Weekly Market Commentary: March 28, 2026

Index Performance

Major Themes

Energy Prices and Inflation Fears

Escalating tensions in the Middle East took center stage this week. Incidents near the Strait of Hormuz rattled energy markets and sent Brent crude above $110 per barrel. West Texas Intermediate averaged around $83, well above earlier forecasts. The OECD now projects U.S. inflation at 4.2% for 2026, meaningfully above the Federal Reserve's prior expectations. Rising energy costs ripple through the broader economy, affecting transportation, manufacturing, and consumer spending alike.

For investors, this raises questions about how long the Fed can hold rates steady. The 10-year Treasury yield climbed to 4.44%, its highest since July 2025, reflecting growing unease about persistent inflation.

The Dow Enters Correction Territory

Friday's 793-point drop pushed the Dow Jones Industrial Average into correction territory, joining the Nasdaq, which now sits roughly 13% below its October high. The S&P 500 posted its fifth consecutive weekly decline. Broad-based selling hit cyclical sectors hard, while defensive names held up somewhat better.

The persistence of this drawdown is notable. Five straight weeks of losses for the S&P 500 tests investor patience and highlights how quickly sentiment can shift when geopolitical risk compounds existing economic uncertainty.

Tech Sector Divergence

The technology sector showed unusual dispersion this week. Companies tied to AI infrastructure (semiconductors, electrical components) continued to hold up, while AI application stocks in software and services gave back double-digit gains. Micron Technology stood out, falling 22% over six trading days despite reporting strong earnings and raising capital spending guidance. The disconnect between fundamentals and price action suggests that elevated expectations may be leaving little room for error in high-growth names.

Looking Ahead

Several factors are worth watching in the coming week. Developments in the Middle East will likely remain the dominant driver for energy prices and overall market direction. Any escalation near critical shipping lanes could amplify the supply concerns that have already lifted oil prices significantly.

On the economic calendar, upcoming inflation data will draw close attention given the recent rise in Treasury yields. The market will also be parsing any commentary from Federal Reserve officials for signals on how the central bank views the shifting inflation picture.

Earnings season is approaching as well, and guidance from major corporations may help clarify whether rising input costs are beginning to pressure margins.

Past performance is not indicative of future results. All investing involves risk, including the potential loss of principal.