Q1 2026: Markets in Fast-Forward Mode
The first quarter of 2026 felt less like a typical investing environment—and more like a crash course.
Think of it like summer school. Instead of spreading lessons over a full semester, everything gets condensed into a much shorter window. The pace is intense, the information comes quickly, and staying on top of it requires focus.
That’s exactly how markets behaved in the opening months of the year. Investors were hit with a rapid stream of developments—from shifting economic data and interest rate expectations to escalating global tensions. Here’s a snapshot of what unfolded:
AI enthusiasm cooled.After a strong run, technology stocks lost momentum as investors began questioning whether massive investments in artificial intelligence would deliver the expected returns. Rising geopolitical tensions only added to the pressure, dampening overall risk appetite.
Geopolitics finally took center stage.For much of the quarter, investors largely shrugged off global conflicts. But that changed as tensions escalated—particularly with military actions involving Iran and disruptions to critical global supply chains. What initially seemed temporary began to look more prolonged and impactful.
Rate cut expectations reversed.Coming into 2026, many believed the Federal Reserve would continue lowering rates after cuts in 2025. Instead, persistent inflation—driven in part by energy shocks—shifted expectations toward potential rate hikes, raising concerns about slower economic growth.
Treasury yields moved higher.The 10-year U.S. Treasury yield, which had briefly dipped below 4 percent, climbed to around 4.35 percent as uncertainty increased. Longer-term yields followed suit, reflecting shifting investor sentiment.
National debt reached new highs.U.S. debt surpassed $39 trillion, a level that now rivals the combined economic output of major global regions. The pace of borrowing continues to accelerate, adding another layer of long-term concern.
Corporate earnings remained resilient.Despite the turbulence, companies showed adaptability. The S&P 500 delivered another quarter of double-digit earnings growth, marking a continued trend of strong corporate performance.
By early last week, the S&P 500 was nearing correction territory before rebounding. A mix of optimism around geopolitical developments and stronger-than-expected economic data—particularly in employment and manufacturing—helped lift markets. Meanwhile, the 30-year Treasury yield ended the week near 4.91 percent.
| Data as of 4/3/26 | 1-Week | Y-T-D | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 3.4% | -3.8% | 16.1% | 16.9% | 10.1% | 12.3% |
| Dow Jones Global ex-U.S. Index | 1.8 | 1.5 | 24.2 | 12.4 | 4.5 | 6.2 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 4.2 | 3.4 | 1.7 | 1.8 |
| Gold (per ounce) | 3.4 | 7.8 | 47.8 | 32.8 | 22.0 | 14.4 |
| Bloomberg Commodity Index | 2.3 | 25.1 | 28.3 | 8.8 | 10.6 | 5.9 |
S&P 500, Dow Jones Global ex-US, Gold, and Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested in directly. N/A means not applicable.
Weekly Focus – Think About It
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