March Markets in Focus

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Markets in Focus

Timely analysis of market moves and sectors of opportunity

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March 30, 2026: Focus on fundamentals in this vacuum of uncertainty

BY MATT ORTON, CFA, AND JOEY DEL GUERCIO, CFA^{1, 2}

Key takeaways

Only tangible progress on a ceasefire or reopening the Strait of Hormuz will meaningfully reverse the risk-off tone now.
There is nothing wrong with diversification, only the way many investors have approached it.
We continue to suggest building a list of opportunistic buying or rotation opportunities rather than chasing waves of volatility.

The deal or no deal whipsaw over ending the Middle East war has continued to dent investor sentiment and pressure global markets as:

Equities and bonds have struggled globally with government yields spiking.
Outside of the energy sector, there are fewer places to hide across the equity complex.
More than half of S&P 500 Index constituents are down more than 20% from highs and thus are now in a bear market.
Pain is spread across a number of sectors, though financials and information technology have been the most challenged.
The Nasdaq-100 Index posted losses for the fifth consecutive week, its longest streak in four years.

Despite the pain across many parts of the market, there are still signs that investors remain too sanguine about the prospects for an immediate resolution to the conflict with Iran and that risks remain skewed to the downside. Without some stabilization across the financials and technology sectors, it is difficult for the broader indices to regain footing. The dollar also looks to continue pushing higher, which has challenged assets like gold and could lead to further deleveraging from the market. In the coming weeks, earnings season will kick into full gear starting with the banks. This provides an opportunity to refocus on fundamentals and growth trends that have not been derailed by the current crisis. With so many stocks being in a bear market, we believe plenty of high-quality assets have been thrown out with the bathwater. We remain risk-off and skeptical of bounces right now, but investors should consider building a shopping list for when there is more clarity and remaining invested across the energy complex as a hedge, despite the significant price appreciation.

Sector valuations have changed meaningfully this year

12-month forward price-to-earnings ranges for S&P 500 sectors excluding real estate

Chart showing 12-month forward price-to-earnings ranges for S&P 500 sectors excluding real estate

Source: Bloomberg, as of March 27, 2026

Inflation and interest rate dynamics

Higher energy prices have contributed to rising inflation expectations, along with already negative consumer sentiment and rising input costs. Eventually, the market is likely to start to move from pricing higher inflation to pricing downside risks to growth as higher energy prices erode consumer purchasing power. Markets are still pricing higher inflation and tighter monetary policy. However, this is an optimistic scenario if the conflict resolves quickly before aggregate demand softens and input costs rise.

The sharp rise in bond yields is presenting a more attractive point at which investors can start to get more positive. That’s because a further meaningful backup in yields would only be sustainable if we saw interest rate hikes and significant additional fiscal stimulus. And that’s unlikely in the US and Europe. In the US, the Federal Reserve (Fed) with Fed Chair Jerome Powell and recent Fed speakers remain focused on a more balanced message, not one that would indicate hikes.

Equities: Fundamentals still matter

In equities, recent price action has reflected whipsawing geopolitical sentiment, and that is unlikely to change. We believe investors should look for upside buying opportunities given underlying fundamentals, but it’s too early to make any meaningful changes from a risk-off stance. Equity positioning has continued to fade as more investors, especially systematic funds, look for places to hide given the lower price trends. Commodity trading advisor (CTA) exposure remains washed out while volatility target funds have turned defensive as close-to-close volatility has picked up.

That said, we believe that stocks are getting close to the point where these systematic flows could soon start to skew toward buying. A relief rally that drives a correlated move higher and volatility lower could trigger these systematic players to start re-leveraging. It’s impossible to time when this will happen, so it’s important for investors to retain exposure to the market. We have been vocal on diversification because there are sectors, industries, and geographies that are holding up much better than others. This allows investors to maintain exposure to parts of the market where the price action has been painful despite fundamentals remaining solid. That has created opportunities when looking at valuations across different sectors in the S&P 500 Index, assuming we don’t see significant downward revisions. The forward price-to-earnings (f P/E) multiples for both financials and information technology are trading below their Liberation Day lows from April 2025 with healthcare getting pretty close.

Investment Playbook

Incremental headlines will not meaningfully reverse the risk-off tone now. That will require tangible progress on a ceasefire or reopening the Strait of Hormuz. The US Federal Reserve looks constrained with respect to the rate-cutting cycle. Rising inflation expectations and a stable low hire-low fire labor backdrop leave little room to ease rates in the near term. Perhaps this is why we saw such negative price action last Friday, which helped extend the losing streak of the S&P 500 to five consecutive weeks, its biggest weekly loss since Oct. 10. The S&P 500 Index is now down 8.7% from its January closing high and finished at the lowest level since early August.

April is shaping up to be a catalyst-rich month. The good news is that April is seasonally one of the strongest months of the year. The bad news is there still doesn’t look to be an off-ramp for the war. US equity markets will be closed on Friday, with event premium for the March nonfarm payroll (NFP) shifting to Monday, April 6, coinciding with the proposed US-Iran deadline. First-quarter earnings kick off at mid-month with banks starting on April 14. The end of the month will be packed with the Fed decision on April 29 and nearly every Magnificent Seven company reporting over the last two weeks of April. Given the catalysts and uncertainty around the next phase of the war with Iran, we believe focusing more on key secular growth themes can help weather the storm. Many of these themes have been part of our playbook this year, but they’re worth emphasizing given price action over the last month and their relative performance to the broader equity complex.

Reminder on diversification. Many articles about the poor performance of the 60/40 portfolio year to date are making hyperbolic claims that diversification is broken. It’s not. Rather, at the start of the year, we warned that rising correlations between stocks and bonds required a more nuanced approach to diversification. Portfolios built upon the assumption of stable correlations can become misaligned as those relationships evolve, which is what we’re seeing now. There is nothing wrong with diversification, only the way many investors have approached it. We need to more tactically allocate capital across asset classes (including commodities and real assets) and within equities. It’s important to balance exposure better across sectors, industries, market capitalizations, and geographies. In commodities, traditional energy names have provided a good place to hide. Share prices are stretched, but this isn’t a move to fade until we get clarity on when and how the Strait of Hormuz will open. Natural gas looks to have structural supply challenges given damage, coal is becoming an alternative, and even clean energy has held up well relative to its traditional beta to the market. We recently wrote a Thematic Insights commentary on gold and industrial metals with some additional diversification ideas. There will be a time to rotate from these trades, but we’re not there yet.

