Valuation Reset Amid Geopolitical Shock. Uncertainty Persists but Opportunities Are Emerging

Amid heightened Iran tensions, growing stress in private credit, and a rotation out of AI-related names, large-cap equities struggled in Q1 2026. The S&P 500 Index declined 4.3%, marking its worst quarter since Q3 2022, while the tech-heavy Nasdaq 100 Index fell even further, down 5.8%. Meanwhile, the S&P 500 Equal Weight Index eked out a modest 0.7% gain. Despite a difficult March, other rotational pockets were able to hold onto gains for the quarter as US small-caps led (+3.5%), followed by international developed equities (+2.8%) and US mid-caps (+2.6%). Bonds were mixed as Treasury Inflation Protected Notes and the US Aggregate Bond Index were up marginally (+0.3% and +0.1%, respectively) while high yield credits and municipal bonds fell (-0.4% each). Commodities produced strong positive returns as crude oil rose 84.0%, broad based commodities increased 24.4%, gold was up 8.6%, and silver gained 5.8%.