Market View: March-April 2026

By Argent Wealth Management, LLC on March 4, 2026

Executive Summary

Recession risks remain low, supported by strong corporate balance sheets, healthy consumer finances, and a continued moderation in inflation.

AI-driven uncertainty is creating compelling long‑term investment opportunities.

We examine concerns around potential AI over‑investment and its implications for software and broader technology markets.

While commodities may appear overbought in the near term, structural forces suggest a potential long‑duration commodity super‑cycle.

Geopolitical tensions in the Middle East, on their own, are not a sufficient reason to de‑risk portfolios.

The underlying trajectory of the global economy remains the more significant driver of asset prices.
Oil markets are the key channel through which conflict could materially affect economic conditions.

Economic Charts

The risk of recession remains low. NDR’s model incorporates forward looking indicators.

Investment Grade Corporate spreads remain tight. This implies bond investors see low recession probability.

Credit card delinquency rates remain low and are improving. This would likely be worsening if consumers were generally under economic pressure.

NDR’s inflation timing model, which has historically correlated with the trajectory of inflation, is in the moderate disinflation zone.

Equity Trends

Stocks tend to do well when sentiment is pessimistic. Despite continued equity market strength, investors remain cognizant of various risks, which suggest that greed is at bay.

International and small cap stocks are outperforming the S&P 500 this year. Diversification continues to make sense. Small cap stocks are trading at a higher Price to Earnings Over Growth (PEG ratio), but international stocks are at a lower PEG.

Energy, materials, and staples are the best‑performing sectors year‑to‑date, while technology has lagged meaningfully. Sector performance has been driven by two dominant forces: ongoing geopolitical uncertainty and investor concerns about AI’s near‑ and long‑term impact on software and technology business models.

Within technology, valuations reflect this shift in sentiment. The cybersecurity sector, is trading at a PEG ratio just above 1—below the broader technology sector—and at a historically low level. On a PEG basis, technology is now the most inexpensive sector in the market.

The optimism that characterized technology investing in 2025 has given way to skepticism in 2026. Investors are wrestling with two central questions:

1. Is there over‑investment in AI?

Possibly in the near term. Companies building large language models (LLMs) and those building the data centers required to run them are in a competitive race. Those under‑investing risk falling behind. This dynamic can create temporary excess and volatility as adoption rates remain uncertain.

However, the long‑term trajectory is clearer: AI adoption by both corporations and individuals is not a question of if, but how fast and how effectively. Historically, major technology waves—computing, the internet, mobile—have driven productivity, economic growth, and higher living standards.

AI will likely follow the same path:

Efficiency gains will reduce the labor needed for certain tasks.
But productivity improvements and new technologies have historically expanded the overall economic pie.
Jobs emphasizing critical thinking, leadership, and decision‑making are poised to grow in importance.
Leaders will need to understand how to integrate AI into business models to remain competitive.

2. Will companies building LLMs (e.g., Anthropic, OpenAI) cannibalize the software industry?

This fear has driven declines across many software names, including cybersecurity. While some software providers focused on basic, easily automated tasks may face pressure, high‑value cybersecurity and data‑centric software companies with clear AI strategies appear oversold. Consulting firms specializing in AI implementation also look undervalued.

Critically:

LLMs cannot replace data; they depend on it.
They are tools for accessing and analyzing information—not sources of truth.
Human-built models still require guardrails, governance, and ongoing quality control.
Cybersecurity firms are already integrating AI to monitor threats and protect AI agents and their connections within corporate systems.
Most corporations lack internal AI expertise and will rely on consultants to design, build, and refine their AI strategies. Adoption is underway, but effective implementation remains in early innings.

The Bottom Line:

The ultimate winners—whether they be LLM providers or software platforms—are not yet known. Investors can make educated assessments, but uncertainty will persist. What is clear is that semiconductor companies remain at the center of the entire AI ecosystem. Regardless of which AI models or software solutions succeed, all require massive and growing semiconductor demand.