Focus on artificial intelligence (AI) capital expenditure beneficiaries. Hyperscalers continue to break down and seven semiconductor companies are starting to show signs of weakness, but it’s important to focus on the full range of AI 2.0 companies we have highlighted for the past year. This includes not just the semiconductor beneficiaries, but the industrial side of the AI buildout and the power/grid supply chain. There is also an increased focus on robotics and the physical side of AI plus the supply chains that will be necessary to support future growth. Aerospace, electrical equipment, construction and engineering, utilities, and battery storage have all held up quite well since their fundamental growth is not meaningfully disrupted by the uncertainty in the Middle East.

Sometimes it’s best to wait and see. Markets are stuck in a vacuum of certainty. This leads to erratic price action overnight and large intraday swings that aren’t captured in traditional volatility metrics that are already elevated. It becomes very difficult to see bottoms in trades that might be washed out (e.g., the underperformance of software) or to assess whether leadership is rolling over for fundamental reasons or just because of geopolitical uncertainty (e.g., semiconductors). Focusing on the fundamentals is critical. As we move into earnings season later in April, guidance will be vital to assessing the degree to which earnings expectations for 2026 may have been impacted by the current disruptions. In an environment where sharp moves can reverse even within a single day, we continue to suggest building a list of opportunistic buying or rotation opportunities rather than chasing waves of volatility.

What to watch

Developments in the Middle East will continue to dominate but data releases start to pick up with the Consumer Price Index (CPI) data. Inflation data will finally begin to reflect the war in Iran and subsequent spike in energy prices. We’ll get March CPI readings from the euro-area, Switzerland, South Korea, and Tokyo (a leading indicator for Japan). The US jobs report and retail sales, Chinese Purchasing Managers Index (PMI), and Japan’s Tankan survey also come this week. Additionally, several central banks release meeting summaries, including the Bank of Japan, Reserve Bank of Australia, and Bank of Canada. Plus, there are long lists of European Central Bank speakers and a few from the US Federal Reserve. Specifically this week, Fed Chair Powell is scheduled to participate in a moderated discussion at Harvard University’s principles of economics class while New York Fed President John C. Williams speaks at the Staten Island Economic Development Corporation.

¹ Matt Orton, CFA, is Chief Market Strategist at Raymond James Investment Management. Joey Del Guercio, CFA, is Research Associate for Market Strategy at Raymond James Investment Management.

² Unless otherwise indicated, all data cited is sourced from Bloomberg as of March 20, 2026.

M-909609 Exp. 7/30/2026

March 23, 2026: Let’s talk about diversification

BY MATT ORTON, CFA, AND JOEY DEL GUERCIO, CFA^{1, 2}

Key takeaways

Diversification still matters, but there’s a strong case for it to be broader and more tactical as traditional stock-bond relationships weaken.
Markets are increasingly pricing in structural longer-term risk, not just a temporary geopolitical shock.
While risks remain elevated, light positioning and upcoming catalysts may create opportunities to redeploy capital.

As the war in the Middle East continues to induce sharp price swings, it’s hard for investors to see a light at the end of the tunnel after an already volatile month. Cracks are manifesting across the market with government bond yields spiking and equities moving lower. The rotation trade, including the outperformance of international equities, abruptly reversed at the start of the war, with no signs of relenting. While it seems that the energy complex or cash may be a place for investors to hide, each comes with its own set of risks, most notably market timing.

So how should investors think about diversification in this environment? With the S&P 500 Index and both investment grade and high yield bonds in the red year to date, it’s no surprise that the traditional 60/40 portfolio has been underperforming. At the start of the year, we highlighted the risks of rising stock-bond correlations and the need for broader equity diversification across geographies, sectors, industries, and market capitalizations, along with a more tactical approach to asset allocation. Although several portfolio diversifiers have declined, certain areas have offered insulation due to idiosyncratic risk. Even as fears around worst-case conflict outcomes intensify, we believe time remains to reposition portfolios to weather volatility and capitalize on the eventual market recovery. In the short term, we remain risk-off but continue to look for opportunities to redeploy capital.

Look out below

S&P 500 Index over the last year

Chart showing S&P 500 Index over the last year

Source: Bloomberg, as of March 20, 2026

In the short term, we remain risk-off but continue to look for opportunities to redeploy capital.

What often changes markets most is not the immediate disruption, but the moment participants begin pricing in permanence rather than temporary shock. That seems to be what took place last week when the attack on Qatar’s liquefied natural gas (LNG) facilities inflicted damage that may take years to repair, implying a structural supply risk to energy on top of the current disruptions. US 10-year Treasury yields have surged nearly 50 basis points since the start of the war, jumping 13 basis points last Friday alone. Interest rate cut expectations are rapidly being priced out and rate hikes are now starting to be priced in. On the equity side, the move in rates has infected small caps and rate-sensitive sectors like real estate, consumer staples, and utilities — all of which underperformed the broader market despite traditionally defensive characteristics. Further, ballasts like gold that historically have provided a haven during periods of uncertainty also have broken down. Considering these challenges, it is easy to understand the desire to dash for cash.

The script has flipped: market implying partial hikes this year now

Futures-implied cuts priced in by respective FOMC meeting

Chart showing Futures-implied cuts priced in by respective FOMC meeting April 29, 2026 to April 28, 2027

Source: Bloomberg, as of March 20, 2026

Diversification is still key

Bonds have provided insulation from weakness across equities broadly, just not as much as we might historically be accustomed to. The S&P 500 is down nearly 7% from its all-time high while the Bloomberg Aggregate Bond Index is down less than 1% over the same period. While these losses can be frustrating for investors, we believe there is still power in diversification.

That said, it’s myopic just to think about stocks and bonds — there’s a lot that happens under the surface in equity and fixed income:

Sectors like information technology and communication services are outperforming the broader market given their diversified revenue streams and strong balance sheets that are less impacted by the Middle East conflict.
Within industrials, durable secular growth trends and an increased focus on defense have provided some relative insulation.
Globally, while equity markets in Europe and many Asian nations have been challenged given their heavy energy imports, countries like China have provided a measure of relative resistance.
Energy’s outperformance has led markets like Canada and Saudi Arabia to outperform as well.

We believe the key to success lies in pursuing diversification and tactical rotation, viewing cash allocations as a component of a broader toolkit for responding dynamically to evolving market conditions.

Investment Playbook

It is unknown where things are headed in the next week, let alone the next month. US Federal Reserve Chairman Jerome Powell said as much at last week’s Federal Open Market Committee (FOMC) press conference when asked how higher energy prices from the conflict would impact the economy.

“The thing I really want to emphasize is that nobody knows,” Powell said. “The economic effects could be bigger. They could be smaller. They could be much smaller or much bigger. We just don’t know.”

This uncertainty has investors on edge, probably more than the price action would suggest, emphasizing the importance of not overreacting to incoming information.

