Next week's five major market highlights

Investing.com - Middle East violence becomes the focus of this week’s trading, as stocks fall and oil prices surge after the US and Israel launched attacks on Iran. In the coming days, traders will watch key economic data and corporate earnings, including the February US employment report and results from Broadcom and Target. Additionally, reports indicate the White House will convene tech giants to discuss how to curb rising AI-related costs.

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1. Iran Conflict Escalation

Geopolitical issues may dominate this week as traders assess the impact of the US and Israel strikes on Iran.

On Saturday, the US and Israel announced joint strikes on targets across Iran, resulting in the deaths of several senior Iranian officials, including Supreme Leader Ayatollah Ali Khamenei. According to Reuters, President Donald Trump urged Iranian opposition groups to overthrow the long-standing oppressive regime, though many US officials remain skeptical about regime change happening soon.

Washington is uncertain how long the conflict will last, with Trump telling The New York Times that the strikes could continue “four to five weeks.” He also declined to give specifics on how he envisions Iran’s transition, saying he has “three very good options” but “won’t reveal them now.”

The strikes prompted Tehran to retaliate against targets across the Middle East, including oil-producing Gulf nations. US Central Command reports indicate three US soldiers have died and five were injured, with Trump warning that more American casualties could occur.

Signs of the conflict spreading outside Iran include Israel striking Hezbollah targets in Lebanon. The Wall Street Journal reports at least one US aircraft was shot down in Kuwait.

Following the attacks, US stock index futures plunged sharply, and oil prices soared amid fears that Tehran might block the Strait of Hormuz, a vital global energy shipping route. Gold also surged as investors sought safe-haven assets.

Mattioli Woods fund manager Lauren Heslop said, “So far, the market’s immediate reaction follows an old script.”

“This moment is especially notable at a crossroads. A quick de-escalation could help markets recover from initial losses. Longer-term disruptions to shipping and insurance—more likely outcomes—would keep energy prices high and market sentiment fragile.”

2. Non-Farm Payrolls Coming Soon

Beyond geopolitics, investors are preparing for a series of potentially critical economic data releases this week.

The highlight will be the February non-farm payroll report, which could offer insights into the US labor market mid-2026.

As with many aspects of today’s markets, AI may linger in the background of the data. Workers and analysts have long warned that the rise of AI could lead to large-scale layoffs as companies adopt the technology to cut costs and boost productivity. Last week, Jack Dorsey’s payments company Block cut about 40% of its staff, intensifying these concerns.

Federal Reserve policymakers have been closely watching the US labor market, which remains resilient overall despite sluggish hiring and firing activity. The Fed has kept interest rates steady until more clarity emerges on the employment trajectory.

Economists expect the US added 58,000 jobs last month, down from 130,000 in January.

3. Broadcom Earnings Ahead

Earnings reports will also be a focus, with investors eager to see the latest developments in the chipmaker’s AI semiconductor ambitions.

While seen as a major opportunity, some analysts worry that Broadcom’s AI chip business could increase costs and pressure profit margins. CEO Hock Tan told analysts in December that the company has $73 billion in backlog orders over the next 18 months, but other executives indicated margins might decline.

Reuters reports concerns from analysts about Broadcom’s customer base being concentrated among just five clients. The company partners with giants like Meta Platforms and Google’s parent Alphabet—both of which are considered “super-scale operators” in AI—producing cutting-edge AI chips as alternatives to Nvidia’s popular graphics processing units.

As Broadcom reports earnings, there is concern over when the massive spending by these super-scale operators will translate into significant shareholder returns, amid software stocks being hit by fears of disruption from new AI tools.

The S&P 500 Information Technology Index, which includes Broadcom, has fallen over 5% this year.

4. Target to Announce Earnings

Target will also release its earnings, potentially offering new insights into consumer spending habits amid ongoing affordability challenges.

Although President Trump described the economy as “booming,” recent polls suggest many Americans disagree. A Reuters/Ipsos poll last month found that 68% of respondents, including Republicans, did not agree with that assessment.

US Q4 growth slowed more than expected, but analysts largely attributed this to the government shutdown, noting that consumer and business spending remained solid. Some economists forecast that, driven by the tax cuts from the Trump-era fiscal law signed last year, the economy will grow this year, albeit modestly.

Against this backdrop, Target has struggled to attract budget-conscious shoppers unlike peers like Walmart. Its profits have declined 14% over the past five years.

Shareholders, including pension funds from New York and California, have begun publicly questioning management decisions.

5. Trump to Host AI Companies

The AI narrative shifts to Washington on Wednesday, when Trump will host leading data center and AI companies at the White House.

Reuters reports that Microsoft, Amazon, and Meta are expected to attend, with an announcement of an agreement to protect customers from rising electricity costs. Anthropic is also on the list, despite being targeted by the Trump administration for refusing Pentagon requests to remove safety measures from its AI systems.

While Trump has long supported national AI development to counter China, the rapid expansion of data centers powering this technology has threatened to drive up US electricity costs—adding to affordability concerns ahead of the critical midterm elections in November.

However, analysts cited by Reuters say there may be no simple way to limit price increases.

This article was translated with the assistance of AI. For more information, see our Terms of Use.