Market Commentary

March 9, 2026

Corporate earnings continue to expand at a robust pace, with bottom-up earnings for the S&P 500 Index up 13.7 percent year over year in the December quarter, well above the consensus of 8.0 percent.  Yet, high expectations starting in the March quarter leave much less room for upside earnings surprises.

The Iran conflict has added yet another uncertainty to the economic outlook, with the Economic Policy Uncertainty Index spiking to its highest level since last June.  While the financial markets are currently discounting a relatively quick resolution, a sustained rise in oil prices stemming from an expansion of military operations would further stress a U.S. economy already coping with tariffs, persistent inflation, and stagnant employment.  With the U.S. midterms around the corner, President Trump could seek to declare victory within just a few weeks (conforming to his initial timeline), leaving the Iranian regime to stagger on.  Then again, the parallels to the U.S. invasions of Iraq and Afghanistan are hard to ignore.

As for portfolio strategy, we believe AI disruption fears within software are overblown and, as a result, are adding to select providers, particularly those with proprietary data deeply embedded in customers’ operations.  Also, although private credit concerns are hitting financials stocks, we are adding to banks and select capital markets firms, as we expect limited fallout outside of the industry.  Lastly, whereas we remain cautious across the consumer sector due to the stagnant job market and persistent inflation (likely exacerbated by rising oil prices), the Iran conflict supports our positive stance on defense and our belief that budgets worldwide will continue to climb.

For our latest full Global Investment Outlook & Strategy Update, download the .pdf document.