We continue to believe in defensive positioning as expectations rise for a prolonged conflict in the Middle East. Growth optimism has room to decrease, but the increasing calls for stagflation and global recession risks seem hyperbolic and may fade at some point. Relatively speaking, US equities have remained resilient, particularly large-cap technology that was out of favor at the start of the year. US equity positioning is now at extremely low levels. Last week’s move lower triggered $20 billion of systematic outflows, with commodity trading advisors’ (CTAs) exposure now looking washed out. This all points to potential short-term stabilization that investors may use to help position their portfolios to weather market volatility. Along the way, key questions and areas to watch in the near term include:

What are triggers for US equity upside? There are a few scenarios that could trigger some support for US equities.

We believe that de-escalation in the Middle East could offer the best catalyst for a strong bounce across US equities, global stocks, and bonds. This is also the most immediate hope for a sustainable bounce.
Quarter-end rebalancing and corporate buybacks could provide a bid to the market. Recent estimates highlight about $40 billion to $50 billion in expected buying flows for US equities in the last trading week of the month. Quarter-end buying flows have not historically shown strong evidence of triggering periods of meaningful positive equity returns, but they can add support to the market and the story of relatively resilient US equities. Another potential source of market support until month-end could be the S&P 500 buybacks, which is currently running around $4 billion per day.
A less hawkish message at the April FOMC meeting could provide upside to stocks and bonds and help reverse the recent swings in rate cut/hike pricing.
Earnings season starts soon, and it will be particularly important to see strong results across the mega-cap technology complex. The last week of April is shaping up to be very significant for catalysts given the Fed decision is on April 29 and six of the Magnificent Seven report in the last two weeks of the month.

The consumer staples sector remains at risk. Despite a more defensive nature, consumer staples was one of last week’s worst performing sectors in the S&P 500, down 4.5%. However, it remains one of the best performers year to date, lagging only energy, which is largely driven by multiple expansion and not earnings growth. Consumer staples also is the most negatively correlated sector to oil and tends to suffer when bond yields rise, making it an area that may be less than ideal for diversification.

Could technology help to ballast the market? The correlation between the S&P 500^® Equal Weight Index and the Magnificent Seven has turned negative, which began with the capital expenditure-induced selloff a few months ago. Over the past few weeks, however, technology has provided some stability. While the last time correlations were this negative, we saw a period of dramatic outperformance for the mega-cap stocks, we believe that is unlikely to repeat. However, technology and the mega-caps in particular could be primed to reestablish market leadership — positioning has decreased meaningfully and valuations have returned to more attractive levels. Their revenue streams are also well diversified and more insulated from the risks of the conflict in the Middle East.

What to watch

The war in the Middle East will continue to dominate investor attention this week, and there aren’t a lot of data catalysts to follow, meaning that price will be a key driver of markets. That said, there will be several central bank speakers to pay attention to. On the economic front, we will see the S&P Global Flash US Purchasing Managers Index (PMI) data for March, US Bureau of Labor Statistics Import Price Index and current account balance, and the US Department of Labor’s weekly initial jobless claims update. The PMI data is important as it should give an indication of consumer sentiment since the survey window will have captured the conflict escalation.

From the Federal Reserve, we’ll hear updates on the US economy from Vice Chair Philip Jefferson, San Francisco Fed President Mary Daly, and Philadelphia Fed President Anna Paulson.

¹ Matt Orton, CFA, is Chief Market Strategist at Raymond James Investment Management. Joey Del Guercio, CFA, is Research Associate for Market Strategy at Raymond James Investment Management.

² Unless otherwise indicated, all data cited is sourced from Bloomberg as of March 20, 2026.

M-906358 Exp. 7/23/2026

March 16, 2026: Good and bad news about the potential path forward

BY MATT ORTON, CFA, AND JOEY DEL GUERCIO, CFA^{1, 2}

Key takeaways

Without tangible movement toward an off ramp, oil prices are likely to continue driving the direction of equities, interest rates, and the dollar.
Private credit has been a concern for months, and an onslaught of negative headlines in recent weeks has increased the strain.
Oil shocks and private credit concerns encourage a more cautious near-term playbook as investors wait to redeploy risk capital.

The Middle East conflict has commanded the attention of global markets for the past two weeks, and oil prices have largely driven the direction of equities, interest rates, and the dollar. This dynamic is unlikely to change without tangible movement toward an off ramp, but most developed market central banks are set to meet this week, including the US Federal Open Market Committee (FOMC), which could cloud the picture further.

The FOMC seems likely to adopt a hawkish shift in tone, stopping short of endorsing recent shifts in market pricing for rate cuts and instead emphasizing its commitment to price stability. Investors have already priced out all expectations for rate cuts for this year, which has made bonds look increasingly attractive at current levels.

In equities, price action is becoming increasingly risk-off, rather than focused on rotation, and retail investors have been less willing to buy the dip. Considering all the uncertainty injected into the future path of inflation and corporate margins, equities have actually been quite well behaved – but the longer that oil prices remain elevated, the more challenging assumptions will have to become.

Opportunities have been created over the past few weeks as high-quality assets are thrown out with the bathwater, but we believe it is too early to wade into the uncertainty. Macro pain from higher energy prices and prolonged disruption will trickle into consensus trades, and it will likely take time for this to be fully reflected in equities. Now is the time to manage risk and protect gains while drafting plans for when we finally start to see an end to hostilities in the Middle East.

There have been significant shifts across Treasuries and the credit market over the past few weeks, including a swift re-pricing of this year’s rate cut expectations. The market has gone from pricing three rate cuts this year to none, setting up for a potentially consequential FOMC meeting this week. However, it’s worth noting that rate markets and central banks can look through short rises in energy prices.

Energy commodity prices look set to remain elevated for a while longer, increasing the risk that higher oil prices could spill over into other asset classes – and worse, into inflation expectations. That makes central banks less likely to push back against recent expectations for more hawkish policy settings, even if they remain in “wait-and-see” mode. Financial conditions have also been tightening on their own as the dollar and the long end of the Treasury curve continue moving higher while investment-grade and high-yield credit spreads widen.

Any discussion of the US Federal Reserve (Fed) raising interest rates seems alarmist at this point, providing an opportunity to fade the noise.

Given the backdrop across fixed income and commodities, it is no surprise to see more cracks in equities. Professional investors moved to reduce their risk during the first week of the Iran conflict – particularly the investors running market-neutral hedge funds – which rapidly unwound popular long and short trades from January and February.

Longer dated yields are meaningfully higher since the conflict began

U.S. Treasuries Yield Curve

Chart showing U.S. Treasuries Yield Curve

Source: Bloomberg, as of March 13, 2026

In contrast, last week seemed more like a “sell everything” drawdown. The broadening trend has reversed, and the performance of sectors like materials and industrials has begun to lag while information technology has started leading (alongside energy, which has been leading all year). Small caps and international markets have seen selling pressure driven by concerns around dollar strength, the impact of higher oil prices, and heightened fragility to changes in the economic growth outlook.

