April 2026 Review & Commentary
Peter W. Tuz, CFA, CFP®, President & Portfolio Manager
College basketball fans will probably take a long time to forget Braylon Mullins’ three-pointer in the final second of the game to give UConn a victory over Duke and a trip to the final four. Investors among us may remember the buzzer-beating performance of the S&P 500 Index (“S&P 500”) on March 31st which saved the first quarter from a significant loss and moved it into the “moderate” category.
The S&P 500 ended Q1 2026 with a loss of 4.33%. This was about equal to last year’s loss and was its worse performance since 2022 but nothing in comparison to the 19.44% loss in Q1 2020, the Covid year. For most of March, things looked worse. Going into March 31st, the index was down 7.24% but recovered nicely with a 2.91% gain on its last day.
Lest we forget, the year started out reasonably well. The S&P 500 reaching 7004 on January 28th. However, cracks emerged in various industries, most notably financials where concerns over private credit have been percolating for months. Even at the end of February, shortly after the bombs started flying, markets were flat. However, as the war’s impact on energy prices, fertilizer prices, metals prices, etc. began being felt, markets sold off – at least until March 31st. The reason for that day’s gain was news of some hope of peace or at least a ceasefire with Iran. For the moment, we are in equity markets driven by headlines more than anything else.
What does the first quarter loss bode for investors? If history is a judge, the odds for a positive year have dropped. Since 1999, there were nine losses in the S&P 500 in the first quarter. In four of those cases (44%), the market was down at year end. In five of those cases (56%) it was up. Compare this to the overall 27-year-period from 1999 to 2025, the S&P 500 rose 21 times (78%) and fell six (22%) (see below).
| YEAR | Q1 | Q2 | Q3 | Q4 | YEAR |
|---|---|---|---|---|---|
| 2026 | -4.33% | ||||
| 2025 | -4.27% | 10.89% | 8.09% | 2.62% | 17.68% |
| 2024 | 10.51% | 4.25% | 5.83% | 2.37% | 24.82% |
| 2023 | 7.47% | 8.71% | -3.30% | 11.66% | 26.15% |
| 2022 | -4.63% | -16.14% | -4.93% | 7.52% | -18.25% |
| 2021 | 6.15% | 8.51% | 0.55% | 10.98% | 28.54% |
| 2020 | -19.44% | 20.58% | 8.87% | 12.15% | 18.59% |
| 2019 | 13.62% | 4.26% | 1.62% | 9.04% | 31.26% |
| 2018 | -0.87% | 3.37% | 7.68% | -13.56% | -4.32% |
| 2017 | 6.03% | 3.06% | 4.42% | 6.64% | 21.68% |
| 2016 | 1.32% | 2.39% | 3.81% | 3.79% | 11.77% |
| 2015 | 0.90% | 0.24% | -6.43% | 7.01% | 1.27% |
| 2014 | 1.78% | 5.17% | 1.11% | 4.87% | 13.50% |
| 2013 | 10.56% | 2.87% | 5.19% | 10.45% | 32.14% |
| 2012 | 12.56% | -2.61% | 6.30% | -0.43% | 16.03% |
| 2011 | 5.82% | 0.04% | -13.99% | 11.87% | 1.86% |
| 2010 | 5.34% | -11.41% | 11.24% | 10.72% | 14.94% |
| 2009 | -11.02% | 15.84% | 15.51% | 6.01% | 26.22% |
| 2008 | -9.57% | -2.72% | -8.36% | -21.89% | -37.03% |
| 2007 | 0.60% | 6.27% | 2.03% | -3.37% | 5.41% |
| 2006 | 4.19% | -1.50% | 5.61% | 6.66% | 15.60% |
| 2005 | -2.19% | 1.31% | 3.58% | 2.03% | 4.71% |
| 2004 | 1.66% | 1.71% | -1.94% | 9.22% | 10.74% |
| 2003 | -3.07% | 15.27% | 2.63% | 12.12% | 28.59% |
| 2002 | 0.26% | -13.46% | -17.35% | 8.30% | -22.34% |
| 2001 | -11.94% | 5.79% | -14.67% | 10.60% | -12.08% |
| 2000 | 2.23% | -2.72% | -0.95% | -7.84% | -9.22% |
| 1999 | 4.94% | 6.94% | -6.23% | 14.8 | 20.89% |
| Data is for State Street S&P 500 Index Fund (SVSPX) | |||||
As most of you can imagine, a Mid-East war led to a huge surge in energy prices with oil up more than 75% per barrel. Gold gained 8.06%, not surprisingly given its reputation as a haven for money in turbulent times. Surprisingly, U.S. long-term interest rates rose a little with the 10-year U.S. Treasury ending the quarter with a yield of 4.31% versus the 4.19% rate it started the year with. With gains of 38.25% the S&P 500’s energy sector was the top performer year-to-date. Materials and utilities both did well too with gains of 9.73% and 8.26% respectively. The three worst sectors were financials, consumer discretionary and information technology with losses of 9.35%, 9.19% and 9.18% respectively.
Looking at the top stocks by market cap in each sector confirms this:
| Q1 26 | |||
|---|---|---|---|
| Sector | Company | Symbol | % Chg. |
| Energy | Exxon Mobil | XOM | 41.3% |
| Industrials | Caterpillar | CAT | 23.7% |
| Materials | Linde PLC | LIN | 16.3% |
| Utilities | NextEra Energy | NEE | 15.7% |
| Consumer Staples | Walmart | WMT | 11.6% |
| Real Estate | Prologis | PLD | 3.5% |
| Info. Technology | NVIDIA | NVDA | -6.5% |
| Comm. Services | Alphabet | GOOGL | -8.1% |
| Financials | JP Morgan Chase | JPM | -8.7% |
| Cons. Discretionary | Amazon | AMZN | -9.8% |
| Health Care | Eli Lilly & Co. | LLY | -14.4% |
The key question investors have is, of course, what’s next?
Over the long term, equity markets are driven by fundamentals such as sales and earnings growth. Over the short-term, psychology takes over. Investors are bearish. The most recent AAII (American Association of Individual Investors) long-running survey of this showed that 33.6% of investors were bullish on April 2 (most recent survey) while 15.0% were neutral and 51.4% were bearish. Extreme bearishness is often bullish for markets going forward. The highest level of bearishness occurred April 2, 2025 – right about when the market bottomed for 2025 and began its gains.
While much of the market’s direction going forward will obviously depend on how the war goes with a swift resolution, probably bullish but a more drawn-out conflict bearish, especially if energy prices stay high. With the conflict barely a month old, the rise in gasoline prices from about $3.00 per gallon to $4.00 per gallon hasn’t really been seen in consumer spending statistics – yet. And with consumer spending still representing about 70% of the U.S. economy, a downturn in it will not bode well for corporate earnings of many companies.
As is fairly typical, analysts making estimates for corporate earnings haven’t changed estimates much yet to account for the war. The S&P Capital IQ consensus for S&P 500 earnings this year is $320.57 per share versus the $270.83 figure for 2025. This puts the S&P 500 at a price/earnings (p/e) ratio of 20.5x. This is down from the 22.5x level at year-end 2025, but still higher than longer-term averages.
Going forward, there are two Wall Street adages worth thinking about: “Markets climb a wall of worry” is one. We certainly have a lot to worry about today. The other adage: “Markets hate uncertainty.” We have a lot of that too.
So, it’s probably best to remember that the best way to protect your lifestyle is to think about how much you spend each year and have enough cash or short-term bonds to cover your expenses for a year or two. That way you don’t have to sell stocks in potentially bad markets for expenses.
As always, if you would like to talk further, we are here.