(First, an important note: For more on Schwab's perspective about the market cases for the war in Iran, make sure to read the daily Schwab Market Update article on Schwab.com/learn).

Here is Schwab's early look at the markets for Tuesday, March 3.

After Monday's surprising resilience in the face of Middle East war, Wall Street enters the new session with one eye on crude oil  and battle headlines and the other on a full schedule of earnings.

Volatility initially flared Monday before calming as investors gingerly dipped their toes back into stocks and cryptocurrencies. Though turbulence could resume depending on how long the conflict lasts and its effect on oil shipping, investors should keep in mind that geopolitical conflict often has a short-lived impact on markets.

While the initial market response seemed orderly and lacked signs of panic, "second order" effects on the economy will matter, too. Higher energy prices can tighten financial conditions, which could pressure consumer spending, not to mention margin issues in energy-intensive sectors. There could also be a quick upward adjustment in inflation expectations and a resulting adjustment to expectations around the Federal Reserve's rate path.

One factor that could limit oil's ceiling is China's recent build of massive crude oil stocks. China is the main buyer of Iranian oil, but if it has ample supply and can forgo near-term purchases, that might be a lucky break for the market. Though the U.S. is less dependent on Middle East oil than it once was—thanks to record domestic production—oil trades globally and U.S. customers will pay more if the rest of the world does.

Stocks saw pressure late in the day after Iran threatened to attack ships traveling through the Strait of Hormuz, an important geographic choke point. Though Iran can't "close" the strait, it can make it difficult for ships to get through. About 20% of the world's oil travels through that passage near Iran's territory.

The U.S. dollar index rose nearly 0.8% Monday on what appeared to be "flight to safety" trading, though no investment is truly safe.

The Cboe Volatility Index initially charged higher Monday, climbing double digits to levels last seen in late November. However, it stayed below 25, sometimes seen as a key height, and one that investors might want to watch. The VIX then spent much of the day rolling back those early gains, trading up less than 3% by late in the session but still above 20.

It appears a number of hedges were in place entering the weekend as many market participants appeared to anticipate military action. The markets weren't caught off guard initially, but appear prepared for a relatively short-lived conflict. If the war spreads or shows signs of persisting longer term, that could mean a resetting of expectations and possibly more volatility.

Turning to earnings, Autozone, Best Buy, and Target report this morning. Chip giant Broadcom reports tomorrow afternoon. Costco and Kroger come later this week. Retail earnings have been a mixed bag so far in the fourth quarter, with holiday sales generally holding up, but some signs of caution expressed about the current quarter and beyond. Rising gas prices in the wake of the war might be another headwind for retailers, and it wasn't surprising to see many consumer-oriented stocks struggle on Monday.

Target shares fell Monday, possibly as market participants recalled Walmart's cautious guidance a few weeks ago. A new CEO took over at Target recently, possibly driving the stock's recent rally.

This afternoon brings earnings from CrowdStrike, turning focus back to the battered software sector. Cybersecurity stocks have been struggling with the rest of software, but the companies themselves and sector bulls argue that the growth of AI raises needs for this segment's services.

If it weren't for Iran, jobs data would likely be the focus this week. Days ahead are packed with jobs news, building up to Friday's February nonfarm payrolls report. That data is under intense scrutiny after the economy added less than 200,000 jobs all last year before a revival to January's 130,000 growth. A repeat looks unlikely, with consensus for February around 60,000.

Even that sort of outcome—which a few years ago would have seemed very tepid--might be welcome after Block's layoff announcement sent shivers through the market late last week. The payments firm said it was laying off 40% of its workforce, using AI to become more efficient.

Today is light on numbers. In data Monday, the February ISM Manufacturing PMI stayed positive above the 50 level that divides between contraction and expansion. The headline reading of 52.4% fell slightly from 52.6% in January but slightly topped the Briefing.com consensus of 52.1%. 

The ISM employment category—an important metric considering all the jobs data straight ahead—stayed in contraction at 48.8%, up from 48.1% in January.

Meanwhile, ISM's prices category surged to 70.5% from 59.0% in January. The huge jump suggests this could be a one-time blip, but next month's report might tell the tale. This doesn't necessarily make the Fed's job any easier after last week's January Producer Price Index, or PPI, came in well above expectations and crude prices climbed sharply after the war began.

