buy rating.
• EQR: Morgan Stanley upgraded the stock; AVB reiterated at Equal Weight.
• META: Report projects potential path to $9 trillion market cap by 2031.
• Goldman Sachs downgraded Indian equities to neutral.

Micron Technology (MU) was at the center of analyst debate following its large capital expenditure guidance. Morgan Stanley reiterated Overweight ratings on MU and SanDisk (SNDK), arguing that Google's algorithm optimization does not change the structural trend of memory demand. However, contrarian views highlighted softness in DRAM orders and warned that the market may be overextrapolating cyclical gains. Despite the mixed signals, multiple analysts maintained that MU remains one of the best-positioned stocks in the current environment.

Broadcom (AVGO) received positive coverage noting that its AI thesis is playing out faster than expected. Nebius (NBIS) attracted attention with two separate bullish reports — one citing Meta and Nvidia deals plus new capital that close its 2026 funding gap, driving a $140 price target, and another arguing the stock is mispriced by association with broader market weakness. Credo Technology (CRDO) faced questions about whether it remains a one-product story or is evolving into a broader platform.

On the institutional side, Goldman Sachs lowered its price target on Jefferies Financial Group (JEF) to $47.00, initiated coverage on HSBC (HSBC), and downgraded Indian stocks to a neutral rating. Jefferies Financial Group issued a Buy rating on Bank of America (BAC). Morgan Stanley upgraded Equity Residential (EQR) and trimmed its target on Pop Mart (09992.HK), while expressing optimism on CK Asset (01113.HK) post-results. Meta Platforms (META) drew attention with a report projecting a path to a $9 trillion market cap by 2031.

• JPMorgan noted Bitcoin is showing safe-haven-like demand during the Iran war, diverging from weakening gold and silver.
• Goldman Sachs suggested Bitcoin and crypto may be nearing a market bottom.
• Fannie Mae will accept crypto-backed mortgages for the first time; Coinbase facilitating token-backed down payments.
• BNP Paribas expanded offerings to include crypto-asset ETNs.
• SEC and CFTC jointly provided a new interpretation framework for crypto asset taxonomy.
• FBI flagged soaring crypto crime; government crackdown targets a $20 billion scam market.

In a notable development, JPMorgan observed that Bitcoin is exhibiting safe-haven-like demand during the Iran war, even as traditional havens like gold and silver weakened. Goldman Sachs suggested that Bitcoin and the broader crypto market may be nearing a bottom, while data analysis from multiple sources explored potential market floor levels. This divergence from traditional safe-haven assets marks a significant shift in institutional perception of digital assets.

The most consequential crypto news of the day was Fannie Mae's announcement that it will accept crypto-backed mortgages for the first time, a move that could bring a new wave of crypto holders into the housing market. Coinbase is reportedly facilitating token-backed down payments. BNP Paribas expanded its stock exchange offering to include crypto-asset ETNs, further blurring the line between traditional and digital finance. Meanwhile, the SEC and CFTC provided a long-awaited joint interpretation for crypto asset taxonomy, offering regulatory clarity.

On the enforcement side, the FBI reported that crypto crime is soaring nationally, and a $20 billion crypto scam market faces a new government crackdown according to WIRED reporting. These developments highlight the dual nature of crypto's maturation — growing institutional adoption alongside persistent fraud risks.