War, Oil, and Markets: What the History Books Tell Us
- Holzberg Wealth Management
- 1 hour ago
- 8 min read
HWM Market Recap - March 2026
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If you’ve been watching the markets lately, you’re not alone in wondering what it all means. The S&P 500 has pulled back from recent highs, Middle East tensions have escalated sharply, oil prices have risen, AI-driven disruption has occurred, and the news cycle seems to be testing even the most seasoned investor’s resolve. We want to take a moment to cut through the noise and share what the data actually says about moments like this one.
Where Markets Stand Right Now
As of the last trading day of February 2026, markets have been mixed since the start of the year. The S&P 500 is more or less flat, up 0.49%. The NASDAQ is down 2.47%. The Russell 2000, which tracks smaller US companies, is up 6.06%. The MSCI World ex USA Index, which tracks the performance of international companies in developed countries excluding the US, is up 9.74%. And the MSCI Emerging Markets Index, which tracks international companies in emerging countries, is up 14.76%.
More recently, the S&P 500 had declined by over 6% from its previous peak. That can feel significant in the moment, but context changes everything. Since 1980, the S&P 500 has experienced an average of 4.6 pullbacks of 5% or more each year, yet the market has delivered positive annual returns in the vast majority of years. Consider 2025: the index fell roughly 19% following the April tariff announcement, yet finished the full year up 18%.
The urge to step aside during turbulence is natural and human. However, history shows that acting on that urge has typically made things worse, not better. Positive market days tend to cluster right after negative ones, making perfect timing nearly impossible. On the other side of the coin, waiting for “the right entry point” carries its own cost. Based on data going back to 1927, an investor waiting for a single-day decline of 5% before buying would sit on the sidelines an average of 303 days, missing an average return of 13.8% along the way.
Not All Sectors Are Created Equal
When most people check on “the market,” they look at the S&P 500 as a whole. But this year is a great reminder of why it pays to look another level deeper. The gap between the best- and worst-performing sectors has widened to over 30 percentage points as of the end of February. That story is being driven by two major forces: geopolitical conflict and the evolving narrative around artificial intelligence.
It’s also worth understanding how the index itself is constructed. Technology currently makes up nearly one-third of the S&P 500, while Energy represents just 3.5% and Utilities only 2.5%. This means the index can decline even when the majority of sectors are actually positive, which is exactly what has happened this year, with 8 of the 11 sectors in positive territory despite the headline pullback.
It is extremely difficult to predict which sectors will lead or lag in any given year. The best-performing sector one year often finds itself near the bottom the next. Recently, technology’s struggles have come after an extended period of market leadership. It is because of this unpredictability that maintaining broad sector exposure is so important.
Energy: The Geopolitical Beneficiary
The energy sector has been the standout performer of 2026, gaining around 25% year-to-date as Brent crude hovered above $100 per barrel amid escalating tensions in the Middle East. This price surge was initially triggered by the blockage of the Strait of Hormuz – a critical chokepoint through which roughly 20% of the world’s oil supply flows – which forced many Middle Eastern countries to scale back oil and gas production. More recent attacks have directly targeted energy production infrastructure, keeping upward pressure on prices. This is not without historical precedent. For instance, when Russia invaded Ukraine in 2022, energy stocks gained 65.7% for the full year even as the broader S&P 500 fell 18%. While the broader market eventually recovered, it demonstrates how energy stocks have served as a counterweight during times of global uncertainty.
Higher oil prices are a direct revenue boost for energy producers, but they act as a headwind for much of the rest of the economy, raising costs for consumers, businesses, transportation, and corporate profit margins across other sectors. That tension is part of why the market picture looks so uneven right now.
The longer-term outlook on oil prices, however, is worth keeping in mind. Between 2011 and 2014, oil sustained levels near $100 per barrel, and the economy continued to grow. Economists tend to view these supply disruptions as temporary, as production eventually recovers and other suppliers step in. The US – the world’s largest oil producer for six consecutive years, with output exceeding 13.7 million barrels per day – plays a particularly important role as a stabilizing force in global supply.
Technology: A Narrative in Transition
For much of the past several years, AI-driven technology stocks dominated market returns, with the so-called Magnificent 7 (i.e., Apple, Microsoft, Alphabet (Google), Amazon, Meta Platforms, Nvidia, and Tesla) far outpacing the broader index. That concentration served investors well during that run, but it also made portfolios more vulnerable when the narrative shifted.
More recently, questions have emerged about how AI will affect existing software business models, specifically, whether AI tools could disrupt traditional software-as-a-service (SaaS) companies, a dynamic some have called the “SaaS-pocalypse.” Whether those fears prove fully justified or not, they have already contributed to a reassessment of technology valuations. Technology remains an important part of a diversified portfolio, but this rotation is a timely reminder of how quickly market leadership can change.
Defensive Sectors: Doing Their Job
As uncertainty has risen, markets have rotated toward traditionally defensive sectors – Utilities, Consumer Staples, and, to a lesser extent, Health Care. These sectors tend to outperform when uncertainty and market volatility rise. This is not because they’re suddenly posting exceptional results; they outperform because their cash flows are stable and largely less dependent on strong economic cycles. Utilities still collect payments. Consumers still buy groceries. Healthcare remains essential. That predictability, combined with generally higher dividend yields, is what makes them attractive when growth and inflation concerns dominate.
