Geopolitical conflict, as well as concerns about the impacts of AI, shaped market returns in the first quarter.
U.S. large-cap stocks ended the quarter down 4.3%, and U.S. small-cap stocks gained 0.9%. U.S. intermediate-term bonds ended the quarter flat.
U.S.–Israeli strikes on Iran effectively closed the Strait of Hormuz. Crude oil surged from$57 to $101 per barrel in March. This pushed U.S. fuel prices to four-year highs, amplifying inflationary pressures.
The “SaaSpocalypse” pushed software stocks down 30–50%, the result of fears that AI dominance will threaten traditional software licensing models. Technology sector valuations fell to broader market levels for the first time in nearly a decade.
Despite geopolitical-driven volatility, credit and futures markets remained stable, indicating that underlying fundamentals were stable and that patience, not reaction, maybe the optimal strategy.
1Q 2026 Commentary: Dire Straits
Summary
Read and download the commentary here.
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