3 themes that drove Wall Street's wild week and the new U.S.-Iran conflict wildcard

CNBC Finance

6 min read

Stocks swung wildly last week as investors wrestled with the impact of artificial intelligence on various sectors and the overall economy. This coming week is a wildcard after the U.S. and Israel attacked Iran. President Donald Trump said Saturday that "major combat operations" in Iran started overnight, with American and Israeli strikes on military and nuclear targets there. Trump called on the Iranian people to "seize control of your destiny" and overthrow the Islamic leadership regime. Iran has reportedly retaliated with missile attacks on U.S. military installations in the Mideast. The president had signaled Friday that an attack could happen soon, expressing displeasure over nuclear talks with Tehran. "We're not exactly happy with the way they're negotiating. They cannot have nuclear weapons," he said. The big question for investors in the week ahead is how will markets react. Wall Street has been absorbing geopolitical and economic strife in stride from the recent tariff upheaval to last month's U.S. capture of Venezuelan President Nicolas Maduro to the U.S. previously attacking Iranian nuclear sites back in June 2025. The current matter, however, is far more serious. Oil prices soared Friday on concerns about what is now transpiring in Iran and the risk of crude supply disruptions out of the Mideast. Stocks had a rough session Friday on the worries about AI hurting the economy that have been dogging the market for weeks. The nail in the coffin was Friday's hotter-than-expected producer price index for February, as persistent inflation was added to the laundry list of unknowns. Fears about AI-driven job losses were heightened further after fintech firm Block laid off nearly half of its workforce . For the month of February, AI disruption and broader macro concerns knocked the S & P 500 and Nasdaq down nearly 1% and 3.4%, respectively. Those were the worst monthly losses for the indexes since March 2025. Last week, financial names ( Capital One and Wells Fargo ) took a beating, while industrial AI plays ( Corning ) soared. Traditional enterprise software stocks ( Salesforce ) bounced, while cybersecurity names ( CrowdStrike and Palo Alto Networks ) plunged. The chipmakers ( Nvidia and Broadcom ) also sank. Ultimately, the S & P 500 and the Nasdaq ended the week lower by 0.4 and nearly 1%, respectively. Here are three forces that drove the market and the Club's portfolio over the past week. Chips down, AI industrials up The market wasn't very happy with chip stocks. Nvidia shares fell nearly 6.7% last week despite posting better-than-expected quarterly results and forward guidance on Wednesday evening. It has nothing to do with the company's fundamentals. "It's a reflection of the idea that hardware [stocks have] gotten too high," Jim Cramer said on Thursday. Nvidia fell 5.5% on Thursday another 4.2% on Friday. Fellow AI chipmaker Broadcom fell in tandem with Nvidia that day, and ended the week with a nearly 4% loss. These declines highlight the market's broader rotation away from chip stocks. Broadcom reports earnings after close this coming Wednesday. While chips were down, AI industrials were up. That was good news for Corning, which benefits from increased demand for data centers because of its fiber optic cables. Corning jumped 7.8% last week, continuing a banner year for the AI infrastructure powerhouse. Our biggest weekly portfolio winner was Qnity Electroncis , which makes essential materials required to produce high-performance AI chips. Shares jumped 11.7% last week, boosted by Qnity's blockbuster earnings on Thursday. It was the first quarter since Qnity split from DuPont back in November. Software swings Salesforce bounced last week following a sustained period of underperformance. The stock advanced 5.2% over the past five trading sessions â the enterprise software's best weekly performance since early December. The rotation of capital from sky-high hardware into down-and-out software helped, but so did Salesforce's better-than-expected earnings report Wednesday evening. We liked what management had to say about new deals for Agentforce, the company's crucial AI-powered platform. The release wasn't enough to convince us that Salesforce is in the clear when it comes to AI-driven disruption risks to its seat-based business software-as-a-service model. After the earnings print, we lowered our Salesforce price target to $250 per share from $300 to account for the price-to-earnings multiple compression happening throughout the sector. We maintained our 2 rating . Cybersecurity stocks have gotten caught up in the software trade as well. CrowdStrike and Palo Alto Networks fell at the start of the week after AI startup Anthropic announced a new cybersecurity tool. The news caused concerns around increased competition. Both stocks popped midweek though with the rest of software on Wednesday and Thursday. Still, CrowdStrike closed Friday's session lower. For the week, CrowdStrike lost 4.3%. Palo Alto, which took its lumps the prior week after a better quarter but noisy guidance, saw shares last week actually gain 0.15%. During the Club's February Monthly Meeting on Friday, Jim reiterated that cyber should not be down like the rest of software. But he said he recognizes the market does. As a result, he thinks the Club should own only one cyber name. He perfers CrowdStrike, which reports earnings after this coming Tuesday's close. Banks get beat up Financial names were pressured this week after a viral research report last Sunday stoked concerns about AI's impact on the economy. Citrini Research warned that rapid AI adoption could lead to massive white-collar layoffs, leading to double-digit unemployment in 2028. The report also said there could be a huge dent in consumer spending. Bank stocks, which are closely tied with U.S. consumer health, tumbled on the research. Capital One, Wells Fargo and Goldman Sachs each declined on Monday, the first trading session after the report was published. We used the weakness in Wells Fargo and Capital One as a buying opportunity on Tuesday, given that it seems like the moves lower were an overreaction. "We read a frightening screed about how AI will wipe out the white collar economy taking down the credit card companies. It was a novel argument and it crushed Wells Fargo and Capital One," Jim said during the Monthly Meeting. "We are grateful to the writers for the opportunity to buy these stocks at such low prices." Capital One ended the week 6% lower, while Goldman fell 6.8%. Wells Fargo was our worst Club stock last week, losing more than 8%. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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3 themes that drove Wall Street's wild week and the new U.S.-Iran conflict wildcard

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