MARKETPOINT
Turbulence Requires a Steady Hand
The first quarter of 2026 served as a reminder that markets rarely move in straight lines. After a strong 2025, the new year began with considerably more turbulence: a geopolitical shock in the Middle East, another leg higher in energy prices, and a meaningful reset in expectations for interest rate policy.
Three forces have shaped markets so far in 2026. The first is the conflict between the United States, Israel, and Iran, which began in late February and sent oil prices surging roughly 55%.[1] Brent crude spiked sharply before settling well above $100 per barrel, feeding directly into inflation and growth concerns. The second force is a renewed inflation challenge: headline and core inflation came in at 2.4% and 2.5% year-over-year in February, respectively, and the energy shock now threatens to push inflation toward 3.5% by mid-year before it resumes its gradual decline.[2] The third force is the resulting reset in interest rate expectations. Before the conflict, markets were pricing in roughly two Federal Reserve rate cuts by year-end; today, those odds have collapsed to near zero. At its March meeting, the Federal Reserve held rates steady at 3.50–3.75% and signaled that the conflict shifts the policy outlook in a more hawkish direction.[3]
All of this unfolded against the backdrop of elevated valuations — particularly in large technology and AI-related stocks — following three solid years for equity markets. When sentiment shifted, those crowded positions became a source of selling pressure that amplified day-to-day swings. It is worth noting, however, that the S&P 500’s maximum drawdown in the quarter has been approximately 8%, well below the historical average intra-year decline of roughly 14%.[4] Investors experienced multiple compression and macro volatility rather than an outright collapse in growth expectations — an important distinction as we assess what comes next.
Equities and Fixed Income: Volatility and Caution
Performance across asset classes reflected this challenging backdrop. The S&P 500 finished the quarter down approximately 4.5% year-to-date, with the Nasdaq Composite down roughly 7% as the heaviest pressure fell on longer-duration growth stocks and semiconductors. Small caps, which remain sensitive to financing costs, were not spared either. The one clear bright spot was energy, up approximately 35% on the year — on pace for one of its strongest quarterly performances on record. Beneath the index-level declines, the picture was more nuanced: 56% of S&P 500 stocks outperformed the index year-to-date, a level of dispersion that historically has been favorable for disciplined, active stock selection.[5] International equities held up considerably better, with non-U.S. developed markets up +1% year-to-date even as they weakened alongside U.S. equities in the final weeks of March — a meaningful contrast that underscores the value of global diversification.
In fixed income, higher yields have been a headwind for longer-dated government bonds, and traditional portfolio diversification has offered less cushion than usual. The 10-year Treasury yield climbed above 4.4% during the quarter as oil and inflation concerns intensified, before pulling back modestly as markets reassessed the Federal Reserve’s likely path. The extra income from high-quality bonds is increasingly meaningful in a world where rates are likely to stay elevated longer than markets anticipated just three months ago.
Favorable investment themes this quarter were allocations to non-U.S. equities, an emphasis on quality companies with durable cash flows, and a bias toward shorter-maturity, high-quality bonds. Growth and AI-related exposures, as well as longer-duration bonds, detracted — though we continue to hold select positions where the long-term fundamentals remain intact.
Looking Ahead
For the remainder of 2026, three variables will likely drive markets: whether geopolitical tensions ease or escalate, the path of inflation and central bank policy, and the health of corporate earnings as higher borrowing costs work through the system. On that last point, there is reason for genuine optimism. Analysts are projecting a sixth consecutive quarter of double-digit earnings growth for S&P 500 companies, with full-year profit growth expected to remain healthy. The underlying investment cycle in artificial intelligence also remains constructive: Microsoft, Amazon, Alphabet, and Meta have collectively outlined nearly $700 billion in annualized or planned AI-related capital spending, and Taiwan Semiconductor recently raised its planned 2026 capital expenditures to as much as $56 billion — a positive signal for semiconductors, equipment, power infrastructure, and automation broadly.
Our base case is not a straight line to either boom or bust. The U.S. economy entered the year on somewhat softer footing and the February jobs report reflected additional softening, with nonfarm payrolls falling by 92,000.[6] Consumers are navigating a more complex environment as well: the Conference Board’s confidence index ticked up modestly in March to 91.8, beating expectations, but inflation expectations jumped and forward-looking sentiment slipped. Growth is likely to slow from last year’s pace but remain positive, with global GDP consensus estimates in the 2.5–3% range. Inflation should continue to trend lower over time, but with setbacks tied to energy prices. The Federal Reserve is likely to move cautiously — prepared to cut if the economy weakens, but unwilling to ease prematurely if inflation proves sticky.
A key investment question for the coming months is whether easing Treasury yields can stabilize risk appetite before geopolitical and inflation pressures reassert themselves. If they do, quality growth, software, and AI infrastructure names should recover first, as the long-term capex cycle supporting them remains intact. If macro continues to overwhelm micro — with oil staying firm and inflation expectations elevated — markets may continue to penalize the longest-duration equities even as underlying earnings hold up. In either scenario, we believe the environment favors selectivity over concentration: companies with pricing power, durable cash flows, and reasonable valuations; financial infrastructure and industrial franchises with genuine competitive advantages; and diversified non-U.S. exposure rather than a narrow bet on the highest-multiple AI winners.
In practice, that means staying invested in equities with a tilt toward quality and balance sheet strength, maintaining global diversification, keeping high-quality bond exposure for income and ballast, and holding a modest reserve of dry powder to add to favored positions if volatility creates better entry points.
