From a seasonal perspective, March is not typically known for any major changes in market dynamics. The month is often quieter with tax season emerging, earnings season’s completion, and investors analyzing early-year market direction. Despite the lack of obvious activity, several meaningful developments are unfolding that warrant our investment team’s attention.
Employment Growth: Narrow Leadership Beneath the Headlines
One of the more surprising recent data points comes from the employment picture. While headline job growth remains positive, a deeper look reveals that nearly all net gains have come from healthcare and private education. At the same time, much of the rest of the economy has shed jobs across many sectors. That type of concentration is not what many would expect in a broadly expanding economy. It does not suggest contraction, but it does indicate that growth is narrower than it appears at first glance.
Tariffs and Inflation: Where Is the Spike?
When paired with recent inflation readings that remain contained, this softer and more concentrated employment backdrop may provide the Federal Reserve with flexibility. The two-year Treasury yield has declined to levels not seen since 2022, signaling that bond markets may already be anticipating room for rate cuts. The overall employment picture does not look overheated, and that detail matters as policymakers weigh their next steps.
Inflation concerns tied to tariffs have also proven more muted than many initially feared. Data tracking the real-time impact of tariffs suggests price effects closer to 2%, far below the double-digit increases some had predicted. In many cases, companies appear to be absorbing costs rather than passing them directly to consumers. This reinforces a recurring theme in markets that perception can often obscure reality.
AI: Disruption Expands Beyond Tech
While macro data provides context, the more dominant force shaping investor conversations remains artificial intelligence. The impact of AI is no longer confined to mega-cap technology stocks. In recent weeks, software companies, logistics firms, commercial real estate brokers, financial data providers, and even segments of wealth management have experienced sharp stock price declines amid fears of disruption. In some cases, shares have fallen 25%, 40%, even 60% from recent highs.
The question is whether these moves reflect permanent impairment of business models or whether stock prices are adjusting more aggressively than underlying fundamentals warrant. Markets are currently selling first and asking questions later. History reminds us that industries often adapt and evolve, even when new technologies appear threatening. At the same time, disruption is real, and not every company successfully pivots. Our role is not to react to headlines but to distinguish between structural decline and temporary repricing.
Market Rotation: Utilities at 20x Earnings?
This rotation has produced unusual market dynamics. Certain companies tied to data infrastructure, electricity demand, and cooling systems for data centers have surged as investors position for an AI-driven future. Even traditional utilities, once valued primarily for dividend yield, are trading at multiples that would have seemed unlikely just a few years ago due to anticipated power demand. Meanwhile, former growth leaders in software and data services have been repriced sharply lower. Market leadership has changed, which reminds us that markets are constantly recalibrating expectations.
Commodities: Volatility Cuts Both Ways
Commodities have also generated questions. Gold and silver have moved higher, though volatility remains significant. Energy prices, despite geopolitical tensions, have remained relatively contained. Oil has not experienced the type of surge many feared, and natural gas prices have retreated after brief spikes. Even after surging for a few years, cocoa has plunged by over 70% from the high of less than a year ago. These markets can move quickly in either direction, which is why we continue to approach them cautiously within diversified portfolios.
Tax Season: Refunds and Contribution Limits
As tax season progresses, early data shows the average refund running higher year-over-year (by 13-14%), though it remains early in the filing cycle. Updated retirement contribution limits are also in effect, and we encourage clients to review planning strategies to maximize tax-advantaged opportunities. Small adjustments in contributions and withholding can meaningfully impact long-term outcomes.
Private Markets and IPO Interest
Our team is also fielding more questions about private companies expected to potentially enter public markets this year. Names like SpaceX, Anthropic, Stripe, and others generate understandable excitement. While private market access can be appealing, it often comes with liquidity constraints and multi-year lockups. Public markets, despite their volatility, provide daily liquidity and flexibility. These are advantages that should not be overlooked when life events require access to capital quickly.
Tax Season: Refunds and Contribution Limits
As tax season progresses, early data shows the average refund running higher year-over-year (by 13-14%), though it remains early in the filing cycle. Updated retirement contribution limits are also in effect, and we encourage clients to review planning strategies to maximize tax-advantaged opportunities. Small adjustments in contributions and withholding can meaningfully impact long-term outcomes.
To help you stay organized and confident throughout the year, click to view our updated 2026 Financial Planning + Tax Calendar. This resource highlights the most important tax deadlines, contribution limits, and planning checkpoints that can impact your financial picture.
Monitoring, Not Reacting
After three consecutive years of double-digit returns, expectations naturally rise. History suggests that sustaining that pace becomes more difficult as time goes on. That does not mean markets are poised for a sharp decline, but it does encourage disciplined forecasting. Broader participation and sector rotation, which we see so far in 2026, would represent a healthy normalization rather than a setback.
Artificial intelligence will continue to reshape industries. Interest rate policy will evolve. Market leadership will shift. Through it all, our focus remains consistent: identifying durable businesses, managing risk thoughtfully, and maintaining a long-term perspective.
Periods of rapid change can feel unsettling, but they also create opportunity. As always, we remain committed to helping you navigate these transitions with clarity, discipline, and a steady hand.
This commentary is for informational purposes only and includes general economic and market conditions. Forward-looking statements cannot be guaranteed. Past performance is not a guarantee of future results. Data and other market and economic information referenced is from sources believed to be reliable and opinions are subject to change. All investments involve risks, including the loss of principal.
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