Bracket Buster
April 2, 2026
Unless you had picked the energy sector upset, March could have been a bracket buster. Energy markets were a central driver of activity during the month. Oil prices rose primarily in connection to the escalating conflict in the Middle East. This dynamic not only supported energy equities but also influenced broader market sentiment and monetary policy expectations.1 The rise in energy costs reinforced inflation concerns, which directly influenced the decision by the Federal Reserve to hold rates mid-month.1 For domestic equities, while some of the underperformance was driven by cross-border conflicts, it was marginally offset by the ongoing sector rotation.2
U.S. equity markets experienced declines during the month, the S&P 500 closing at -4.98% and NASDAQ closing at -4.68%. Energy stocks benefited from the sharp rise in oil prices as tracked by the S&P 500 GICS Energy Sector Index, closing the month at +10.40%. Before energy sectors took over every headline, the domestic equity conversation was really centered around the ongoing equity leadership rotation. Since their peak in mid-October 2025, technology sectors have experienced a gradual decline in performance. As tracked by the S&P 500 GICS Information Technology Sector Index, the tech sector closed at -3.83% for the month of March. With this sector making up material segments of major indexes, concerns persist regarding index-level concentration risk, especially during periods of sector weakness.2 Since the mid-October peak, there has been a broader industry rotation out of growth sectors and into value sectors.2 Now that energy is at the forefront of every domestic equity conversation, it would be a good time to mention that energy is value oriented, so this rotation is timely. Developed and emerging international equities were relatively in sync with one another. As tracked by the MSCI EAFE Index, developed markets closed at -10.18% for the month. Emerging markets closed at -13.04% as tracked by the MSCI Emerging Market Index.
In fixed income markets, the Federal Reserve held interest rates steady during the month, in line with the continued data-dependent approach.1 Investors have adjusted expectations for future rate cuts. Bloomberg’s World Interest Rate Probability function(WIRP) has investors pricing in no monetary policy action by the Federal Reserve, be it rate hikes or cuts, for the entire fifteen-month outlook. Beyond fifteen months is too soon to tell using this model. These adjusted expectations have influenced bond yields to move higher across all durations. The higher rate expectation resulted in modest price declines. Tracked by the Bloomberg U.S. Aggregate Total Return Value Unhedged Index, debt markets closed the month -1.76%.
Overall, March served as a reminder that markets remain sensitive to external shocks. Investors are navigating escalating geopolitical tensions, higher energy prices, and evolving expectations around monetary policy. Despite the bracket busting moments noted here, a diversified portfolio will never experience the performance of one asset class alone, but rather a strategically allocated part of each. In addition, March is only one month out of the year, which is a small picture in the greater 2026 narrative, and any number of factors can encourage markets to perform differently for the remainder of the year.
Certain statements in this commentary may constitute forward-looking statements. Actual results may differ materially from those anticipated. See important disclosures below.
1https://www.federalreserve.gov/newsevents/pressreleases/monetary20260318a.htm
2https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/protected/market-insights/mi-guide-to-the-markets-daily-ce.pdf?countryCode=no
The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies.
The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices.
The S&P 500 GICS Energy Sector Index is the Standard and Poor’s Index that comprises those companies included in the S&P 500 that are classified as members of the GICS® energy sector.
The S&P 500 GICS Information Technology Sector Index is the Standard and Poor’s Index that comprises those companies included in the S&P 500 that are classified as members of the GICS® information technology sector.
The MSCI EAFE Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.
The MSCI Emerging Markets Index consists of 23 economies including Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates. The MSCI is a float-adjusted market capitalization index.
Bloomberg’s U.S. Aggregate Total Return Value Unhedged Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS(agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency).
Bloomberg's World Interest Rate Probability (WIRP) function estimates the probability of Federal Reserve interest rate actions based on market-derived pricing of interest rate instruments.
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