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Updated: April 13, 2026
This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
- What we’re watching
- What we’re reading
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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.
More from Yahoo Scout
Why are oil stocks outperforming this quarter?
What factors caused the AI trade to backslide?
What questions define the upcoming market quarter?
How did the Iran war impact markets?
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.
The Fed and the economy
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.
AI backslide
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.
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%.
Plot twist: Iran
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.
