MICHAEL J. HALLORAN, CFA | Equity Strategist of Janney Montgomery Scott
Wyncote Wealth Management Group

Highlights for this week include:

• The incoming March business surveys remain consistent with a growing economy.
• Weekly jobless claims remain close to historically low levels, consistent with a healthy labor market.
• Stocks and other assets remain – but with a conflict that lasts weeks rather than months.
• Also included below are key talking points as the Iranian conflict continues to unfold.

Early Look at March Business Surveys Shows a Muted Impact So Far from Iranian Conflict

The Business Roundtable released its first quarter 2026 CEO Economic Outlook Survey last week, with the responses collected from February 23 through March 6, 2026. For context, the U.S. Supreme Court decision on the International Emergency Economic Powers Act tariffs was on February 20, and the ongoing military operation in Iran began on February 28. In total, 169 CEOs completed the survey. The survey index includes CEO plans for capital spending and employment, and expectations for sales over the next six months.

The overall Index showed a notable improvement and is now above its long-term historic average. CEOs
reported higher numbers across all three subindices. Notably, the capex and sales subindices are in
expansion territory while the employment subindex is neutral. Business Roundtable CEO Joshua Bolten noted that policymakers can help strengthen economic and employment conditions by reforming permitting and providing greater certainty on trade, including extending the U.S.-Mexico-Canada Agreement.

S&P Global provides a preliminary release of its monthly business survey, which gives timely insight into a given month’s economic activity. The early look at March’s survey showed U.S. business activity growth slowed to an 11-month low as businesses reported a slightly weaker upturn in new orders and a spike in prices following the outbreak of war in the Middle East.

The service sector reading was below expectations, while manufacturing came in better than expected, with further improvement in output and new order growth. A divergence was also seen regarding output expectations, with a weaker outlook among service providers contrasting with a more upbeat perspective among manufacturers, the latter buoyed in part by fewer tariff-related worries. This survey is consistent with economic growth of a muted1.0% for March, with a modest 1.3% expansion signaled for the first quarter.

The March regional Federal Reserve surveys (Empire, Philly, Richmond, and Kansas City) were all taken during the Iranian conflict window and are also consistent with improving manufacturing conditions.
We also pay close attention to weekly jobless claims, which provide a timely and accurate barometer of the labor market. Weekly jobless claims remain at historically low levels while continuing claims fell to the lowest level since May of 2024, consistent with a still healthy labor market.

Key Talking Points for The Impact of The Iranian Conflict on The Economy And Markets

1) Uncertainty remains high around how events will unfold, and the impact on the economy will depend
on the length of the disruption to energy flow through the Strait of Hormuz and the extent of
damage to energy infrastructure. The longer traffic is halted, and the more damage is done to
infrastructure, the higher energy prices will climb, and the more harm that will occur to the economy
and stocks.

2) The direct impact of modestly higher oil prices on economic growth and inflation should be limited.
U.S. benchmark crude oil prices have jumped from $65 per barrel before the conflict to around $95
per barrel as of this writing. A rough rule of thumb is that a sustained $10 per barrel increase in oil
would reduce 2026 economic growth by about 0.10%. The consensus is currently calling for 2.5%
economic growth in 2026, which suggests the economy can absorb the current spike in oil prices.

3) The major risk to stock prices is a sustained period of severe oil disruption and price spikes that
weigh on economic growth. A sustained increase in oil prices and uncertainty would also threaten
equity valuations, corporate confidence, and the current rebound in industrial activity that has stocks.

4) The U.S. economy was healthy entering this conflict, and the current economic readings suggest it
remains so. Importantly, the U.S. was a major oil importer during previous oil price spikes that
pushed the economy into recession. Today, the U.S. is energy independent and a net exporter of
energy and is a much more balanced economy as a result of the shale oil and gas revolution. While
high oil prices are still a tax on the consumer, many industries benefit from U.S. oil and gas
production, while significant wealth that was transferred to other oil-producing nations now stays in
the U.S.

5) In addition, the energy intensity of the U.S. economy is much lower today. The amount of oil
necessary to produce one unit of U.S. economic output has fallen by about 70% since 1980.

6) Since 1980, the average year has had a 14% intra-year decline in the S&P 500 stock index while
ultimately producing a positive return of 10% for the full of 19% while the full-year return came in at 16%.

7) We further note that stocks remain a key element for portfolio growth and maintaining long-term
purchasing power, with stocks outperforming other major asset classes and inflation during long
periods of time.

For more on Wyncote Wealth Management Group, located at 8101 Washington Lane (Suite 100) in Wyncote (Cheltenham Township), you can visit their website.

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