This March 2026 market update highlights key developments across equities, fixed income, and the broader economic landscape as 2026 continues to unfold.
Equities
Markets Navigated a Meaningful Pullback, with a Constructive Finish
Global markets faced a meaningful test in March, driven largely by the conflict involving Iran and the resulting spike in oil prices. The S&P 500 ended the month down about 4.9%, though it recovered noticeably in the final days after reports emerged that Iran might be open to peace negotiations. That late-month rebound is an important reminder of how quickly sentiment can shift when geopolitical conditions begin to stabilize. Smaller U.S. companies pulled back by a similar amount and at one point were down more than 10% from their recent highs, though they remain well-positioned to benefit from any easing of interest rate pressure. International stocks saw sharper moves, with European markets down roughly 10% given the region’s greater energy dependence, and emerging market stocks down around 13%. The energy sector was the clear standout, gaining nearly 10% for the month as oil companies benefited directly from rising prices. On a positive note, the pullback across the broader market has brought valuations down to more attractive levels than we have seen in some time, which history suggests is a favorable setup for patient, long-term investors.
Bonds
Higher Yields Mean Better Income Opportunities Going Forward
In March, interest rates moved higher across the board, with the U.S. government’s 10-year bond rate rising from about 3.94% to 4.31%. When rates rise, the value of existing bonds dips in the short term, which is why the broad bond market returned approximately -1.8% for the month. The reason rates moved higher include: the oil shock pushed up inflation expectations, leading investors to anticipate that the Federal Reserve would keep rates steady for longer. Corporate bonds experienced modest spread widening but credit markets remained orderly throughout the month. The income now available across the bond market represents a meaningful opportunity for portfolios seeking yield and stability.
The Federal Reserve and Global Central Banks
The Fed Held Steady and Kept Its Options Open
The Federal Reserve in mid-March and chose to leave interest rates unchanged at 3.50 to 3.75%, where they have been since late 2025. The vote was 11 to 1 in favor of holding steady. Fed Chair Jerome Powell acknowledged the complexity of the current environment: the jump in oil prices is pushing inflation higher while also squeezing household budgets in a way that tends to slow economic activity. That combination creates a genuinely nuanced situation, and the Fed’s measured, patient approach reflects exactly the kind of careful stewardship that long-term investors should find reassuring. The Fed still expects to cut rates once before year-end, and while markets have become somewhat less certain of the timing, the broader direction of policy over the next few years remains toward lower rates. Central banks in Europe and the United Kingdom also held their rates steady, each acknowledging that the energy shock introduces enough uncertainty to warrant a wait-and-see posture for now. The consistency of this message globally reflects a thoughtful, coordinated response to an unusual external event rather than any fundamental deterioration in the economic outlook.
The Economy
Underlying Economic Strength Persists Beneath Near-Term Noise
The economic data released in March painted a picture of an economy with genuine underlying resilience, even as the oil shock introduced new near-term pressures. On jobs, the U.S. economy added 178,000 positions in the most recent report, meaningfully stronger than most economists had expected, and the unemployment rate ticked down to 4.3%. Wage growth has moderated to a healthier pace, which is actually welcome news from an inflation perspective. On prices, the most recent official reading showed inflation at 2.4% annually before the energy shock took hold, the lowest reading in years. The next report, which will reflect March energy prices, is expected to show a temporary increase, though the underlying trend in prices outside of energy and food has been encouraging. Factory activity expanded at its fastest pace in several years, as businesses moved to build inventory ahead of potential tariff changes, a sign of forward-looking confidence in demand. The service sector softened during the month as higher fuel costs weighed on some consumer-facing businesses, and fourth-quarter 2025 GDP was revised to 0.7% annualized growth, a modest figure that nonetheless reflects an economy that continues to expand. The overall picture is one of an economy in solid shape navigating an external shock, not one experiencing any fundamental deterioration.
Global Events and U.S. Fiscal Policy
An External Energy Shock, with Early Signs of Diplomatic Progress
The dominant global story in March was the military conflict involving the United States, Israel, and Iran, which escalated at the end of February. Iran responded by restricting traffic through the Strait of Hormuz, one of the world’s most important shipping corridors for oil. The resulting reduction in global oil supply sent prices significantly higher: West Texas Intermediate crude oil rose from roughly $67 per barrel at the start of March to about $101 by month end, contributing to a jump in average gasoline prices of approximately $1 per gallon nationally. It is worth understanding what drove that move: this was almost entirely a supply disruption caused by a specific geopolitical event, not a sign of runaway demand or a structural shift in energy markets. Historically, supply-driven oil price spikes tend to resolve faster than demand-driven ones, particularly when diplomatic channels remain active, as they appear to be. The International Energy Agency coordinated its largest-ever release of emergency oil reserves in response, and by late March, diplomatic signals from the region were cautiously encouraging, contributing to the market recovery seen in the final days of the month. On the domestic front, a partial government shutdown continued through March, though markets generally regard shutdowns of this nature as manageable and temporary. New trade tariff measures were also announced, adding to near-term uncertainty, though businesses and investors have shown considerable adaptability in navigating the evolving trade landscape.
Bottom Line
Our Conviction in a Disciplined, Long-Term Approach Remains Unchanged
Periods of market volatility driven by unexpected world events are never comfortable, but they are a normal and well-documented part of long-term investing. What March ultimately demonstrated is that diversified portfolios continue to serve their purpose: energy holdings provided a meaningful offset to equity weakness, bond income offered stability, and the late-month recovery rewarded those who stayed the course rather than reacting to headlines.
Looking ahead, we see reasons for genuine optimism. U.S. stock valuations are now more attractive, creating a better starting point for future returns. International markets, which trade at significantly lower valuations than U.S. stocks, stand to benefit meaningfully when global tensions ease. And with bonds now offering the strongest income in years, fixed income is once again earning its place in a balanced portfolio as both a return driver and a stabilizer. We continue to advocate a balanced approach: quality U.S. equities for long-term growth, international exposure to take advantage of compelling valuations abroad, and bonds to generate reliable income along the way. The situation in the Middle East is evolving, and we are watching closely. History gives us confidence that markets navigate these moments, and that the investors who benefit most are those who remain patient, diversified, and focused on the long term. As always, we are here to answer your questions and will continue to keep you informed as conditions develop.
Disclosure
This material is provided by Gryphon Financial Partners, LLC (“Gryphon”) for informational purposes only. It is not intended as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable, though Gryphon cannot guarantee their accuracy or completeness. Gryphon does not provide tax, accounting, or legal advice. Individuals should seek such guidance from qualified professionals based on their specific circumstances.