Navigating Market Volatility: Oil, Inflation, and Earnings in Focus

Investors face uncertainty as oil prices rise and markets wobble amid Middle East headlines. We recap what matters most during volatility and how to approach your portfolio today.

Last Edited by: LPL Research

Last Updated: March 20, 2026

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IN THIS ARTICLE:

Investors have a lot on their minds right now. Oil prices have jumped, markets have wobbled, and headlines out of the Middle East change by the day. Below we recap what matters most to investors when volatility looms, and how to think about your portfolio today.

Oil Prices Matter Less for Growth, but Still Affect Inflation

The U.S. economy uses less oil per dollar of output than it did decades ago. The U.S. also produces and exports more petroleum products than it imports. Because of this shift, spikes in oil prices tend to hurt overall economic growth less than they did in the 1970s.

Even so, higher energy costs still lift inflation. When oil prices rise, they can push up prices that consumers pay for transportation, utilities, and food. If oil prices remain high for an extended period, inflation could cool more slowly.

In that scenario, the Federal Reserve may take longer to lower interest rates. Short bursts in oil prices usually do not change the long‑term picture, but longer‑lasting increases deserve closer attention.

Are We Past Peak Fear in Stocks?

Recent selling has created some technical damage, yet the S&P 500 has held above its widely watched 200 day moving average, a common gauge of trend. That suggests the longer uptrend remains intact for now.

Market breadth has narrowed, which is a risk, but oversold conditions have started to appear. LPL Research is also closely watching oil and volatility. Falling crude prices alongside lower implied volatility can signal that fear has eased.

Despite the conflict and shipping disruptions near the Strait of Hormuz, earnings expectations have held up as Wall Street still expects solid profit growth this year. Strong investment in artificial intelligence is a key driver, with technology contributing a large share of overall profit growth.

What You Can Do Now

Two things drive the next leg for markets:

  1. Watch the path of inflation as energy flows through monthly data
  2. Track whether the broad market can rebuild participation beyond the largest stocks

Practical steps to consider:

  • Revisit your mix of stocks and bonds so it still matches your time horizon and risk tolerance. Avoid big shifts on headlines alone.
  • Favor quality companies with steady earnings trends, as earnings momentum remains a key support.
  • Keep an eye on oil and inflation updates, since a prolonged spike would have a clearer impact on the economy and markets.

 

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OIL PRICES AND EARNINGS IMPACT FAQS

Higher oil prices don’t automatically hurt stocks. The U.S. economy is much less sensitive to oil prices than it was decades ago, thanks to greater energy efficiency and domestic production. Markets tend to focus more on how high oil prices go and how long they stay elevated. Short-term spikes often create volatility, but sustained price increases that fuel inflation or pressure corporate margins are more likely to become a broader concern for stocks.

Even when fear starts to fade, stock markets often remain volatile for a while. During this phase, market breadth and momentum need time to rebuild, which can lead to choppy, uneven trading rather than a smooth recovery. This type of volatility is common during transitions, not necessarily a sign of renewed trouble.

Geopolitical conflicts do introduce risks, but corporate earnings estimates have so far remained relatively firm. In many cases, strength in areas like technology has helped offset higher energy-related costs elsewhere. While some industries may feel pressure, broad-based earnings deterioration hasn’t materialized, suggesting that companies have been able to manage higher costs and uncertainty reasonably well so far.

Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. ​

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. ​

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. ​

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. ​

All investing involves risk, including possible loss of principal. ​

US Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. ​

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio. ​

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio. ​

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.​

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Indexes are unmanaged and cannot be invested in directly.

The MSCI US Broad Market Index captures broad U.S. equity coverage. The index includes 3,204 constituents across large, mid, small and micro capitalizations, about 99% of the U.S. equity universe. Indexes are unmanaged and cannot be invested in directly.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Private credit carries certain risks — illiquidity, opacity, borrower concentration, and bespoke structures — that distinguish it from corporate bonds and bank loans and complicate its evaluation and oversight.

All index data from FactSet or Bloomberg.

This research material has been prepared by LPL Financial LLC.

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