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A tanker carrying crude oil reached India after sailing through the Strait of Hormuz.
Credit: Imtiyaz Shaikh / Anadolu via Getty Images

Key Takeaways

• The trajectory of the economy depends on when vessels resume sailing through the Strait of Hormuz, which has been closed due to the Iran war.
• Some economic forecasts presume the waterway will reopen by March 20, but the prospects for a quick end to the war faded Thursday as attacks continued.
• The longer the war goes on, the greater risk of oil prices rising so high that the energy costs drag the U.S. economy into a recession.

All economic forecasts now hinge on one question: how long will the Iran war last?

With unclear timelines from government officials, there are few details on how long the violence in the region will continue—and what kind of economic impact the fighting may have. Violence in the region continued on Thursday, and the important transportation route through the Strait of Hormuz remained effectively closed.

As a result, the price of Brent crude oil closed above $100 a barrel for the first time since August 2022, up from roughly $70 before the war. The longer the war continues, the greater the impact rising oil prices will have on the broader economy.

What This Means For The Economy

With 20% of global oil flowing through the Strait of Hormuz, prolonged disruption could push inflation higher and slow growth. The war’s duration may determine whether the U.S. and global economies avoid recession.

On Thursday, Goldman Sachs raised its recession expectations 5 percentage points to 25%. The investment bank expects the Strait of Hormuz to reopen to ship traffic by March 21, implying the war will end soon and Iran will allow ship traffic to resume, which would cause oil prices to gradually fall.

The International Energy Agency said it was assuming strait would reopen by that date and "the largest oil supply shock on record" would then start to ease.

The war is overshadowing all other aspects of the economy because of its massive influence on energy prices, which ripple throughout the economy. Higher oil prices have led to costlier gas, travel, and even mortgages, and could soon affect food and nearly every consumer product. Consequences could spill over into the trajectory of employment, inflation, and other economic metrics.

“Our base case remains that if the Iranian conflict and disruption to global energy and commodity supplies lasts no longer than two to six weeks, the impact on inflation and economic activity should be temporary," Kathy Bostjancic, chief economist at Nationwide, wrote in a commentary. "That said, we now see weaker economic activity in Q2 due to the spike in gasoline and energy prices, weaker exports as the rest of the world reels from the disruptions, and an erosion in business confidence."

Oil prices have been volatile since the first salvo in the war, and stock prices have followed suit. However, the impact has so far been limited, economists said.

"Because the major economies have answered with the large supply from strategic holdings, and because markets are clinging to the view that the conflict will not last long, the spike in oil has been relatively contained," Douglas Porter, chief economist at BMO Capital Markets, wrote in a commentary.

That could change, however, if that view turns out to be overly optimistic. Analysts at Alpine Macro led by Dan Alamariu, said the prospects of a quick end to the war worsened this week as attacks continued and leaders on both sides vowed to fight on until their aims are achieved. The analysts said the war would last two months, revising their earlier forecast for a 10-day conflict.

The most likely outcome is that both sides declare victory and stop fighting after a few weeks, with the U.S. halting its bombing first and Iran stopping its own strikes a short time later, they wrote.

In addition to the destruction and human suffering caused by the war, both sides have good political and economic reasons to cease fire. As long as the U.S. does not take control of the strait with ground troops—a scenario Alpine considered extremely unlikely—it's ultimately up to Iran whether to allow traffic through the strait again.

"If Tehran concludes that time favors its war aims and that continued military pain does not threaten its regime's survivability, then the war drags on," Alamariu wrote. "The U.S. is likely willing to settle sooner, but Iran gets a veto."

Economists grappled with how high oil prices could rise if the war continues for months, and what effect that would have on the global and U.S. economies.

Forecasters at Oxford Economics said the global economy would hit a "breaking point" if oil rose to $140 a barrel and stayed there for a few months, with several countries entering a recession and the U.S. flirting with one but not quite going under. Separately, economists at Wells Fargo Securities said sustained oil prices of $ 130 per barrel would cause a U.S. recession.

Events in the Strait of Hormuz are moving markets. A tanker ship unloads in London Wednesday.
Credit: Dan Kitwood / Getty Images

Key Takeaways

• Iran's new Supreme Leader Mojtaba Khamenei vowed to continue blocking off the Strait of Hormuz, through which crude oil, natural gas, fertilizer, sugar, aluminum, basic plastics, and helium all move.
• Some 30% of the world's fertilizer flows through the strait, said Adrian Helfert, Westwood's chief investment officer.

