March 2026 Market Commentary: Energy Price Pressure

Markets sold off in March as the war in Iran dominated headlines, with surging energy prices threatening to unsettle an already fragile global economy. 

We continue to lean on our data-driven Three Dials allocation framework, which held steady during the month of March as we summarize below. 

TECHNICAL

Despite this month’s selloff in equities, most major indexes are still showing support around their long-term moving averages, consistent with the historical reality that most geopolitical shocks tend to be shallow and short-lived. Given that individual investor sentiment has already reached overly bearish levels and could be due for a reversal, we are not yet moving our Technical Dial out of its Positive position. 

ECONOMIC

Initial surveys of consumers are showing that future spending is already likely to be impacted by higher gas prices and overall uncertainty caused by the war in Iran, which threatens to halt previous signs of a pickup in activity. With companies continuing to limit employee headcounts and the Fed losing wiggle room to cut rates if inflation resurfaces, our Economic Fundamentals Dial stays in a Negative position. 

VALUATION

We’ve long viewed this stock market as priced for perfection, and geopolitical uncertainty, as well as renewed competition from higher-yielding bonds, could lead to a continued downward repricing in equities. As such, our Valuation Dial remains Negative. 

MARKET COMMENTARY

Markets sold off in March as the war in Iran dominated headlines, with surging energy prices threatening to unsettle an already fragile global economy.

The S&P 500 fell -5% on the month and is now down -4% through the first quarter of 2026. Smaller company stocks also dropped -5% in March, giving up most of their gains from the first two months as the Russell 2000 Index ended the quarter at a +1% gain.

International stocks fell more sharply due to their geographic proximity and reliance on energy from the Middle East, with the MSCI EAFE Index falling -10% in March, though the index is only down -1% for the year thanks to a strong start to 2026.

Bond prices were also negative in March, as investors weighed the potential inflationary impacts of higher oil prices on interest rates. The Bloomberg Aggregate Bond Index fell -1.8% in March and is now flat year-to-date, with the ten-year treasury yield surpassing 4.4% after dropping below 4% just last month. The Bloomberg Commodity Index surged +12% and is now up +24% this year, driven by the +50% jump in WTI oil prices.