The 10-year Treasury note yield, which dipped below 3.95% in trading late Sunday on ideas the war might cause "flight to safety" action in the markets, climbed about 10 basis points during the course of the day Monday. The ISM price data was one factor, along with crude oil values.

There's less than a 3% chance of a Fed rate cut at this month's meeting, according to the CME FedWatch Tool. The chance of at least one rate cut by mid-year is around 45%, down from 55% a week ago, possibly driven by inflation concerns as crude rallies. The market still works in two in three chances of at least two cuts this year.

On Monday, major indexes started the day 1% lower, clawed back to slight gains, and then spent much of the afternoon vacillating between light gains and losses before finishing mixed.  Small caps had the best session as they tend to be less affected by international trade. The Dow Jones Industrial Average was the only major index to fall, and the broader market ended flat.

Technically, the 50-day moving average near 6,900 for the S&P 500 Index again appeared to attract sellers, while recent lows near 6,800 found buyers. The index continues to trade in a tight range, but any dip below the 6,750 to 6,775 area might trigger additional selling.

Only a handful of S&P sectors stayed above water Monday while seven of 11 fell. However, some of the most battered sectors of recent weeks including financials and info tech were in the top- five, a sign that investors might be interested in buying dips. Consumer staples and discretionary had the worst days, pinned down by inflation worries related to the oil market.

U.S. crude oil surged more than 6% Monday to around $71 per barrel as Middle East violence flared, raising concerns about the impact on the Strait of Hormuz. Crude is now at its highest price since late last June, the last time Iran came under attack.

In individual trading Monday, energy stocks led gains as the energy sector rose more than 1.75%. ConocoPhillips rose more than 3% while Chevron and Exxon Mobil climbed 1%, boosted by the oil rally.

Tech shares did well Monday, led by nearly 3% gains for Nvidia. This might reflect some participants electing to "buy the dip" in battered sectors like tech and financials.

Airlines shares got grounded by the Middle East war, which could raise input costs and interrupt travel flow in the region. United Airlines plunged nearly 3%, and Delta Air Lines and Southwest fell around 2%.

Defense industry firms including Lockheed Martin and Northrop Grumman added 3% and nearly 5%, respectively, as war led to ideas these companies could see increased demand for their weapons. There are concerns that U.S. forces could need replenishments if the conflict persists much beyond a few weeks, a military analyst told CNN today.

Consumer-oriented stocks generally lost ground Monday, including 2% or worse declines for Disney, Wendy's, Ford, Lululemon, Estee Lauder, home builder and home improvement companies, and department stores.

One source of pressure appeared to be ideas that higher gas costs could cause consumers to pull back on spending. Another worry is that the Fed may have less room to lower rates if the war keeps oil prices and inflation elevated.

The Nasdaq Bank Index popped almost 2%, reversing early losses for the sector. Banks initially came under pressure from spillover selling after last week's private-equity-fueled dive, and on ideas that a war-torn Middle East might hurt risk tolerance and clamp down on investments. Those scenarios could still happen, but investors appeared less wary as of late Monday. The sudden rally in longer-term Treasury yields also appeared to support banks, as a steeper yield curve tends to improve their profitability.

Norwegian Cruise Line dropped more than 11% after quarterly results came in short of consensus on revenue, and guidance also appeared to disappoint. Spillover from Norwegian as well as worries about travel demand in war time weighed on other cruise line stocks as well.

Natural gas futures surged more than 3% Monday. Qatar accounts for around 20% of global liquid natural gas (LNG) exports, and its infrastructure sits on the vulnerable side of the Strait of Hormuz—a global chokepoint for the oil trade. Any serious disruption could reverberate across Europe and Asia. European stocks fell 1% to 2% in midday trading on Monday. Qatar stopped LNG production at the world's top plant, CNBC reported.

Bitcoin managed to buck predictions and put up a rally on Monday. A "risk-off" environment tends to hurt crypto, and did overnight Sunday. But as the equities market got nibbles during Monday's session, investors dove back into cryptocurrencies and related stocks as well. Bitcoin rose 5% and is knocking on the door of $70,000, a level it last closed above on February 9.

The Dow Jones Industrial Average® ($DJI) dropped 73.14 points Monday (-0.15%) to 48,904.78; the S&P 500 Index (SPX) added 2.74 points (+0.04%) to 6,881.62, and the Nasdaq Composite® ($COMP) ticked up 80.65 points (+0.36%) to 22,748.86.