So much depends on a 21-mile wide passageway.

The world's crude oil, gas, fertilizer, sugar, aluminum, basic plastics, helium, and other goods move through the Strait of Hormuz—which is now a chokepoint of the ongoing war in the Middle East. Iran's new Supreme Leader Mojtaba Khamenei in his first released message to the media early Thursday vowed to continue blocking the strait as the rest of the world scrambles, with the magnitude of the resultant supply-chain disruption largely dependent on how long the fighting continues.

Governments and the International Energy Agency rode to the rescue, with plans to distribute an unprecedented amount from oil reserves. Markets experts say there isn't enough spare capacity to address the potential shortfall. Still, oil prices remain aloft, and the de facto closure of the trade passageway threatens to prove consequential even for those far removed from the fighting in the Middle East.

"In the current environment, where the Strait of Hormuz is effectively closed, it is an acute vulnerability," according to energy consultancy firm Rystad Energy.

WHY THIS MATTERS TO YOU

Surging oil prices can affect consumers, and their spending, with folks already feeling the effects of the war at the gas pump.

Some 30% of the world's fertilizer flows through the strait, and its effective closure is happening just before the spring planting season, said Adrian Helfert, Westwood's chief investment officer of multi-asset strategies, in an interview with Investopedia.

Other food goods pass through the Strait of Hormuz, but fertilizer makes crop yields larger and reduces loss from disease and bugs, Helfert said. "Simplistically, if it goes up 20% in price, the farmer is going to need to charge 20% more for corn, or what have you, to make the same amount of margin and that will be passed on to the consumer."

And what about oil prices, which affect economies in a range of ways? Do the math: Twenty million barrels of oil used to move through the strait on an average day before the conflict, and the IEA's planned release is for 400 million. "It's a very positive impact, clearly, but it's not six months of oil supply," Helfert said, saying the market is building in "risk premium" until supply comes back online.

Brent crude futures were about 8% higher Thursday, trading at around $100, which Rystad said shows a supply shock that is "harder to resolve than anything the market has faced in years."

"The $100-per-barrel level is not a ceiling; it is a signal that the architecture of global energy security has a fault line – and the fault line has just been activated," the firm said in a report. West Texas Intermediate futures were up a similar amount, trading at around $95.

U.S. Energy Secretary Chris Wright in a Thursday interview with CNBC said the operations in Iran will "take weeks—it's not days, it's not months." He also said the U.S. was "not ready" to escort tankers through the strait, a suggestion President Donald Trump made last week.

While investors wait for the uncertainty to clear, oil prices appear to be steering their penchant for risk.

"For now, oil remains the primary market driver, with developments around the reopening of the Strait of Hormuz acting as either an accelerator or a brake on risk appetite," Adam Turnquist, LPL's chief technical strategist said in a note Thursday.

Heightened economic uncertainty is one reason Dollar General expects sales growth to slow this year.
Credit: Jakub Porzycki / NurPhoto via Getty Images

Key Takeaways

• After years of above-average growth, Dollar General on Thursday forecast sales growth would slow more than expected this year.
• Cuts to SNAP benefits, slowing wage growth, and rising gas prices all threaten to force lower-income consumers to rein in discretionary spending.

The discount stores that have benefited from inflation-pinched consumers may feel the pinch themselves this year. 

Shares of Dollar General (DG) slumped Thursday after the retailer forecast same-store sales will grow between 2.2% and 2.7% in its 2026 fiscal year, a slowdown from 3% in 2025 and slightly below analyst estimates. The outlook, the company said, reflects the "potential for continued uncertainty, particularly in consumer behavior.” 

Dollar stores have experienced above-average growth in recent years, driven by middle- and high-income consumers trading down to cope with elevated inflation and slowing income growth. Dollar General’s guidance raised questions about whether mounting financial pressures are now squeezing its core low-income consumer enough to offset that.

Why This Matters

Economists have labeled the economy of recent years as "K-shaped"—a reference to the diverging fortunes of upper- and lower-income Americans. Many experts warn that the resilience of higher-income finances has skewed economic data over the past year, obscuring the financial distress of Americans and potentially overstating the economy's strength.

The pressure on lower-income Americans was evident in the retailer’s results. Comparable sales within Dollar General’s “Value Valley,” a rotating selection of 500 items priced at $1, grew about 18% last quarter, four times faster than the company-wide average, according to CEO Todd Vasos. “It’s 'value, value, value' at this point for the consumer,” Vasos told analysts on the company’s earnings call Thursday. 