Commodities

Technology has always been central to national security—whether in the form of advanced defense systems like stealth aircraft or the data centers powering modern AI models. Over the past decade, however, the geopolitical landscape has shifted. The globalization mindset that once prioritized open trade and integrated supply chains has given way to a more protectionist, nation‑first posture.

In this new environment, secure access to critical natural resources has become a strategic priority. Nations recognize that building and maintaining technological leadership, especially in areas such as AI, semiconductors, and advanced computing, requires a reliable supply of minerals, energy, and other inputs that cannot be subject to geopolitical disruption.

This dynamic partly explains the renewed focus by the U.S. and other major powers on strengthening relationships with resource‑rich regions and reducing reliance on foreign supply chains. Rather than traditional territorial ambitions, today’s strategic competition is increasingly about control, access, and resilience in the supply chains that underpin next‑generation technologies.

Ultimately, governments aiming to lead in advanced technology must ensure stable, diversified, and secure access to the natural resources required to power datacenters, produce semiconductors, and fuel innovation.

Despite gold looking overbought, NDR’s gold model, which has historically correlated with the future price of gold, is bullish. The latest signal was on 1/21/2026. The median rally after these signals has been 30% over 248 market days (about 1 year).

Moreover, commodities, especially gold, are non-correlated with stocks and bonds generating positive diversification benefits.

Conflict in the Middle East

Key Points

Do not de‑risk solely because of war headlines.
Follow the macro data—it remains the dominant driver of market outcomes.
Oil is the primary channel through which conflict affects the macro landscape.
- If an energy shock proves temporary, periods of equity weakness have historically created buying opportunities, assuming the broader macro backdrop remains constructive.
Once initial uncertainty fades, markets typically normalize.

Market Behavior During Middle East Conflict

Historically, U.S. involvement in Middle Eastern conflicts has produced short‑lived market shocks, followed by normalization as uncertainty dissipates. Ultimately, macro forces—not geopolitical events alone—determine the market’s trajectory.

Typical market patterns include:

Oil spikes are common early in a conflict.
Energy, gold, and defense stocks often outperform during the initial shock.
Airlines and travel tend to weaken.
Treasuries typically rally on flight‑to‑safety flows.
Equity markets often bottom before or shortly after formal military engagement begins.

These reactions are usually sharp but temporary unless the conflict triggers a significant and sustained disruption in oil supply.

Why Oil Matters Most

The Strait of Hormuz is a critical chokepoint: roughly 20% of global oil consumption moves through it. When tensions escalate, oil frequently sees a 5–20% upward spike—driven by fears of supply interruption, higher shipping and insurance costs, and speculative positioning.

If no sustained disruption occurs, these spikes historically retrace.
If the conflict broadens, oil can remain elevated for longer.

Current market context:

Oil was around $64/barrel¹ before the conflict (up from $58² at the start of the year).
This leaves room for prices to rise without immediately threatening global growth.
As a reminder, oil reached $130/barrel³ in mid‑2022 without triggering a recession.
A full, sustained closure of the Strait of Hormuz has not occurred in the past 45 years.
Were it to happen, oil prices would likely spike sharply, pushing inflation higher and slowing economic activity—a true tail risk that would complicate the Federal Reserve’s policy response.

However, major global powers—including the U.S., China, India, and others —have strong incentives to prevent such a closure. As a result, this scenario remains possible but unlikely and does not represent the base case.

Bottom Line

War in Iran alone is not a sufficient reason to de‑risk.
Market outcomes will continue to be shaped primarily by the underlying macro environment, with oil prices serving as the key transmission mechanism between geopolitics and economic fundamentals.

¹ https://finance.yahoo.com/ on 2/26/2026

² https://finance.yahoo.com/ on 1/1/2026

³ https://finance.yahoo.com/ on 6/5/2022

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