A tumultuous quarter just ended. Here are the highlights, lowlights, and everything else.
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The year kicked off with the S&P 500 (^GSPC) in the 6,850s and a general feeling of bullishness. Three months later, and quite a lot has happened.
First off, the S&P 500 lost 4.8%, the Dow (^DJI) 4.2%, and the Nasdaq (^IXIC) 7.1%.
But perhaps not surprisingly, many of the narrative plot points of the year’s first quarter have been the old standbys — just turned on their head. Here’s our quarter in review, starting with the broad strokes.
What a difference a few months can make. That’s as true for the Fed as it is for so many things touched by the economy this year.
What started as a January pause in rate cuts amid the Fed’s view that consumer spending and the unemployment rate were healthy and stabilizing quickly slid into a more precarious situation as inflation remained stubborn, even before a war with Iran led to an oil blockade and shock.
Now, instead of eyeing the next cut, Wall Street is bracing for an extended pause — or even a rate hike.
We may not have reached the bottom of the AI trade, but we have fallen far from the top.
A confluence of factors has ravaged the tech sector, from rising yields that have weighed on sky-high valuations to profit-taking and the tech sector no longer functioning as an equity safe haven.
Nvidia CEO Jensen Huang interacts with a Disney animatronic robot during his keynote address at the company’s annual GTC developers conference in San Jose, Calif., on March 16, 2026. (Josh Edelson/AFP via Getty Images) ·JOSH EDELSON via Getty Images
Concerns over massive AI spending and revenue questions, combined with a rethinking of Gulf monarchy spending and their willingness to invest in and build out their own AI infrastructure, have taken much of the wind out of the trade’s sails.
Just look at the “Magnificent Seven”: Alphabet’s (GOOG, GOOGL) down 9% year to date. Amazon’s (AMZN) down 8%. Meta (META) 12%. Microsoft (MSFT) 22%. Tesla (TSLA) 15%. Apple (AAPL) 6%. Nvidia (NVDA) 8%.
That brings us to the biggest catalyst of them all: the war in Iran.
Investors have been hanging on President Trump’s every word, looking for signs that the conflict will, in fact, wind down. Every war brings some element of economic disruption. But choking global energy flows is core to Iran’s strategy. And while Washington envisioned a swift bombing campaign, Tehran is waging a protracted oil war.
That has tripped up the Trump administration’s plans for the war and unleashed havoc on the global economy. In the US, stocks are in or near correction territory, the Fed is hamstrung, and there’s renewed fear of stagflation.
Tuesday brought hope and commensurate gains in the stock market. But it’s far from over.
We grabbed the year-to-date results from companies with market caps over $150 billion. There aren’t really any big surprises. But you’d have been surprised if we had shown you this list three months ago.
The big question is whether AI will help companies or make them unnecessary. While the jury is still out, the prospect of new AI capabilities from Anthropic (ANTH.PVT) has made the market very worried about the latter. The corollary here is that AI is a big winner, as its capabilities have eaten something it didn’t even really see as a competitor. But those gains aren’t really present in the stock market. Yet.
Oil and oil stocks: Winner
Oil majors are back in a big way. The war in Iran has made clear just how reliant the world is on fossil fuels and how global energy flows are. Even for the US, which has massively raised its domestic production. While the high prices may not convince the majors to increase their production — they want to make sure high prices aren’t short-lived — the companies have shot to the top of our charts.
And oil itself? It’s up around 77% after beginning the year at $57 per barrel.
Microsoft CEO Satya Nadella speaks on stage during the Microsoft AI Tour in Bavaria, Munich, on Feb. 25, 2026. (Sven Hoppe/picture alliance via Getty Images) ·picture alliance via Getty Images
While OpenAI’s (OPAI.PVT) ChatGPT and Google’s Gemini had first-mover and network-effect advantages, Anthropic’s Claude has emerged with a strong case for pole position ending Q1 as best of the AIs. And with its safety guardrail-brand and public dispute with the Pentagon, Claude hit the top of the app store charts and underscored how reversals of fortune can come at any time — and how much ethics and brand matter to users.
This was a shock. The effective closure of the Strait of Hormuz has led to surging gas prices and a reminder to frustrated drivers that hybrid and electric vehicles still exist — despite the auto world’s recent pullback away from them amid the evaporation of government subsidies. While a short-term conflict may not significantly shift EV demand, the longer the war drags on, the more attractive EV alternatives will seem.
Slapping any outlook on the current moment is something we’ll leave to strategists. But with an enormous range of potential outlooks, we’ll stick to five questions that may define the coming quarter.
How will the Powell era at the Fed end?
Will Wall Street treat an inevitable “victory” in the Iran war as a blip?
Does the AI investor backlash gain steam or peter out?
Will AI eat software stocks or help them?
A single cut, no cuts, or a rate hike?
He hasn’t (yet?) won his battle with the Pentagon, but Dario Amodei raised Anthropic’s standing in the court of public opinion. And where so many business and institutional leaders have conceded to the Trump administration’s demands, it was rare and refreshing to see someone say no. Plus, he’s the head of Anthropic.
The Tesla CEO is on track to preside over the biggest IPO in history, when SpaceX (SPAX.PVT) debuts on the stock market as early as this summer. An unconventional rollout suggests fund managers and analysts will be tripping over themselves to get in on the action. Elon Musk has also managed to bring back Tesla sales in Europe and generally avoid own goals this quarter.
It’s hard for the exec at the top of the AI heap to remain king of the hill. Nvidia CEO Jensen Huang has seemingly lost his leather-jacket-clad power to move markets with his enthusiasm. Every criticism and the rising second-guessing around AI also falls on Huang, from the circular dealmaking to massive infrastructure spending to increasing competition for alternative or in-house chips. But we appreciate his take on AI, companies, and labor: If you’re firing workers because of AI, you lack imagination.
India’s Prime Minister Narendra Modi, left, takes a group photo with AI company leaders including OpenAI CEO Sam Altman, center, and Anthropic CEO Dario Amodei, right, at the AI Impact Summit in New Delhi on Feb. 19, 2026. (Ludovic Marin/AFP via Getty Images) ·LUDOVIC MARIN via Getty Images
Zuck’s newfound UFC energy is being challenged on two fronts: a recent, stinging court defeat that may force Meta to reshape its social media platforms, and renewed doubts over Meta’s place in the AI race. Sometimes we have to remind ourselves what they’re doing with all the data centers, as their AI is tucked into Instagram and Facebook. As the man famously said, “We sell ads, Senator.”
Sora, RIP. That panicked email at the end of last year about Alphabet’s rapid AI gains, in which Sam Altman declared a “code red,” was the start of a downward spiral.
Soon after, Altman was committing what many in the tech world still see as a sin: doing “Game of Thrones”-style politics. What OpenAI won through its new deal with the Defense Department, it lost in social cachet and nerd-kingdom standing. And that awkward moment where he and Amodei refused to hold hands at an event in India added to the general feeling of desperation amid Claude competition.
Honorable mentions: Satya Nadella and Alex Karp didn’t make the top five, given their stock market performance. You can tell us in the comments how you feel about their performance.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.
