The Week Ahead: Markets Look Ahead to Payrolls as Energy Shock Fuels Inflation Risks

Author: James Hyerczyk

Updated: March 29, 2026

Key Points

• Energy shock drives oil prices higher, pushing Consumer Price Index (CPI) toward 3.5%, complicating the Federal Reserve's policy outlook.
• Nonfarm payrolls are forecasted at 56,000, following a decline of 92,000, testing labor market stability and growth outlook.
• All major indices have closed below their 52-week Simple Moving Averages (SMAs), indicating trend deterioration and overhead resistance.

Market Overview

U.S. equities experienced a downturn last week due to geopolitical risks and rising energy prices. The S&P 500 fell by 2.12% to 6,368.85, the Nasdaq Composite dropped 3.23% to 20,948.36, and the Dow Jones Industrial Average decreased by 0.90% to 45,166.65. The technology sector was particularly hard hit, with the Nasdaq leading the decline as higher yields and margin pressures affected growth stocks. Conversely, the Dow remained relatively stable due to its lower exposure to rate-sensitive sectors.

Technical Analysis

All three major indices closed below their rising 52-week moving averages, which now act as resistance levels. This shift signals a loss of long-term trend support:

• Dow: 45,515.56
• Nasdaq: 21,381.73
• S&P 500: 6,429.83

Drivers of Market Movement

The ongoing conflict in Iran is a primary driver of rising oil prices, contributing to increased market volatility. The market is pricing in a prolonged energy shock, which has implications for inflation and corporate margins. Rising gasoline prices are expected to elevate inflation expectations, with the headline CPI projected to approach 3.5% year-over-year in the coming months. This scenario complicates the Fed's policy outlook as it navigates inflation pressures against signs of softer growth.

Upcoming Economic Releases

Key economic releases and notable earnings are scheduled for the upcoming week:

• Monday, Mar 30: No economic releases scheduled.
• Tuesday, Mar 31:
  • CB Consumer Confidence forecast: 88.0 (prior: 91.2)
  • JOLTS Job Openings forecast: 6.90M (prior: 6.95M)
• Friday, Apr 3:
  • Nonfarm Payrolls forecast: 56K (prior: -92K)
  • Unemployment Rate forecast: 4.4% (prior: 4.4%)

Central Bank Activity

Fed commentary will be closely monitored for insights on how policymakers are addressing the inflation impact of rising energy prices. Any shift towards concern over sustained inflation could influence rate expectations and exert pressure on risk assets.

Technical Outlook

All major indices are currently trading below their 52-week SMAs, which now serve as resistance levels. Failure to reclaim these levels may lead to further downside pressure and expose markets to additional weakness in the near term.

Conclusion

As markets enter the week, the focus will be on the March jobs report and ongoing developments in the Middle East. The upcoming payrolls data will be crucial following February's sharp decline, with expectations indicating a modest rebound. Inflation remains a central concern as higher energy prices continue to influence headline data, keeping pressure on the Fed's policy outlook.