There is good and bad news about the potential path forward. Volatility remains extremely elevated across indices, exchange-traded funds (ETFs), and individual stocks. The difference between expected and actual volatility, as measured by S&P 500 Index 1-month at-the-money implied volatility trades, is at some of its highest levels of the last five years. Fear is well reflected in the market, even if the S&P 500 Index is down “only” about 5% from its all-time high.

Equity positioning also sits at its lowest level since last summer. Systematic selling driven by algorithmic strategies and commodity trading advisors (CTAs) looks to be mostly behind us; meaningful escalation of the conflict would be necessary to re-ignite automated selling pressure.

On the flip side, passive flows have yet to flee the market, and consensus fundamental trades show limited positioning pain despite headlines.

There will be more work to do if the macro outlook deteriorates further. As the S&P 500 Index flirts with important technical levels, it seems likely that any remaining complacency will be slowly eroded.

Investment Playbook

Several changes are forcing a re-think of the rotation theses that commanded our attention over the past few months. The Iranian crisis could become a systemic growth shock, particularly for some European and Asian economies that rely on energy imports. The market may be looking for a silver bullet in the form of a Truth Social post from US President Donald Trump, but the fact is that he has no way of unilaterally ending the war.

Oil shocks tend to weigh on beta and cyclical stocks for months. Meanwhile private credit concerns had already been causing problems for the financial complex – price action has been abysmal for months, and an onslaught of negative headlines in recent weeks increased the strain. It encourages a more cautious near-term playbook as we wait to redeploy risk capital.

We believe that this is a time to preserve portfolio balances through a low-risk approach that remains ready to buy dips selectively. We are looking for areas where market movement has been driven less by fundamentals and more by investors squaring their positions – specifically, we want to rotate out of sectors and countries that are most impacted by rising energy prices and/or risks from tighter financial conditions or economic cooling – seeking to redeploy that capital into sectors and themes that can benefit from increased spending regardless of conflict.

Diversification isn’t dead. The underperformance of the traditional 60/40 portfolio has stood out since the onset of conflict in the Middle East. In higher and more volatile inflation regimes, stock-bond correlations tend to rise, which we flagged in our 2026 outlook. We’re seeing that correlation play out amid geopolitical stress, oil volatility, and cross-asset rotations. But proper diversification extends beyond the 60/40 allocation, and it is increasingly important to seek diversification from other areas. Investors should think about sufficiently diversifying their allocations across asset classes, which includes commodities and real assets, and within equities, across geographies, sectors, industries, and themes. Dispersion beneath the surface remains elevated. This is an environment where thoughtful portfolio construction and being tactical across asset sleeves – instead of relying on static allocation – will drive resilience.
Don’t forget about technology. Despite increased risk-off price action, last week saw strong inflows into mega-cap tech. Price action has been choppy to start the year as investors rotated into energy, industrials, materials, and staples. Nonetheless, semiconductors and hardware remain areas of strength, and the fundamentals of these businesses are largely insulated from current geopolitical challenges. An increasing cost of energy will certainly have an impact on margins, but positioning levels have massively lightened up and valuations are starting to reflect some degradation of free cash flow. Last week’s price action was constructive as investors realized how the revenues of these companies are insulated, and this part of the market is likely to bounce back once we have some clarity.
Biggest concerns: Financial and consumer sectors
- Credit concerns have not been diminished by geopolitical events. Credit stress is being catalyzed by drying liquidity, rising yields, ramping inflation concerns, and the disruptive pressure that artificial intelligence (AI) is placing on software. Exposure to private credit and withdrawal caps have continued pressuring larger banks, alternative asset managers, and business development companies (BDCs). The poor behavior of financials is a problem across the market capitalization spectrum, and it is hard to see this sector meaningfully participating in any relief rally driven by progress with Iran. Many of the concerns are hyperbolic and grossly generalize the impact to the sector, but these companies remain vulnerable, making them tough to buy on dips for now.
- On Friday, consumer sentiment data from the University of Michigan gave an early window into potential impacts from the US-Iran conflict. The headline reading was solid, but the report’s commentary was split between improvement before the conflict and its subsequent erasure after the start of the conflict. We believe that consumer sectors could be most vulnerable to higher-for-longer oil prices. Consumer staples, in particular, looks overvalued as a sector and appears to be the beneficiary of a rotation without the supporting fundamentals. However, its negative correlation with crude oil made it a place to hide out.

What to look for this week?

The Middle East will continue dominating investor focus this week, but there are plenty of other catalysts. The US Federal Reserve, Bank of Canada, European Central Bank, Bank of England, and Bank of Japan will meet this week, and although they are expected to keep interest rates unchanged, we will hear their respective risk assessments and how they have evolved since the start of the Iran conflict. The Reserve Bank of Australia will also meet, and it is expected to raise its benchmark rate.

This week’s US data releases include the industrial production index from the St. Louis Federal Reserve and the Producer Price Index from the U.S. Bureau of Labor Statistics. Europe will get UK job figures and Germany’s ZEW Financial Market Survey. Chinese retail sales and industrial production will also offer insights in Asia.

¹ Matt Orton, CFA, is Chief Market Strategist at Raymond James Investment Management. Joey Del Guercio, CFA, is Research Associate for Market Strategy at Raymond James Investment Management.

² Unless otherwise indicated, all data cited is sourced from Bloomberg as of March 13, 2026.

M-903348 Exp. 7/16/2026

March 9, 2026: The storm builds

BY MATT ORTON, CFA, AND JOEY DEL GUERCIO, CFA^{1, 2}

Key takeaways

Maritime traffic through the Strait of Hormuz is at a near standstill with much of Iran’s retaliation to US and Israeli strikes focused on targeting oil infrastructure in the greater region.
The fundamentals underpinning this bull market remain strong, and this earnings season is not getting the credit it deserves.
We continue to believe that the market can march higher into year end, but diversification will be increasingly important to weather heightened volatility.

Equities have faced a confluence of headwinds but have been much more resilient than expected. Even before the escalation in the Middle East, markets were beginning to lean more risk off:

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) closed off last week at around 30, its highest level since Liberation Day.
Volatility has remained relatively subdued considering all the rapid developments the markets have been forced to digest.
Tariffs are back.
Geopolitics are front and center.
And artificial intelligence (AI) has been like the grim reaper, slashing terminal values of individual companies and taking out industries one by one.