Periods like this are uncomfortable, but they are not unusual. History is instructive here: despite average intra-year declines of around 14%, equity markets have delivered positive annual returns in 34 of the past 45 years. Attempting to time the market requires being right twice — knowing when to sell and when to get back in — and the data is unambiguous on the cost of getting it wrong. Missing just the ten best trading days over the past two decades would have cut a portfolio’s value in half. What has mattered most for long-term investors is staying aligned with a sound plan, avoiding emotional decisions at the extremes, and owning businesses and assets with the durability to grow through the cycle.
We will continue to adjust as facts evolve, but the core principles guiding how we manage your wealth remain unchanged. As always, if you would like to discuss how these dynamics affect your specific portfolio or goals, please do not hesitate to reach out. Thank you for your continued trust.
[1] Bloomberg Data, March 30, 2026.
[2] US Bureau of Labor Statistics, “Consumer Price Index – February 2026,” March 11, 2026.
[3] J.P. Morgan Asset Management, “Economic Update,” March 30, 2026.
[4] J.P. Morgan Asset Management, “What’s Happening to Stocks Beneath the Index?” March 27, 2026.
[5] J.P. Morgan Asset Management, “What’s Happening to Stocks Beneath the Index?” March 27, 2026.
[6] US Bureau of Labor Statistics, “February 2026 Employment Situation,” March 11, 2026.
HONORING GEORGE WOOD
FINANCIAL PLANNING
Trump Accounts and Saving for the Next Generation
As part of the “One Big Beautiful Bill” signed into law in 2025, Congress created a new savings vehicle called the Trump Account — a tax-advantaged account designed to help families build long-term financial security for their children.
➤ What is a Trump Account?
A Trump Account is a new type of individual retirement account available for children under 18. Think of it as an early-stage IRA — a way to put money to work for a child’s future decades before they enter the workforce.
➤ Who qualifies?
Any child who is a U.S. citizen or resident, under age 18, with a valid Social Security number is eligible.
➤ How do you open one?
Accounts can be opened via IRS Form 4547 at TrumpAccounts.gov. Once your application is processed, the Treasury will send activation instructions prior to July 4, 2026.
➤ How do contributions work?
Children born between 2025 and 2028 receive a $1,000 government seed contribution. Beyond that:
- Parents, relatives, or employers can contribute up to $5,000 per year
- Employer contributions up to $2,500 annually are excluded from taxable income
➤ How are funds invested?
Contributions are automatically invested in a single U.S. equity index fund — broad market exposure with no active management required.
➤ When can the money be used?
Starting at age 18, funds can be withdrawn penalty-free for qualified expenses including higher education, a first home purchase (up to $10,000), small business costs, natural disaster expenses (up to $22,000), and birth or adoption of a child (up to $5,000). Other early withdrawals are subject to a 10% penalty plus ordinary income taxes.
➤ What happens at 18?
The account converts to a traditional IRA, with tax-deferred growth continuing and standard IRA rules applying going forward.
➤ How does this fit into your family’s financial plan?
Trump Accounts are designed to complement — not replace — existing tools like 529 plans and custodial accounts. For families who start early and contribute consistently, the combination of tax-deferred compounding, government seed money, and outside contributions (from employers, relatives, or charitable organizations) could make a meaningful difference over an 18-year horizon.
Full implementation details are still forthcoming. If you’d like to discuss whether a Trump Account makes sense for your family, we’re happy to help.
FIRM UPDATE
New Partners: Brooke Gais, CFP® and Brian Brady, CFP®
We are delighted to announce the promotions of Brooke Gais, CFP® and Brian Brady, CFP® to Partner. This important milestone recognizes their dedication, leadership, and impact since each of them joined our firm, and highlights our commitment to serving future generations of clients.
Both Brooke and Brian excel in their roles and provide our clients and their families with innovative and thoughtful solutions. They embody our firm’s core values. Please join us in congratulating Brooke and Brian as they expand their leadership roles at Obermeyer.
New Team Members
The firm is pleased to introduce two recent additions to our growing team.
Matt Ladley, Wealth Advisor (Steamboat Springs): A Steamboat native, Matt manages client relationships and supports Obermeyer Wealth’s financial planning services. Matt brings deep local roots and a strong community network to our wealth advisory team. His experience includes sports marketing, technology, real estate, and 14 years on the U.S. Snowboard Team. With a diverse background in business and entrepreneurship, Matt is committed to helping our clients make financial decisions that meet their goals.
Matt Popish, Associate, Wealth Advisory and Investments (Aspen): Matt plays a key role in supporting the firm’s investment committee and relationship managers. His experience includes handling due diligence on alternative and traditional investments as a Registered Investment Advisor analyst. An Aspen native and fourth-generation Colorado native, he holds a degree in Business Administration with an emphasis in Finance and a minor in Mathematics from the University of Colorado Boulder.
Awards
Forbes | SHOOK Top Women Wealth Advisors
Ali Phillips, President; Dana Nightingale, CFA, CFP®, Senior Vice President; and Brooke Gais, CFP®, Vice President; are among the 100 leaders included in Forbes’ 10th annual America’s Top Women Wealth Advisors ranking. This honor belongs not just to Ali, Dana, and Brooke but to the entire Obermeyer Wealth team, reflecting our Team Over Individual core value. The annual list is a collaboration between Forbes and SHOOK Research. Obermeyer Wealth is the only Colorado-based independent Registered Investment Advisor with more than one honoree.
To view the complete rankings, visit Forbes’ website. For information on ranking methodology, visit our website.
