Fixed Income & Equities Markets Week in Review

US equities experienced another week of choppy trading as the market reacted to rapidly shifting headlines regarding US-Iran diplomacy. Market sentiment swung between cautious optimism and renewed concern given mixed signals of the potential for de-escalation in the Iran war throughout the week. Ultimately, sentiment soured by week’s end with US stocks selling off both Thursday and Friday morning.

Early in the week US equities staged a brief relief rally as President Trump indicated talks were taking place with Iran and those talks were “going very well.” Trump also announced a five-day pause in US strikes against Iranian energy assets. However, market optimism was quickly tempered following Iran’s public denial of any negotiations having occurred. As the week progressed, optimism for a near-term diplomatic breakthrough faded with some concerns the conflict could escalate given the potential involvement of US ground troops and/or additional Gulf nations entering the conflict. Late in the week Trump extended the strike pause on Iranian energy assets until April 6, which may have been a sign of talks taking place in the backdrop. Regardless, the market remains focused on the still opaque geopolitical backdrop.

As near-term de-escalation hopes faded, the oil market responded by moving higher as roughly 20% of global energy export flows remained disrupted. After retreating into the high-$80s early in the week, West Texas Intermediate Crude rebounded strongly, pushing above $99/barrel by Friday morning. The nearly 50% surge in crude prices since the onset of the Iran war has intensified investor concerns regarding inflationary pressures and the potential drag on economic growth. Rising bond yields and dimming hopes for the Federal Reserve to ease rates in 2026, have also been top of mind for investors.

Against this backdrop the market has seen equity valuations compress meaningfully in 2026. The S&P 500 Index’s next-twelve-month price/earnings (NTM P/E) multiple fell to ~19.6x as of mid-week, well below the more than 23x seen last fall. While there have been few winners in the stock market in the month of March, the energy sector has unsurprisingly been a beneficiary of the current market backdrop. The S&P 500 Energy Sector Index has gained nearly 9% month-to-date and more than 36% year-to-date, both of which far outpace the broader market. Performance leadership has led to some interesting movements in stock multiples, with mega cap tech names Alphabet, Broadcom, Meta Platforms, Microsoft, and Nvidia all trading at lower NTM P/E multiples relative to an energy name like Chevron.

Overall, ongoing geopolitical uncertainty remains the dominating overhang for US equities. With few definitive signs of progress amid conflicting reports, investors should expect stock price movements to remain highly sensitive to incremental headlines.