Despite correlations rising alongside volatility, dispersion is at multi-decade highs. The Magnificent Seven continues to struggle, keeping the S&P 500 Index below 7000. Last week the S&P 500 was down 2%, its worst week since October. Meanwhile — and we feel this hasn’t gotten enough attention — the 10-year U.S. Treasury yield spiked 14 basis points (bps) last week, its largest weekly rise since Liberation Day. Oil’s expeditious rise is driving up inflation expectations. This plays into yields’ ascent, but also serves to muddy the path forward for interest rate cuts — the focus for both the market narrative and President Trump.

Despite all of this, the S&P 500 is in just a -3.4% drawdown, its deepest since November. Still, the index recently fell below its 100-day moving average for the first time since just prior to Liberation Day. If we don’t see some calming in the Middle East, then selling pressure is likely to pick up. This isn’t necessarily a bad thing; pullbacks are healthy, and we’ve been waiting months for one to come. This bull market is grounded in robust fundamentals, and we continue to believe that redeploying capital into weakness will be rewarded as the year evolves.

The role of US politics

We are in a midterm election year, which has historically been the worst year of presidential cycles for equity returns. During both of the last two midterm years, 2018 and 2022, the S&P 500 finished in the red (-6% and -19%, respectively). Both years also had meaningful intra-year drawdowns (-20% and -25%). We’re not pointing this out as something necessarily bearish, but we think that this could be playing into the market’s current weakness. Behind the geopolitics, there’s good old-fashioned domestic politics on the horizon.

President Trump’s approval rating has been dwindling for months, which should hopefully cap how long he’s willing to keep the United States involved in Iran. However, it also means that we’re probably in for a populist push, and that could affect markets. Whether it’s related to inflation and affordability, housing, or the eradication of industry “middle men,” the market is waiting for dialogue to come out of the White House. It’s no secret that the market is a scoreboard that President Trump pays attention to, and hopefully it won’t need to drop much farther before he decides to act.

Iran — When will it end?

The biggest overhang on the market undoubtedly stems from Iran. The longer this conflict goes on, the worse off the market is likely to be. Maritime traffic through the Strait of Hormuz is at a near standstill since the US and Israel’s initial strikes on Iran. Much of Iran’s retaliatory efforts have been focused on targeting oil infrastructure in the greater region. About 20% of global oil consumption goes through the Strait of Hormuz (but only about 3% of global natural gas consumption). Last week alone, West Texas Intermediate (WTI) crude jumped 36% for its biggest weekly jump on record since 1983. Brent crude stands at its most overbought level since the Gulf War in 1990. Oil started the week trading above $100 per barrel. It can only stay this elevated for so long before risk assets start to bear the brunt.

With President Trump reiterating his demand for Iran’s “unconditional surrender” heading into last weekend, it’s increasingly likely that this conflict drags on longer. It was announced over the weekend that Mojtaba Khameni, son of Ali Khameni, is the new supreme leader of Iran. This is obviously not the regime change that President Trump was looking for and it’s now more likely that this could drag on longer than the Trump administration initially thought.

International equities underperformed domestic equities last week by the most since Liberation Day. There was a flight to safety and the US dollar rose. Beyond US assets being broadly viewed as a safe haven, the United States also has the great privilege of being energy independent. This is not the case for a majority of emerging markets and adds important context to why South Korea’s Composite Stock Price Index (KOSPI) was down more than 10% last week. South Korea imports 100% of the oil it consumes, and oil is about 45% of the country’s final energy consumption. Taiwan also imports 100% of the oil it consumes. Most of the energy-dependent countries will continue to have a dark cloud over them the longer that oil isn’t transporting through the Strait of Hormuz.

Inflation and rates

Higher oil prices also meaningfully affects interest rates. Last week, the 2-year Treasury yield spiked around 19 bps, the most since April 2025. Because energy is a universal input price:

Inflation expectations are higher;
Uncertainty around inflation expectations are higher; and
Both lead to higher yields.

Given the labor market’s pervasive weakness, we think inflation, rather than the labor market, will be the primary determinant of where interest rates go. Higher energy costs create an environment where the US Federal Reserve (Fed) is more likely to hold rates steady for longer. Last week’s jobs report was abysmal. The February nonfarm payroll report declined by around 92,000 jobs vs. a consensus expectation of 55,000 jobs gained. Yields were quite volatile around the data, immediately declining, then spiking, and finishing a touch lower on the day. At Friday’s close, futures were implying 44 bps of cuts by year-end with the first full cut not priced in until September. The Consumer Price Index (CPI), Personal Consumption Expenditures (PCE) Price Index, and Job Openings and Labor Turnover Survey (JOLTS) all come out this week and it’s going to be very important to see how the market reacts to these numbers. The Fed has two competing mandates that we expect are likely to continue diverging over the coming months.

Midterm drawdown pull forward?

S&P 500 this year vs. typical midterm seasonality going back to 1930 (24 midterm election years)

Chart showing S&P 500 this year vs. typical midterm seasonality going back to 1930 (24 midterm election years)

Source: Bloomberg, as of March 6, 2026

Investment Playbook

In the near term, we think it’s important to focus on playing defense rather than offense. The S&P 500’s breach of its 100-day moving average is meaningful. The longer oil prices remain elevated, the more defensive investors should think about being. Despite this, US equities deserve credit for their resilience, exemplified by the S&P 500 closing well above intra-day lows every day last week. The fundamentals underpinning this bull market remain strong, and we believe this earnings season is not getting the credit it deserves; we expect this will eventually change. We’ve been surprised by mega-cap weakness considering that their business models are mostly insulated from energy prices, tariffs, private credit, or any of the negative market narratives.

Ultimately, we continue to believe that the market can march higher in 2026, but diversification is likely to be increasingly important to weather heightened volatility. Increased dispersion of performance means active management can shine. This is not a “set it and forget it” market anymore. Quality and safety factors could benefit as the year evolves, the anything/everything growth rally slows down, and the market becomes more discerning. Beyond the artificial intelligence, defense, and other key megatrends we’ve discussed for the past year, here are some areas where we believe dips could be buyable when it’s time to start adding risk again:

Small caps. The Russell 2000® Index is still about 700 bps ahead of the S&P 500 since Liberation Day. We believe the case for continued outperformance remains. Higher energy prices and higher interest rates are doubly negative for small caps, which is why the index has begun to draw down, but the reasons here appear to be transitory. Earnings are most likely to determine where small caps head. So far, fourth-quarter 2025 small-cap earnings growth has come in closer to 20% year over year rather than the 2% or so that the consensus had forecast. 2026 is expected to show small-cap earnings meaningfully outpace large-cap earnings growth as well, and stronger economic growth could be a tailwind for the more classically cyclical small-cap index.
International equities. The war in the Middle East has seen US equities outperform international equities, the U.S. dollar reverse its downtrend, and net oil importers fall. Many US-based investors have little to no international equity exposure and probably hesitated to buy into historic trailing outperformance. We continue to believe in the US dollar’s longer-term downtrend as well as the necessity of international equity exposure in a diversified portfolio, making this a buyable dip in international.
Gold. Remember when gold fell about 13% in three trading days? That was over a month ago. Now the shiny rock has since rallied around 11%, making a series of higher lows the whole way up. Behind the US dollar, gold remains the second-largest reserve holding and central bank appetite is only growing. Clearly, the dip a month ago was buyable in retrospect, but gold is still in a near 4% drawdown. With geopolitics in focus and havens possibly set to outperform in the near term, we believe gold exposure is a strong consideration for a well-diversified portfolio.

