What We’re Watching as We Head Into Q2
As we move further into 2026, the first quarter served as a reminder that markets don’t move in a straight line. What began with strong momentum shifted into a more uncertain environment, as investors became more selective and focused on fundamentals.
Below is a brief recap of what happened in Q1 — and what it may mean moving forward.
Markets Pulled Back After a Strong Run
Following a strong finish to 2025, markets gave back some ground in the first quarter:
- The S&P 500 declined 4.63%
- The Nasdaq 100 declined 5.98%
- The Dow Jones Industrial Average declined 3.58%
Part of this shift came from a cooling in segments of the AI and mega-cap technology trade. At the same time, investors rotated toward areas tied more closely to earnings strength and inflation sensitivity, including energy and other real asset sectors.me.
The Economy: Still Growing, but Less Clear
Economic data throughout the quarter painted a mixed picture.
Early reports suggested continued momentum, while later data indicated some softening in hiring and consumer sentiment. The takeaway is not that the economy is weakening significantly, but rather that it is not sending one clear, consistent signal.
In environments like this, diversification tends to play an even more important role.oping a plan. But at first, definitely give yourself room to dream about travel plans, quality time with the grandchildren, or hobbies you never had time for before. These are the rewards that you can work toward, measuring your achievements as you go.
The Federal Reserve: Holding Steady
The Federal Reserve held short-term interest rates steady during the quarter, maintaining a range of 3.50%–3.75%.
More notably, expectations shifted. At the start of the year, markets anticipated a series of rate cuts. As inflation remained persistent and economic growth held up, those expectations began to moderate.
This serves as a helpful reminder: relying on falling interest rates as the primary driver of returns can lead to disappointment. A well-structured portfolio should not depend on a single outcome.
Oil and Geopolitics: A Renewed Variable
Rising oil prices emerged as another key theme in Q1, driven in part by geopolitical tensions and supply concerns.
Energy price increases can influence inflation and consumer costs, adding complexity to the broader economic picture. While these developments can create short-term volatility, they also reinforce the importance of building portfolios that can navigate a range of scenarios.
What This Means for Your Plan
Market pullbacks, while uncomfortable, are a normal part of long-term investing.
During periods of uncertainty, we return to a few key questions:
- Does your investment mix still align with your goals and time horizon?
- Has your portfolio become more concentrated than intended?
- Do you have sufficient cash reserves to support short-term needs?
Staying grounded in these fundamentals can help maintain clarity and confidence, even when markets feel less predictable.
Looking Ahead
As we move into Q2, the focus remains on maintaining balance, staying diversified, and avoiding overreactions to short-term noise.
If you would like to review your portfolio or talk through how current market conditions may impact your plan, our team is here and happy to help.d on different income, withdrawal strategies, or expenses. Scenario planning helps you to determine what you’ll need to do now to live comfortably in retirement.
Disclosures: This material is for informational purposes only and should not be considered investment advice. Past performance is no guarantee of future results. Investing involves risk, including the potential loss of principal.
