Monthly Market Commentary – February and March 2026

By Dennis Karpenko, CFA

February and the first few weeks of March have carried over much of the volatility observed in January this year. Geopolitical tensions between the U.S. and Iran have exacerbated an already shaky market landscape. Now, beyond just headwinds for certain equity sectors, elevated oil prices have also begun to find themselves under the lens of investor scrutiny.

Equities

In the equity space, investors have continued to shift away from large-cap tech names and into other sectors; despite a strong earnings cycle, continued capital expenditure on AI development without much immediate return on investment has caused a shift into other areas of the market.

Through March 13th, the Energy sector, supported by rising oil prices, leads all sectors with a return over 29%. Utilities and Consumer Staples round out the top three sectors with returns of around 10% and 9%. Financials and Consumer Discretionary are the worst performers, down 7% and 10%, respectively.

In the last few weeks, major equity indexes have printed negative returns, with the S&P 500, DJIA, and Nasdaq 100 all down over 2% year to date. International indexes still show positive returns for the year despite the pullback, with emerging markets still up nearly 5% since the start of the year.

Fixed Income

Mirroring equities, bond indexes also saw a drop in the first few weeks of March after climbing in February. The more muted response, though, partially reflects a shift in sentiment as investors look to comparably safer, more high-quality assets to sit out this stretch of volatility.

Although bond prices have pulled back, yields have climbed in conjunction with a renewed inflation risk. Spreads have commensurately widened as well, with most fixed income classes underperforming treasuries in the last few weeks.

Economic Recap

The Fed’s second meeting of the year is on March 18th, with expectations that there will be no change in rates. Although broad market consensus is still that there will be one to two cuts in 2026, the recent conflict between the U.S. and Iran and rising oil prices have increased odds for these cuts to now occur in the back-half of the year.

The WTI Crude Index, a global benchmark for oil prices, has spiked on the heels of conflict in the Middle East. Particularly, oil traffic through the Strait of Hormuz, on the southern side of Iran, has dropped significantly as sides look to establish safe routes through the area.

Other notable economic figures:

Disclosures

Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.