What to watch

Earnings are basically concluded, and developments in the Middle East will certainly be the prime driver of markets next week. Inflation will be in focus with the CPI coming on Wednesday followed by the PCE on Friday. Note that the data for these reports precedes the US and Israeli strikes on Iran and are more likely to be discounted.

Tuesday also brings the National Federation of Independent Business (NFIB) Small Business Optimism Index. Friday brings the second read on fourth-quarter 2025 gross domestic product (GDP), the University of Michigan Index of Consumer Sentiment, and the Job Openings and Labor Turnover Survey (JOLTS).

¹ Matt Orton, CFA, is Chief Market Strategist at Raymond James Investment Management. Joey Del Guercio, CFA, is Research Associate for Market Strategy at Raymond James Investment Management.

² Unless otherwise indicated, all data cited is sourced from Bloomberg as of March 6, 2026.

M-899161 Exp. 7/9/2026

March 2, 2026: Market contradictions must resolve

BY MATT ORTON, CFA, AND JOEY DEL GUERCIO, CFA^{1, 2}

Key takeaways

The market, which was showing increased risk-off sentiment even before the U.S.-Israeli strikes against Iran, must resolve a number of contradictions to push higher.
Despite the potential for meaningful price moves, some important offsets could mitigate long-term oil price extremes.
Macroeconomic and fundamental backdrops continue to look supportive at home and abroad, making it important to focus on the bigger picture.
Current areas of focus include beneficiaries of the capital expenditure boom in artificial intelligence, select developed and emerging markets, and areas like utilities, infrastructure development, construction, mining, and aerospace and defense.

The start of this week will be driven by actions in the Middle East. The most likely impacts are a strong upward move in oil and gas prices as well as a continuation in the recent flattening of the yield curve, which was driven by the long-end rally and a stronger U.S. dollar.

However, the market was showing increased risk-off sentiment even before the joint U.S.-Israeli strikes against Iran. Much of the risk-off sentiment has resulted from inherent contradictions across the U.S. market:

Competing and incompatible narratives around artificial intelligence (AI),
A rotation beneath the surface that is not entirely supported by fundamentals, and
Potential issues in private credit despite its underlying economic fundamentals.

These contradictions must resolve for the market to push higher. The S&P 500 Index is only 1.5% below its all-time highs, but realized dispersion is extreme and sits at its highest level in more than 30 years. Positioning is becoming increasingly more defensive.

A healthy market should rally on good earnings, absorb bad news, and keep oversold conditions brief. In the current market, key sectors like information technology and financials have posted strong results and guidance while extending oversold conditions. Unease across the equity complex has spilled into interest rates, helping to push the U.S. 10-year Treasury yield below 4% despite economic data that remains robust.

We have been cautious about putting new money to work given all the contradictions in the market. We are patiently waiting for downside opportunities, noting that areas like domestic small- and mid-cap stocks, equities outside the United States, and industrials (including the AI capital expenditure beneficiaries) could be attractive if the market weakens further. Longer-term, the macroeconomic and fundamental backdrops continue to look supportive at home and abroad. This is why it’s important not to panic when geopolitics distracts from the bigger picture.

The ultimate path of oil and gas prices and the duration of dislocations highly depend on how attempts at regime change play out in Iran and whether the Strait of Hormuz is shut for a prolonged period of time.

A continued closure of Hormuz — which handles 20% to 30% of the world’s seaborne traded oil — could lead to the most significant upward pressure on energy prices. The potential for a lengthy and challenging power vacuum in Iran could also lead to meaningful price moves. However, we believe that price spikes in all of these situations are likely to be temporary, and some important offsets might prevent talk of triple-digit oil prices:

Critically, any closure of Hormuz should be fairly short-lived given the significant U.S. naval presence in the region.
OPEC+ — the Organization of the Petroleum Exporting Countries, plus 10 other oil producers — can also increase supply, and has already done so. Meanwhile, pipelines in Saudi Arabia and the United Arab Emirates can divert significant volumes around the Strait.
Nearly all Iranian oil has gone to China, which built a significant stockpile of more than 1 billion barrels. Any oil production taken offline by conflict likely will not need to be replaced in the short term.

These factors can mitigate structural price increases once the weekend’s initial price spikes start to fade. As usual, the key is how this unfolds and the duration of any disruptions.

The good news is that markets were already pricing in the increased likelihood of geopolitical escalation ahead of this week. Oil prices have been on the rise, and positioning across equities has been increasingly defensive. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) peaked last week at 22, 8 points above 1-month S&P 500 Index realized volatility.

Equity inflows have been anemic. Instead, existing allocations have shifted away from technology companies and into cyclical sectors like energy, materials, and industrials. Investors have been selling tech companies like the Magnificent Seven to fund their rotation into other parts of the market, and the lack of reaction to strong earnings reports further highlights an investor mindset focused on protecting gains rather than on buying dips. This might not limit immediate knee-jerk reactions to the escalated conflict with Iran, but it could help minimize the degree to which the market overshoots on the downside.

We also cannot lose sight of strong fourth-quarter earnings. Earnings per share (EPS) growth for S&P 500 Index companies now sits at 14.2%, almost 6% ahead of the consensus expectation of 8.3% and marking the fifth consecutive quarter of double-digit earnings growth. All 11 sectors have been reporting positive earnings growth while profit margins are at their highest level on record. Guidance has also remained positive, increasing confidence in the 2026 double-digit consensus EPS growth expectations that will be necessary to keep the market moving higher.

Valuations across S&P 500 Index companies have contracted following strong earnings results and weak price action in more expensive sectors like information technology. In fact, the S&P 500 Index’s information technology sector now has a lower 1-year forward price-to-earnings (forward P/E) ratio than its consumer staples sector. These types of inversions tend to only occur during recessions or protracted market drawdowns. Given the erratic moves in sentiment, this dislocation could get worse, but it does signal an opportunity at some point in the future.

