Short-Term Uncertainty, Long-Term Opportunity

1. Resilience Amid Uncertainty Markets are currently grappling with two key uncertainties: the ongoing conflict with Iran and rising concerns surrounding the private credit market. The timeline of the conflict remains unclear. While the administration initially suggested a duration of roughly four to six weeks, any extension beyond that window would likely require investors to reassess potential economic and market implications. Energy prices remain the most direct transmission channel to the economy. Average gasoline prices in the United States are currently around $3.69 per gallon¹, levels similar to those seen in 2022 and 2023. At those levels, there was little evidence of demand destruction, and the same appears true today. Importantly, gasoline now represents only about 3% of the average household budget, near historic lows, suggesting consumers may be better positioned to absorb moderate price increases than in previous cycles.

Despite these uncertainties, the underlying economic data continues to show resilience. While the softer nonfarm payroll report earlier in the month raised some concern, other labor indicators remain solid. Weekly jobless claims recently came in at 213,000, with the four-week moving average at roughly 212,000², levels that remain well below those historically associated with recession. Consumer activity also remains stable. Core retail sales are growing at approximately 3.9% year over year³, and same-store sales across major retailers such as Dick’s Sporting Goods, Costco, and Walmart are posting moderate growth in the 2–4% range.

2. S&P 500 Performance Following an Increase in Oil Prices⁴

3. Market Pullbacks and Selective Opportunity Despite the wide range of macro concerns currently weighing on sentiment, the overall market decline has been relatively modest. The S&P 500 is down roughly 3.07% year to date⁵, a move that is well within the range of normal market fluctuations. Recent history offers several reminders that periods of volatility often lead to strong recoveries. During the COVID-19 market crash of 2020, the index fell 33.9% from peak to trough before ultimately rebounding more than 198% from the lows. The Silicon Valley Bank collapse produced a more modest 7.8% drawdown, followed by a 73.1% recovery, while the 2025 tariff-driven market selloff saw a 28.6% decline before markets recovered roughly 33.9%.⁶ These episodes highlight how short-term dislocations can create opportunities for long-term investors.

Today’s environment is producing a similar pattern beneath the surface. While the broader index has held up relatively well, certain sectors and individual companies have experienced significantly larger declines. Financials are one example. Capital One completed a major acquisition of Discover Financial Services, a transaction that will create the second-largest credit card network behind American Express. Despite the strategic significance of the deal and improving credit quality metrics, the stock currently trades around 9x earnings. Meanwhile, regional bank valuations have also compressed, with Truist Financial trading near 0.9 times book value⁷, levels that historically have represented attractive entry points.

Opportunities are not limited to financials. Several technology companies with strong fundamentals have also pulled back meaningfully. Broadcom has declined roughly 19% over the past two quarters despite reporting AI revenue up 106% year over year. In cybersecurity, Palo Alto Networks has come under pressure alongside the broader software sector, even as long-term demand for digital security infrastructure continues to grow with the expansion of AI systems. More established technology firms have also seen valuations compress, with IBM declining from roughly 30 times earnings to closer to 19 times.⁸ While markets can feel very different on days when equities are moving lower, the current environment continues to present selective opportunities for investors willing to focus on underlying fundamentals rather than short-term price movements.

4. Stress Within the Banks The banks are continuing to see pressure, which is mainly tied to broader stress within private credit and private markets, where redemption risk could persist for some time. However, the large U.S. banks are structurally different from many of the publicly traded private market firms facing those pressures. The largest institutions, often referred to as the big six, maintain highly diversified revenue streams across lending, investment banking, capital markets, payments, and wealth management, making them less dependent on any single area of the financial system.

Part of the market’s caution likely reflects lingering memories from the Global Financial Crisis of 2007–2008. During that period, early assurances from banks that risks were contained ultimately proved incorrect, and that experience still shapes investor psychology today. As a result, when uncertainty emerges in the financial system, many investors default to reducing exposure first and asking questions later. In the current environment, however, the underlying data from large banks has remained relatively stable. At a recent industry conference, Brian Moynihan of Bank of America reiterated the company’s guidance for the upcoming quarter, reinforcing the view that operating conditions have not materially deteriorated.

5. Fixed Income U.S. Treasury yields ended the week higher across the curve as escalating Middle East tensions further eroded confidence in stable oil supply, pushing crude prices sharply higher and deepening concerns about persistent inflation risks. Market participants also began to reassess the potential economic and geopolitical consequences of a prolonged regional conflict, contributing to a broad repricing of interest rate expectations. By Friday’s close, the 2, 10, and 30-year yields rose 16, 14, and 15 basis points, respectively.⁹

Credit markets softened last week, with widening pressure evident across both the investment-grade and high-yield sectors. Investment-grade spreads moved 13 basis points higher to +134, while high-yield spreads expanded 17 basis points to +377. In the tax-exempt market, municipal yields moved higher alongside Treasuries, rising 4–16 basis points across the curve.¹⁰

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Return for Selected Indices¹¹

Sources:

1. AAA: As of March 15, 2026 ↩︎
2. Department of Labor: As of March 12, 2026 ↩︎
3. ETF Trends: As of March 6, 2026 ↩︎
4. Strategas: As of March 6, 2026 ↩︎
5. Bloomberg: As of March 15, 2026 ↩︎
6. Bloomberg: As of March 13, 2026 ↩︎
7. Bloomberg: As of March 15, 2026 ↩︎
8. Bloomberg: As of March 15, 2026 ↩︎
9. Bloomberg: As of March 15, 2026 ↩︎
10. Bloomberg: As of March 15, 2026 ↩︎
11. Bloomberg: As of March 15, 2026 ↩︎

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