Low-income consumers face a variety of challenges this year. Experts warn the cuts to SNAP benefits enacted by last year’s One Big, Beautiful Bill will result in 4 million Americans having their grocery assistance eliminated or substantially reduced.

The war in Iran’s impact on oil and gas prices is also likely to pressure Dollar General’s core consumers. The national average gas price rose for an eleventh consecutive day on Thursday and now sits more than 20% above its pre-war level.

“As oil prices climb, the company tends to underperform in comp sales and gross margins” because its customers are more sensitive to higher fuel costs than the average consumer, wrote UBS analysts in a note on Tuesday. 

Not only are lower-income households’ expenses rising, their wages are stagnating. In February, after-tax wage growth slowed to 0.6% for the lowest third of earners, according to Bank of America data.

The pressures facing low-income consumers stand in contrast to the outlook for higher-income Americans. The highest third of earners saw their wage growth accelerate to 4.2% last month. The gap between high and low—3.6 percentage points—is the widest observed in data going back to 2015. 

Higher- and lower-income consumers are also diverging in their feelings about the economy. The University of Michigan’s Survey of Consumer Sentiment moved very little between January and February because improvement among the largest stockholders and higher-income respondents was almost entirely offset by a decline among lower-income households and those without stocks.

Kohl's wants to bring "fun back" to the in-store experience, CEO Michael Bender said.
Credit: Michael Siluk / UCG / Universal Images Group via Getty Images

Key Takeaways

• Kohl's is using proprietary brands to offer lower prices and streamlining the number of styles and products it stocks, company executives said.
• The department store is trying to appeal to bargain hunters who have migrated to off-price retailers and Amazon, UBS says.

Kohl’s is in the thick of a battle for bargain hunters.

The department store company is sharpening its focus on inexpensive goods and making deals easier to spot as its turnaround campaign enters a second year. Kohl’s (KSS) is investing in lower price points and simplifying the in-store experience with signs, mannequins and less merchandise, company executives said on a conference call this week.

The retailer is concentrating on proprietary brands because focusing less on them in recent years left a “void of an opening price point,” and prompted Kohl’s credit cardholders to look elsewhere, CFO Jill Timm said. Kohl’s has ceded ground to competitors including Amazon (AMZN), Burlington Stores (BURL), Ross Stores (ROST) and TJX (TJX), likely losing a third its market share from 2013 to 2024, by UBS' estimate.

“We know that our customer, particularly the low- to middle-income customer, is going to over-penetrate in these value brands," said Timm, according to a transcript made available by AlphaSense. "So we need to bring that to them.”

Why This News Matters to Investors

While lower-income shoppers are cutting back, department stores that cater to higher-income households have also experienced challenges. Macy's is in the midst of a turnaround plan, and the parent company of Saks Fifth Avenue recently filed for bankruptcy.

Products that sell for under $10 are a focal point. Kohl’s is adding kids apparel that costs less than $10 and stocking toy and home goods displays with items in that price range, CEO Michael Bender said.

Kohl’s is also streamlining inventory after having “a little bit too many choices on our floor,” Timm said. Ordering more of fewer items should prevent stores from running out of popular products and simplify the browsing experience, Bender said.

Meanwhile, he said, in-store signs and mannequin displays will “bring some fun back to the Kohl's environment."

Kohl's this week reported another quarter of comparable sales declines—its 16th straight, according to UBS. The Wisconsin-based business expects to end its current fiscal year with sales flat to down 2% from fiscal year 2025.

Executives say they’ve made progress since last March, when then-CEO Ashley Buchanan said Kohl’s had concentrated too much on attracting new customers and overlooked its core shopper. Buchanan was fired weeks later, leaving Bender to implement a turnaround plan.

Shoppers have responded well to Kohl’s prioritizing its brands and making coupons easier to use, the company said.

The focus on value, however, may be hard to pull off, according to UBS. “We are skeptical this can work,” the bank's analysts said in a research note published this week. “While [Kohl’s] can lower prices, it may lose some high-quality national brands that may not want to partner with [Kohl’s] at lower prices.”

Kohl's didn't respond to a request for comment in time for publication.

Investors also appear skittish. Shares were recently down 5% from where they opened Wednesday—around the time Kohl's reported its fourth-quarter results. Shares have fallen nearly 60% in the past year.

