Oil Weighs on Stock

March 31, 2026

For several months we have been noting stock valuations were stretched and a 5% to 10% pullback could come at any time. However, with the enthusiasm for AI and the likelihood of lower interest rates ahead, we felt it would take some type of headline making news to move the market lower.  The Iran war was that headline making news.  It was not the war per se, but the rise in oil prices and inflation expectations that came with the war that caused the concern.  We often say valuations do not matter, until they do.  The thing the market hates most is uncertainty and the war has given us that in spades with the S&P 500 losing ground for 5 straight weeks.  Excitement about AI has been driving technology stocks higher but higher oil prices and rising interest rates have weighed on that market leading sector.  At the end of the month the S&P 500 had lost 5.1% and is now 4.6% lower this year.  The important technology sector lost 4.8% and is down 7.1% in 2026.  Oil prices were the biggest concern with a massive 52% price increase in March, and interest rates also rose with the yield on the benchmark 10-year Treasury going up 9%.

The month began with news the U S and Israel had launch a massive air strike against Iran.  The market opened lower on Monday but worked its way back into positive territory by days end.  However, over the next few days reality set in as we saw the biggest one week jump in oil prices in history.  In addition, we learned the economy had lost jobs in February for the first time in several months and investors began hitting the sell button driving the S&P 500 down 2% at week’s end. The second week began with a rally after oil prices spiked to $119 over the weekend but then dropped back to $80. We then learned Iran had closed the important Strait of Hormuz which send oil prices higher and stocks lower.  The S&P 500 ended that week down another 1.6%. Oil prices continued to rise during the 3^rd week of the month, and we also received a report that wholesale inflation jumped at an annualized rate of 8.4%.  The inflation report sent interest rates to the highest level since early January and that, combined with higher oil prices, sent the S&P 500 down another 1.9%. The last full week of the month was more of the same with rising oil prices and lower stock prices. The market leading technology sector came under pressure on concerns about rising oil prices increasing the costs of running their data centers.  The week ended with another 2.1% loss for the S&P 500.  On the last day of the month the S&P 500 opened 1.7% higher before closing the day with a gain of nearly 3% on talk Trump may want to end the war with Iran.

April has historically been the 3^rd best month for stock market performance with a positive close 65% of the time.  This April will clearly not be a normal month with the uncertainty surrounding the war.  A prolonged conflict with oil prices and interest rates continuing to rise will likely put more pressure on stock prices, while an end to hostilities should create a more positive environment.  We have seen the valuation concerns we have been talking about somewhat mitigated by the selling in technology stocks and we are seeing many stocks selling at price to earnings ratios we have not seen in years. It might be a good time to be reminded that every stock market decline in history has been an opportunity to buy, but we need to see a firming of technology names.  There will be an end to the selling, but we will only know that in hindsight.  We have been using the market decline to slowly put some money to work.

If you know someone who would be interested in learning more about Greenberg Financial Group or taking advantage of our complementary financial plan, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  Previous shows are available on the iHeart app, our website, or your favorite podcast platform.  Simply type “Money Matters with Dean Greenberg”.