Joe Fernandez
Apr 2, 2026
First Quarter 2026 Recap and Outlook
The first quarter was eventful for markets. Stocks traded higher to start the year, with the S&P 500 posting a modest gain in January. However, the market traded lower in March due to escalating geopolitical tensions in the Middle East and the Strait of Hormuz closure, which led to a spike in oil prices. The S&P 500 returned -4.3%, but despite the late-quarter volatility, there were bright spots. The average S&P 500 stock outperformed the broad index by nearly +5% as market leadership broadened, and manufacturing data showed signs of improvement. In this letter, we recap the key developments from Q1, discuss how higher oil prices impacted rate cut expectations, highlight how diversification benefited investors, and look ahead to Q2.
Read the full letter here.