Shares of Florsheim's parent company have had a good March.
Credit: Eva Marie Uzcategui / Bloomberg via Getty Images

Key Takeaways

• Shares of Weyco, which owns a number of shoe brands, has seen its shares rise this month.
• Some of that can be attributed to publicity from a powerful corner: President Donald Trump, who is said to be a fan of the company's Florsheim brand.

Why have shares of a company called Weyco been hot this month? It's gotta be the (president's) shoes.

Milwaukee-based Weyco Group (WEYS), which owns shoe brands like Nunn Bush and Forsake, were up some 10% in March through yesterday's close. (They're down today; read Investopedia's full coverage of Thursday's trading here.)

Some of that can be attributed to the interest of a particularly powerful shoe shopper: President Donald Trump, who—according to a recent article in The Wall Street Journal and shoebox-loads of follow-up coverage—is a fan of the company's Florsheim brand. Trump, the story goes, not only likes Florsheims himself but routinely shells out his own money to buy them for staffers, commentators and congressmen.

Weyco, shares of which are up about 10% over the past 12 months, could perhaps use the lift. The company earlier this month said fourth-quarter sales fell year over year as the company raised prices and saw lower North American wholesale volume.

Meanwhile, Weyco has recently made headlines for other connections to the White House: It's among the companies that has sued for tariff rebates.

On a conference call earlier this month, a transcript of which was made available by AlphaSense, executives said tariffs led to cost increases of as much as 50% on some products last year, pressing gross margins.

The Supreme Court recently ruled against some Trump administration tariffs, with the path forward for them still in flux. "We're expecting continued cost uncertainty in 2026," Weyco CEO Tom Florsheim Jr. said on the call. "We are prepared to continue to adjust our margin and pricing strategy with the goal of maintaining historical margins."

McDonald's shares climbed to a record high last month as the fast-food giant showed gains with its value efforts
Credit: Zak Bennett / Bloomberg / Getty Images

Key Takeaways

• McDonald's is looking to launch a new $3 menu next month as part of the fast-food giant's focus on value, according to a report from The Wall Street Journal. 
• The company has worked to reclaim its reputation as a value leader with recent deals and promotions.

McDonald's is intensifying its focus on value with plans for a new menu.

The fast-food giant could be set to launch a $3 and under menu next month, as well as a range of $4 breakfast combos, The Wall Street Journal reported Wednesday.

The $3 and under menu could include the fast-food chain's popular four-piece chicken McNuggets, its sausage biscuit, and other items, the report said, while the breakfast deal could feature options such as a McMuffin, hash brown, and coffee for $4.

McDonald's did not respond to an Investopedia request for comment in time for publication.

Why This Matters to Investors

McDonald's and other chains have rolled out value-focused promotions in recent months as executives said consumers across income levels have shown signs of pressure.

The move marks the latest in a series of deals McDonald's has launched to win over squeezed diners, to some signs of success. Last month, McDonald's posted earning that topped analysts' estimates, with CEO Chris Kempczinski telling investors promotions helped drive improved traffic.

In last month's earnings call, Kempczinski said McDonald's also plans to introduce more items aimed at drawing higher-income customers, who are increasingly trading meals at full-service restaurants for less expensive options like McDonald’s.

McDonald's shares were little changed in recent trading, leaving them up about 6% for 2026 so far. They hit a record high last month as the fast-food giant showed gains with its value efforts.

With Thursday's move, Honda's U.S.-listed shares are down about 12% since the start of the year
Credit: Emily Elconin / Bloomberg / Getty Images

Key Takeaways

• Honda said Thursday it expects to post a loss this fiscal year as it shifts focus away from electric vehicles.
• Honda joins other automakers including Stellantis, General Motors, and Ford in pivoting away from EVs.

Another auto giant is pivoting away from electric vehicles amid a number of changes in the U.S. market.

This time it's Honda Motor Company (HMC), whose U.S.-listed shares sank this morning after the Japanese automaker told investors it's pivoting away from electric vehicles, and expects to take a big hit while doing so. The move follows similar announcements in recent months from other automakers, including Stellantis (STLA), Ford (F), and General Motors (GM).

Honda said Thursday that it expects to take on charges of up to 2.5 trillion Japanese yen ($15.75 billion) in its fiscal year ending March 31 as part of the transition. Honda cited the expiration of EV tax credits in the U.S. and President Trump's tariffs as factors in the decision, as they have made it much more difficult to sell cars profitably in the U.S.

Why This Matters to Investors

Several automakers, including Honda, are opting to put more focus on hybrids and traditional internal combustion engine vehicles as demand for EVs in the U.S. has declined in recent months.