Overall, the strong fundamentals underpinning the market should help to mitigate the duration of any drawdown driven by geopolitics or an internal positioning shakeout.

Too defensive? Consumer staples are more expensive than tech

1-year forward P/E ratios for the information technology and consumeer staples sectors of the S&P 500 Index

Chart showing 1-year forward P/E ratios for the information technology and consumeer staples sectors of the S&P 500 Index

Source: Bloomberg, as of March 2, 2026

Investment Playbook

AI disruption and private credit concerns have been the primary drivers of dislocation and dispersion across equity markets. In the immediate future, risks related to the conflict with Iran are likely to become the market’s main pressure point, adding to the level of dispersion. Year-to-date winners like energy, already up over 24%, are likely to gain the most. Weakness across the most pressured sectors, like financials (which is down over 6%), seems likely to continue as investors assess the impact to growth. There will be a lot of noise in the coming days, and now is a time to watch and manage risk. We expect that there will be opportunities for investors once the dust settles. Here are some areas we’re thinking about:

There are still opportunities in AI. AI anxiety has fully controlled the market psyche for the past month, but it doesn’t quite fit with the fundamentals. Recent AI selloffs have felt like less of a coherent macro thesis and more of a positioning dynamic — akin to a rumor-driven bank run — where sentiment shifts can spark selling simply because others may sell. As the narrative fails to materialize, markets should revert to equilibrium. Additionally, parts of the AI trade have not been wrapped up in the capital expenditure (capex) or software shakeout. One of our key themes this year has been robotics: the growth of physical AI across defense, factory automation, and autonomous driving. We believe that this is set to be the next phase of AI commercialization, where companies across multiple sectors and industries are making investments, and where there are multiple avenues for investment exposure.
Playing defense with defense. Globally, defense has been a winning theme over the past year; geopolitical conflicts have escalated and government budgets increased meaningfully. Defense stocks surged at the start of the year, following U.S. military action in Venezuela, before trading sideways as many investors took profits ahead of earnings season. European defense companies have seen the largest decrease in positioning, and they will all be in focus this week as geopolitical fracturing comes back to center stage. Weapons stockpiles will need to be rebuilt after this conflict, and the impact of modern warfare along with the need for more drones and autonomous weapons systems is front and center.
Look down market cap on further weakness. Small- and mid-cap companies have been meaningfully surpassing the broader market this year: relative to the S&P 500 Index, the Russell 2000 Index is up 5.6% and the Russell Midcap^® Index is up 6.3%. Changing private credit narratives and widening credit spreads are risks to these companies, especially given the weakness across regional banks, but we believe that the worries are likely overstated. We plan to monitor continued weakness given geopolitical tensions and the cautious investor mindset, but we still expect buying opportunities given the resilience in earnings. Increased market breadth and the strong performance of cyclical companies should be encouraging — more than 60% of the stocks in the Russell 3000 Index have outperformed the index average, which also suggests better conditions for active investment strategies.
Mind the dollar strength and emerging markets. The euro, U.S. dollar, Japanese yen, and U.K. pound are expected to increase in value due to the strikes against Iran. This, along with rising energy prices, will likely put pressure on emerging markets. Broadly speaking, emerging markets have performed meaningfully better than U.S. markets over the past year, and some markets — like South Korea — are quite extended. Many investors came into this week with extended positioning, which means that the initial impact of their risk management could be quite severe. Not all emerging markets are the same, making selectivity increasingly important for country, sector, and industry exposures. As long as we avoid worst-case scenarios (a prolonged closure of the Strait of Hormuz and a massive spike in energy prices), weakness could end up being temporary due to the strong fundamental underpinnings of markets that have enjoyed durable economic growth.

What to watch

Geopolitics and the Middle East will be a key focus, but a new month means a lot of new economic data. The February U.S. jobs report on Friday will show whether hiring and wage growth are cooling fast enough to keep rate-cut expectations intact. Before that, the ADP^® National Employment Report™ and surveys from the Institute for Supply Management should shape expectations.

In Europe, the European Central Bank will publish accounts of its last meeting. The U.K. Spring Statement will provide an updated economic forecast from the Office for Budget Responsibility, putting fiscal policy back in focus. And the China Purchasing Manager Index will round out the global picture.

We also expect some important earnings results this week, particularly in the consumer and software spaces.

¹ Matt Orton, CFA, is Chief Market Strategist at Raymond James Investment Management. Joey Del Guercio, CFA, is Research Associate for Market Strategy at Raymond James Investment Management.

² Unless otherwise indicated, all data cited is sourced from Bloomberg as of Feb. 27, 2026.

³ This is not a recommendation to purchase or sell the companies or investment products mentioned herein.

Risk Information:
Investing involves risk, including risk of loss.

Diversification does not ensure a profit or guarantee against loss.

Disclosures:
Any forecasts, figures, opinions, or investment techniques and strategies set out are for informational purposes only. There is no assurance any estimate, forecast or projection will be realized.

Index or benchmark performance presented in this document does not reflect the deduction of advisory fees, transaction charges, or other expenses, which would reduce performance. Indexes are unmanaged. It is not possible to invest directly in an index. Any investor who attempts to mimic the performance of an index would incur fees and expenses that would reduce return.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature, or other purpose in any jurisdiction, nor is it a commitment from Raymond James Investment Management or any of its affiliates to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical, and for illustration purposes only. This material does not contain sufficient information to support an investment decision, and you should not rely on it in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and make their own determinations together with their own professionals in those fields. Any forecasts, figures, opinions, or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions, and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements, and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

The views and opinions expressed are not necessarily those of the broker/dealer or any affiliates. Nothing discussed or suggested should be construed as permission to supersede or circumvent any broker/dealer policies, procedures, rules, and guidelines.

Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.

Investing in small cap stocks generally involves greater risks, and therefore, may not be appropriate for every investor. The prices of small company stocks may be subject to more volatility than those of large company stocks.

International investing presents specific risks, such as currency fluctuations, differences in financial accounting standards, and potential political and economic instability. These risks are further accentuated in emerging market countries where risks can also include possible economic dependency on revenues from particular commodities or on international aid or development assistance, currency transfer restrictions, and liquidity risks related to lower trading volumes.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Definitions
ADP^® National Employment Report™ — A monthly report from the ADP Research Institute^® in close collaboration with Moody’s Analytics. The ADP^® National Employment Report™ provides a monthly snapshot of U.S. nonfarm private sector Employment based on actual transactional data.

Artificial intelligence (AI) — A technology that enables computers and machines to simulate human learning, comprehension, problem solving, decision making, creativity and autonomy.

