Atlantic Edge Insights
April 2026
Through the Shock: Staying the Course
in a Disrupted Market
First Quarter 2026 · Quarterly Market Commentary
Market Recap
Stocks
The S&P 500 entered 2026 on the back of two consecutive years of strong double-digit returns. That momentum held through the first seven weeks of the year before the US and Israel launched coordinated strikes against Iran on February 28, triggering the conflict that has defined the quarter.
-
Valuations adjusted: The S&P 500 fell roughly 9% from its January high, but the P/E multiple compressed from 21x to 19x while earnings estimates rose 3% over the same period. The market got cheaper as the earnings outlook improved.
-
Equal-weight bias continued to provide relative protection. The most expensive mega-cap stocks bore the brunt of the compression, as they did following Liberation Day last year.
Bonds
Rather than rallying as a safe haven, as bonds typically do during geopolitical crises, 10-year Treasury yields rose approximately 50 basis points during the quarter on fears that higher oil prices would rekindle inflation and constrain the Fed.
-
Short-duration, high-quality positioning held up well. Credit spreads widened modestly but remain well below recession-signaling levels.
S&P 500 monthly closing levels, Jan 1928–Mar 2026 · Log scale · Source: Multpl.com / S&P historical data. Atlantic Edge Wealth Management.
Nearly 100 years of market history makes the case better than any argument can. Every crisis on this chart, the Great Depression, World War II, the 1973 Oil Embargo, the Dot-Com Bust, the Global Financial Crisis, COVID-19, appeared catastrophic in the moment and was eventually absorbed by a market that continued to grow.
We do not minimize the human cost of the current conflict. But as investors, our responsibility is to separate its emotional weight from its long-term portfolio implications. History’s answer has been consistent: markets look through crises. The question is not whether a recovery comes, but where portfolios should be positioned when it does.
The Iran Shock — Serious, but Asymmetric
Iran’s closure of the Strait of Hormuz on March 2 triggered the largest oil supply disruption in the history of energy markets. Brent crude surged from ~$65 to a $126 peak and trades near $105 on April 1. The shock is real, but it does not land equally around the world.
Net energy import dependency by region. The US is a net exporter; EU import dependency 57%; South Korea 81%.
-
Europe is most exposed. The EU imports approximately 60% of its energy, and European natural gas prices are up 60% since the conflict began. Higher costs feed quickly into industrial margins, household bills, and slower growth.
-
The US is structurally insulated. As the world’s largest producer and a net energy exporter since 2019, rising prices benefit the domestic energy sector and US LNG exports. The consumer will feel pain, especially at the pump, but is cushioned by fiscal policy unavailable to European peers.
-
Base case: The two-week temporary opening of the Strait should provide some relief, however, if a deal cannot be reached within two weeks, economists at Goldman Sachs predict Brent Crude at $80 per barrel by year-end, US GDP +2.1% in 2026. Even in the most adverse scenario — oil above $150, prolonged disruption, supply scarring — US GDP stays above 1%.
US Tailwinds Remain Intact
“The Iran shock is not big enough to offset the strong tailwinds to the US economy from AI spending, the industrial renaissance, and the One Big Beautiful Bill.”
— Torsten Slok, Chief Economist, Apollo Global Management
Three structural US tailwinds versus the Iran headwind. Sources: Apollo Global Management, Goldman Sachs GIR, CBO.
Artificial Intelligence
-
AI investment will account for about 40% of S&P 500 earnings growth in 2026. Hyperscalers spent $131 billion on AI investment in Q4 2025, +72% higher than last year. Analysts forecast that spending increased to $149 billion in Q1 2026.
-
US data centers run on domestic natural gas, meaning that they are insulated from any Hormuz energy disruption.
-
Early Q1 earnings reports revised 2026 estimates higher by a median of 0.5% since the conflict began.
The Industrial Renaissance
-
Reshoring was already accelerating as companies reconsidered their global supply chains, prompted by tariff policy and geopolitical risk. The case has only become more compelling.
-
US-based production offers abundant, affordable energy not subject to the disruptions currently punishing European manufacturers, a structural advantage that outlasts the conflict.
The One Big Beautiful Bill
-
The CBO estimates that the “BBB” alone will boost GDP by +0.9%, primarily fueled by 100% immediate deduction of capital expenditures
-
Tax refunds provide consumers a partial offset to higher pump prices, a cushion European households do not have.
The Earnings Picture
-
We expect more than 10% earnings growth in Q1 2026 — the sixth consecutive quarter of double-digit growth. More importantly, the selloff compressed the P/E to 19x from 21x even as EPS estimates rose 3%. The market enters earnings season cheaper than it started the year. Earnings reports released since the start of the war have seen estimates revised higher, not lower.
Bottom Line
The Iran shock is acute, and we are monitoring it closely. However, the structural tailwinds supporting U.S. growth, particularly AI investment, manufacturing reshoring, and fiscal stimulus, remain intact. History tells us markets look through crises. The earnings outlook, not geopolitical headlines, will determine whether this bull market has more room to run.
Portfolio Positioning
US Stocks
Our equal-weight bias has served portfolios well. The most expensive segments of the market, large-cap growth and the mega-cap technology names that dominate the cap-weighted S&P 500, bore the greatest burden of the valuation compression this quarter, as they did during the tariff-driven correction of early 2025.
-
We reduced growth exposure in Q1 as signs of softening emerged in that segment, and we remain positioned toward more attractively valued companies with solid earnings growth.
-
Longer-term, we expect market concentration to recede from current extremes. Portfolios underweight the largest stocks should outperform as earnings growth broadens.
International Stocks
After the Iran conflict began, we trimmed International Developed equity exposure, specifically reducing European stocks.
-
Higher energy costs compress European margins and slow consumer spending in ways the US does not face. Near-term earnings risk is higher despite lower valuations.
Bonds
Short duration and high quality has been the right call. The 10-year Treasury yield rose approximately 50 basis points during the quarter, driven by oil-driven inflation fears, not Fed action.
-
Long rates tend to fall during easing cycles that end in recession. With recession a minority probability in the base case, we see no compelling reason to extend duration.
-
Portfolio earns an attractive yield at the short end without undue interest rate risk. We remain ready to reduce high-yield exposure if credit spreads compress materially or the economic outlook deteriorates.
Sources: Goldman Sachs Global Investment Research (US Weekly Kickstart, March 27, 2026), Apollo Global Management (Torsten Slok, Daily Spark), Congressional Budget Office, International Energy Agency, EIA, Eurostat, Multpl.com. This commentary is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Past performance is not indicative of future results. Atlantic Edge Private Wealth Management.
Atlantic Edge Insights
Matthew Cochran, CFA
Robert Filosa, CFA
Ethan Caldarelli, CFA
Opinions expressed in this commentary may change as conditions warrant and are for informational purposes only. Information contained herein is not intended to be personal investment advice for any specific person for any particular purpose. We utilize information sources that we believe to be reliable but cannot guarantee the accuracy of those sources. Past performance is no guarantee of future performance; investing involves risk and may result in loss of capital. No graph, chart, formula or other device can, in and of itself, be used to determine which securities to buy or sell, or when to buy or sell such securities, or can assist persons in making those decisions. Consider seeking advice from a professional before implementing any investing strategy.