Honda now projects a loss of 340 billion to 570 billion yen for the full fiscal year, down from its previous forecast of a 360 billion yen profit when it last reported quarterly results in February. The full-year loss would be Honda's first since starting to report quarterly results in 1977.

The automaker said it will focus on developing more competitive hybrid vehicles, and grow its motorcycle business to improve profitability. Several Honda executives are also giving up 20% to 30% of their monthly pay for three months of the next fiscal year to help compensate for the loss.

Honda's U.S.-listed shares were down 6% Thursday morning, leaving them down about 12% since the start of the year.

News of the day for March 12, 2026

Stocks are under pressure as oil prices have resumed their move higher amid supply concerns.
Credit: Michael M. Santiago / Getty Images

Stock futures are lower as investors continue to be rattled by uncertainty over the length and impact of the Iran war; crude oil futures are rising despite an announcement yesterday that the IEA would release 400 million barrels from its strategic reserves; the IEA slashed its projection for oil supply growth this year because of the war; Adobe is set to report earnings after the closing bell today amid a rough stretch for the Photoshop maker and other software stocks; and Honda is the latest automaker to take a big financial hit as it shifts focus away from developing electric vehicles for the U.S. market. Here's what you need to know today.

Stocks Point Lower Amid Concerns About Oil Supply

Stock futures are pointing to a lower open Thursday as the Iran war continues to take its toll on markets. Futures tied to the Dow Jones Industrial Average were down 0.8% recently, while those connected to the S&P 500 and Nasdaq each fell 0.6%. The major indexes ended mostly lower on Thursday, with only the Nasdaq posting a gain of less than 0.1% as Oracle (ORCL) rallied following a solid earnings report. Crude oil futures are extending their gains despite moves from the international community to shore up the global oil supply as experts predict a sizable disruption to the industry (more on that below). Gold futures were little changed at $5,180 an ounce, while bitcoin was also holding steady at around $70,500. The yield on the 10-year Treasury note, which is trading at its highest levels in more than a month, ticked higher to 4.22%

Oil Prices Climb Despite Release of 400M Barrels

Crude oil futures are moving higher again despite Wednesday's announcement that the International Energy Agency would release 400 million barrels from its strategic reserves, around double its previous largest-ever release in 2022 when Russia invaded Ukraine. West Texas Intermediate futures, the U.S. crude oil benchmark, were recently up 6% at $92.50 per barrel, after surging as high as $96 overnight. Investors appear unconvinced that the IEA's move will be sufficient if the war in Iran continues to drag on and the Strait of Hormuz remains closed to the millions of barrels of oil that typically move through the channel per day. Crude oil prices have risen nearly 40% since the start of the Iran war in late February.

IEA Sees 'Largest Supply Disruption' in History

Along with announcing the massive release from its reserves, the IEA on Thursday issued its latest monthly forecast for the oil industry. The agency said that the war in Iran is causing "the largest supply disruption in the history of the global oil market," as traffic through the Strait of Hormuz has cratered from 20 million barrels a day to nearly nothing currently. The agency said that oil-producing countries across the Middle East have slashed their production by at least 10 million barrels a day as the blockage causes their storage facilities to fill up. Global oil supply is expected to fall by 8 million barrels per day in March, and the IEA now puts global oil supply growth for the year at about 1.1 million barrels per day, down from 2.4 million it forecast in its February report.

Adobe Set to Release Results Amid Rough Stretch for Software Companies

Adobe (ADBE) is scheduled to release its latest earnings report after the market closes Thursday. The software maker is projected to report adjusted earnings per share of $5.87 on a 10% year-over-year jump in revenue to $6.28 billion for it fiscal first quarter, according to estimates collected by Visible Alpha. Adobe is among the many software stocks that have had a rough start to the year due to concerns over how generative AI could hamper their growth. Adobe shares, which enter Thursday down 22% year-to-date and nearly 40% in the last 12 months, were little changed in premarket trading.

Honda Is Latest Automaker to Project Massive Hit in Shift Away From EVs

Shares of Honda Motor Company (HMC) are sinking this morning after the Japanese automaker became the latest vehicle manufacturer to pivot away from electric vehicles and take a big financial hit while doing so. Honda said Thursday that it expects to take on charges of up to 2.5 trillion Japanese yen ($15.75 billion) in its fiscal year that ends on March 31 as part of the transition. Honda cited the scrapping of EV tax credits in the U.S. and President Trump's tariffs as factors in the decision, as they would make it much more difficult to sell EVs profitably in the U.S. Several other automakers have made similar announcements in recent months, including Stellantis (STLA), Ford (F), and General Motors (GM). Honda's U.S.-listed shares were down 6% ahead of the opening bell.