Breadth — The relationship between the median and the mean of a market index. When a few data outliers result in a mean that is substantially larger (or smaller) than the median of the full data set, then the performance of the entire index is being driven by a “narrow” selection of companies. An index supported by “broad” market movements is one where the median is closer to the mean. Market breadth is said to be narrow when a smaller number of more extreme outliers have driven the mean of an index further from its median.

Capital expenditures / capex — Monies used by a company to buy, improve, or maintain physical assets such as real estate, facilities, technology, or equipment, and may include new projects or investments.

China Purchasing Manager Index — A report compiled by the National Bureau of Statistics of China and based on a monthly survey of purchasing managers in 31 divisions of manufacturing enterprise and 43 divisions of non-manufacturing enterprise.

Consensus expectations — Forecasts of a public company’s projected earnings, the results of a particular industry, sector, geography, asset class, or other category, or the expected findings of a macroeconomic report based on the combined estimates of analysts and other market observers that track the stock or data in question.

Credit spread — The difference in yield between a U.S. Treasury bond and another debt security with the same maturity but different credit quality. Also referred to as “bond spreads” or “default spreads,” credit spreads are measured in basis points, with a 1% difference in yield equaling a spread of 100 basis points. Credit spreads reflect the risk of the debt security being compared with the Treasury bond, which is considered to be risk-free. Higher quality securities have a lower chance of the issuer defaulting. Lower quality securities have a higher chance of the issuer defaulting.

Credit spread widening refers to the expansion of credit spreads in response to changes in economic conditions that cause an increase in credit risk.

Cyclical stocks — Stocks with prices influenced by macroeconomic changes in the economy and are known for following the economy as it cycles through expansion, peak, recession, and recovery.

Defensive investments — Investments in companies that tend to have a constant demand for their products or services, making their operations more stable during different phases of the business cycle.

Dispersion — The range of outcomes realized in different areas of a financial market.

Earnings per share / EPS — A company’s profit divided by the outstanding shares of its common stock. The resulting number serves as an indicator of a company’s profitability.

Extended is a term used to describe an investment, industry, or sector with performance that has substantially moved away from a longer-term average in a short period of time.

Forward price-to-earnings (forward P/E) — A version of the ratio of price to earnings that uses forecasted earnings for the P/E calculation. The earnings used in this ratio are an estimate and therefore are not as reliable as current or historical earnings data.

Guidance — Statements from the managers of publicly traded companies that indicate whether they expect to realize near-term profits or losses and why.

Institute for Supply Management — A nonprofit organization that produces several surveys assessing business conditions and outlooks across a variety of industries. They include the ISM Purchasing Managers’ Index (PMI), which measures the prevailing direction of economic trends in the manufacturing sector, and the Services ISM^® Report on Business^®, which is based on data compiled from purchasing and supply executives and reflects the change, if any, in the current month compared to the previous month in supplier deliveries along with seasonally adjusted business activity, new orders, and employment.

Macroeconomic — Relating to the branch of economics that focuses on seeking to understand the interactions between the markets, businesses, governments, and consumers that make up an entire economy.

Magnificent Seven — The seven largest stocks by market capitalization in the S&P 500 Index, as of Dec. 31, 2025. They are NVIDIA, Apple, Microsoft, Amazon.com, Alphabet, Broadcom, and Meta Platforms.

Market capitalization / market cap — The total dollar market value of a company’s outstanding shares of stock.

Organization of the Petroleum Exporting Countries (OPEC) — A permanent organization, founded in 1960 and consisting of 13 oil-exporting developing nations, that coordinates the petroleum policies of its member countries: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Libya, the United Arab Emirates, Algeria, Nigeria, Gabon, Angola, Equatorial Guinea, and Congo.

OPEC+ — OPEC+ consists of OPEC, plus 10 other oil-producing countries (in order of production): Russia, Mexico, Kazakhstan, Oman, Azerbaijan, Malaysia, Bahrain, South Sudan, Brunei, and Sudan. OPEC+ was established in 2016 as rising U.S. shale oil production caused prices to fall dramatically.

Oversold — A security or group of securities believed to be trading at a level below its or their intrinsic or fair value.

Positioning — Assessments of whether professional investors are, on the whole, bullish or bearish on a particular security, industry, sector, market capitalization or other area of the market, as reflected by the extent to which they are invested in the area of the market in question. Directional positioning focuses on the direction of the price of an asset or group of assets.

Price-to-earnings (P/E) — A ratio that measures a company’s current share price relative to its earnings per share. The ratio is used to help assess a company’s value and is sometimes referred to as the price multiple or earnings multiple.

Realized data — Measured data for a given metric over a specified period of time.

Risk assets — Investments such as equities, commodities, high-yield bonds, real estate, and currencies, where the value may rise or fall due to fluctuating interest rates, changes in credit quality, default risks, supply and demand disruption, and other factors.

Risk-off — When sentiment is driven by a weakening growth environment, bad news that fuels a bearish outlook, and/or investor expectations of unfavorable risk/reward ratios.

Rotation — The movement of investments in securities from one industry, sector, factor, or asset class to another as market participants react to or try to anticipate the next stage of the economic cycle.

Shakeout — Occurs when investors are “shaken out” by normal price movements in the market because their fear encouraged them to sell positions at virtually any sign of bad news.

U.K. Spring Statement — An updated economic forecast from the United Kingdom’s Office for Budget Responsibility. It provides insights into growth, inflation, and borrowing.

U.S. jobs report — A monthly U.S. Bureau of Labor Statistics (BLS) report, also known as the payroll report or, officially, the Employment Situation Summary, tracking nonfarm payroll employment and the national unemployment rate.

VIX / officially the Chicago Board Options Exchange (CBOE) Volatility Index — A real-time market index that represents the market’s expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors’ sentiments.

Yield curve — A line that plots yields (interest rates) of bonds having equal credit quality but differing maturity dates. The slope of the yield curve gives an idea of future interest rate changes and economic activity.

Indices
S&P 500 Index — Measures changes in stock market conditions based on the average performance of 500 widely held common stocks. It is a market-weighted index calculated on a total return basis with dividend reinvested. The S&P 500 represents approximately 80% of the investable U.S. equity market.

Russell 2000^® Index — Measures the performance of the 2,000 smallest companies in the Russell 3000^® Index.

Russell 3000^® Index — measures the performance of the 3,000 largest U.S.-traded stocks, which represent about 96% of the total market capitalization of all U.S. incorporated equity securities.

Russell Midcap^® Index — Measures the performance of the mid-cap segment of the U.S. equity universe. It includes approximately 800 of the smallest securities of the Russell 1000^® Index based on a combination of their market capitalization and current index membership and represents approximately 27% of the total market capitalization of the Russell 1000^® Index.

London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies. Russell^® is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

M-895098 Exp. 7/2/2026