The first quarter of 2026 began with all US major indices posting negative returns. The S&P 500 was off -4.63%, the Dow Jones Industrial Average fell -3.58%, and the Nasdaq Composite retreated -7.11%.
US Equity Markets led the way in losses, with Developed Markets Outside the US and Emerging Markets narrowly in the red. Across these markets value outperformed growth, which can be attributed to the rotation away from mega-cap tech names. In US Equity Markets Small Caps outperformed Large Caps. The opposite proved true in Emerging Markets and Developed Markets Outside the US. Some asset classes in the fixed income space were positive during the quarter, but in a broader lens US and Global Bond Markets posted marginally negative returns.
Q1 of 2026 marked a volatile start to the year. In the closing days of January, the Federal Reserve Board met and acted to put rate cuts on hold, reporting the first pause since July of 2025. Their subsequent meeting in March resulted in yet another hold on rates. Tariffs again gained attention when the US Supreme Court ruled on February 20th against use of the International Economic Emergency Powers Act (IEEPA) as justification for “reciprocal” tariffs announced in 2025. The US administration implemented a flat 10% tariff on all imports in response to the ruling.
On February 28th the US and Isreal launched “Operation Epic Fury,” a massive joint air campaign against Iran causing markets to sell-off globally. The conflict poses an ongoing threat to global oil and gas prices. With the strait of Hormuz effectively shut down, Brent oil prices jumped 63% in the month of March. On March 11th the International Energy Agency, comprised of 32 member countries, unanimously agreed to make available 400 million barrels to the market in hope of tempering price escalation.
A late quarter rally driven by sentiment around a shorter conflict in Iran helped to limit negative returns in the closing days. With continued geopolitical risk and a resurfacing concern on inflationary pressure, global markets face several headwinds as we move to the second quarter.
| TOT RETURN 3-MO* | TOT RETURN 12-MO* | TOT RETURN 3-YEAR* | TOT RETURN 5-YEAR* | CLOSING VALUE | |
|---|---|---|---|---|---|
| S&P 500 | -4.63% | 16.33% | 16.69% | 10.44% | 6,528.52 |
| Dow Jones Industrial Average | -3.58% | 10.33% | 11.67% | 7.04% | 46,341.51 |
| NASDAQ Composite | -7.11% | 24.81% | 20.89% | 10.26% | 21,590.63 |
Source: Morningstar. The S&P 500, Dow Jones Industrial Average, and NASDAQ Composite are unmanaged indexes. It is not possible to invest in an index. Past performance is no guarantee of future results. * Price only. Does not include dividends.
All overviews and commentary are intended to be general in nature and for current interest, educational purposes and factual reference only and are subject to change based on market and other conditions.