Most items need to be transported, so the Iran conflict could push up more prices than just at the pump.
Credit: Lindsey Nicholson / UCG / Universal Images Group via Getty Images

Key Takeaways

• Prices for food, consumer products, airline tickets, and just about everything else could get more expensive in the coming months if the Iran war drags on.
• The spike in gas prices since the war began is likely to stoke inflation because fuel costs factor into most things people buy.
• The price hikes will be worse the longer the war goes on, economists said.

You've seen the war-related surge in prices at the gas pump—expect to see price increases just about everywhere else before too long.

The 60-cent-per-gallon jump in gasoline prices since the war began is just the beginning, economists warned this week.

The war in Iran has restricted sea traffic through the critical Strait of Hormuz, choking off about 20% of the world's oil supply and causing prices to spike. That's translated into higher gas and, especially, diesel fuel costs. Diesel was $4.81 a gallon Wednesday, up $1.07 since March 1, Patrick DeHaan, head of petroleum analysis at Gasbuddy, posted on social media.

A surge in fuel prices isn't just a surge in fuel prices. It can push up costs for everything that's delivered by truck or uses vehicles and machinery, which, in the U.S., is just about everything.

What This Means For The Economy

Some forecasters say oil would have to reach $130 a gallon and stay there to drag the economy down into a recession—as of Wednesday it was hovering under $90.

"Diesel powers trucks, farms, and construction," DeHaan wrote. "Spikes like this ripple through the entire economy."

Air travel will likely get more expensive in the coming months, forecasters at Pantheon Macroeconomics said in a commentary. Fuel is a major cost for airlines, accounting for about a quarter of their total expenses in 2019, according to the International Air Transport Association. As of March 6, jet fuel was up 64% compared to the previous month, the association said.

It won't belong before those higher prices start squeezing household budgets, eventually leading people to cut back on spending, Sean Snaith, director of the University of Central Florida’s Institute for Economic Forecasting, wrote in a commentary.

"Energy costs show up everywhere, at the gas pump, in shipping costs and eventually in the price of goods," he wrote. "Many middle- and lower-income households are still repairing their budgets after several years of high inflation. Higher energy prices make that recovery harder."

As with many aspects of the war, the damage will be less the sooner it ends.

“If energy price increases remain contained and the conflict does not significantly disrupt global supply, the broader trend of moderating goods inflation is likely to continue through 2026," wrote Ralph McLaughlin, chief economist at market intelligence company OpenBrand, in a commentary. "But a prolonged or escalating conflict that drives oil substantially higher would pose a renewed upside risk to overall inflation.”

Adobe shares have lost about 20% of their value since the start of the year
Credit: Smith Collection / Gado / Getty Images

Key Takeaways

• Adobe is slated to post its latest earnings after the market closes Thursday, with traders expecting a big swing in the software maker's stock following the event.
• Adobe's stock has tumbled to start the year, amid concerns about competition and disruption from AI.

Adobe is set to report earnings after the market closes Thursday, with traders anticipating a big move from the Photoshop maker's stock following the results.

Based on current options pricing, traders expect Adobe (ADBE) stock could move up to 7% in either direction by the end of the week. A move of that size from Wednesday's close could lift the stock close to $293, recovering some of its recent losses. The low end of that range could drag the stock below $255.

Adobe shares have lost about a fifth of their value since the year began, amid a broader pullback in software stocks on concerns about disruption from AI. Oppenheimer analysts downgraded Adobe's stock in January, saying it exemplifies many of the major challenges facing the application software industry.

Why This Matters to Investors

Adobe and other software stocks have slumped to start this year amid worries about the impact of generative AI. Thursday's report could offer Adobe an opportunity to address investors' concerns.

Jefferies analysts warned ahead of the results that they don't see many catalysts appearing in the near term, and that Adobe could continue to face pressure from growing competition.

Adobe is projected to report adjusted earnings per share of $5.87 on a 10% year-over-year jump in revenue to $6.28 billion for it fiscal first quarter, according to estimates collected by Visible Alpha.

Wall Street analysts are divided on the stock. Of the 12 analysts with current ratings tracked by Visible Alpha, just five recommend buying the shares, compared to four neutral and three "sell" ratings. Still, their average price target of $368 would suggest nearly 35% upside from Wednesday's close.