A related concept for stocks that are less sensitive to AI concerns is “heavy assets, low obsolescence,” or HALO. This refers to companies in manufacturing and physical goods that are less susceptible to disruption from new technology. These tend to behave defensively and have held up well in the current environment.
The Geopolitical Wildcard
Geopolitical tensions in the Middle East escalated significantly. Coordinated strikes and counter-responses have raised real concerns about oil supply disruptions, energy prices, and downstream effects on global production and supply chains.
Make no mistake, we take these developments very seriously. But we also think the historical record deserves attention. Nearly 100 years of US market data spans Pearl Harbor, the Korean War, the Cuban Missile Crisis, Vietnam, 9/11, Iraq, Russia’s invasion of Ukraine, and more. The pattern that emerges is more consistent and more encouraging than most people expect.
US Stock Performance After Conflicts
Data from July 1926 – December 2025. Source: Ken French Data Library. Returns greater than one year are annualized. Past performance is no guarantee of future results.
Looking at US stock returns in the three months, one year, and three years following each of these major events, the short-term picture is mixed. Some conflicts triggered near-term declines; others saw markets move higher almost immediately. But zoom out to three years, and the story becomes remarkably consistent: in every single instance examined, three-year returns were positive, with an average annualized return of approximately 13%.
What This Means for Your Financial Plan
We recognize that data doesn’t fully capture the feelings that come with watching markets move against you while global headlines feel overwhelming. Those emotions are real, and we don’t dismiss them. But they are precisely the moments when having a long-term financial plan and a trusted advisor matters most.
A few key things to keep in mind:
Pullbacks are normal. The market absorbs bad news far more often than it collapses under it.
Trying to time your way around volatility has historically made outcomes worse, not better.
Sector diversification matters as much as asset class diversification. No single sector leads forever, and this year illustrates that clearly.
Geopolitical shocks have consistently resolved into long-term opportunities for disciplined investors.
Your financial plan was built to withstand a wide range of financial and economic conditions. Trust the process.
With Military Conflicts, Long-Term Discipline is Key for Investors
Data from July 1926 – December 2025. Source: Ken French Data Library. Past performance is no guarantee of future results.
History doesn’t guarantee any particular outcome, and we would never suggest otherwise. But it does provide a meaningful anchor when headlines are at their loudest. The investors who have fared best over the long run are typically those who stayed disciplined when it was hardest to do so. That is our north star, and it should be yours, too.
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Monthly Changes in Indices
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Monthly Performance By Sector
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Interest Rates: The Federal Open Market Committee (FOMC) announced that it held interest rates steady in its March meeting.
Inflation: The Consumer Price Index (CPI) increased 0.3% month-over-month in February. Over the last twelve months, CPI increased 2.4%. Core CPI (which excludes food and energy) increased 0.2% in February compared to January and rose 2.5% compared to a year ago.
Housing: According to the National Association of Realtors, existing home sales increased 1.7% month-over-month in February and decreased 1.4% from one year ago. The median existing-home sales price rose 0.3% from February 2025 to $398,000. Sales of new single-family houses decreased 17.6% in January from December and decreased 11.3% from January 2025. The median sales price of new houses sold in January was $400,500 – an 6.8% decrease from a year ago.
Mortgage Rates: As of March 19th, 2026, the weekly average for a 30-year fixed-rate mortgage is 6.22%, below the 52-week average of 6.43% and down 0.45% from a year ago. The 30-year fixed-rate dipped below 6% in February for the first time since September 2022.
Employment: According to the Bureau of Labor Statistics' Employment Situation Summary, unemployment was little changed in February at 4.4%.
Consumer Sentiment: The University of Michigan's Surveys of Consumers dipped about 2% in March – its lowest reading of the year. Compared to its reading from one year prior, consumer sentiment is down 2.6%. Year-ahead inflation expectations ended six months of consecutive declines, stalling at 3.4% in March. Long-run inflation expectations inched down slightly to 3.2%.
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About the Author
Holzberg Wealth Management is a family-owned and operated financial planning and investment management firm based in Marin County, CA. As your financial advisors, we serve you as a fiduciary and are fee-only, so we never receive commissions of any kind. We help individuals and families like you in the greater San Francisco Bay Area and nationwide with the financial decision-making process to organize, grow, and protect your assets.
** This writing is for informational purposes only. The author and Holzberg Wealth Management do not guarantee or otherwise promise any results that may be obtained from using this report. No reader should make any investment decision without first consulting their financial advisor and conducting their own research and due diligence. These commentaries, analyses, opinions, and recommendations represent the personal and subjective views of the author and do not constitute a recommendation, offer, or solicitation to make any securities transaction. The information provided in this report is obtained from sources that the author believes to be reliable. External links to third parties are being provided for informational purposes only. Holzberg Wealth Management is not affiliated with the third-party websites linked to, unless otherwise explicitly stated, and does not constitute an endorsement or approval by Holzberg Wealth Management of any of the third party’s products, services, or opinions. Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Any charts and graphs provided are hypothetical and for illustrative purposes only, are not indicative of any investment, and assume reinvestment of income and no transaction costs or taxes.