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The first quarter was eventful for markets. Stocks traded higher to start the year, with the S&P 500 posting a modest gain in January. However, the market traded lower in March due to escalating geopolitical tensions in the Middle East and the Strait of Hormuz closure, which led to a spike in oil prices. The S&P 500 returned -4.3%, but despite the late-quarter volatility, there were bright spots. The average S&P 500 stock outperformed the broad index by nearly +5% as market leadership broadened, and manufacturing data showed signs of improvement. In this letter, we recap the key developments from Q1, discuss how higher oil prices impacted rate cut expectations, highlight how diversification benefited investors, and look ahead to Q2.

The software industry has declined nearly -30% from its peak last October, one of the largest non-recessionary drawdowns in over 30 years. Figure 1 puts the decline in historical context alongside the other major software selloffs. The two largest drawdowns before the current one, the dot-com bust and the 2008 financial crisis, both occurred during recessions, when corporate earnings were declining and businesses were cutting spending. The 2022 selloff, driven by the Federal Reserve’s aggressive rate-hiking cycle, was the first major non-recessionary decline and saw software stocks fall nearly -40%. The current drawdown, at nearly -30%, surpasses the COVID pandemic, but it’s driven by a fundamentally different catalyst: artificial intelligence.

“I’ve sat on both sides of the table—making lending decisions and owning a business. And let me tell you, the view looks very different depending on which chair you’re in.”

If you're running a small business, when you get paid can be just as important as how much you get paid. Being able to predict and manage your cash flow — the timing of when you get paid and when you have to pay bills — is an essential skill for success.

Chief Investment Officer John Cunnison shares insights on the key forces influencing markets today. Topics include the market response to the Iran conflict, emerging risks in private credit markets, and major structural shifts in the global economy including the growing importance of real assets as AI and infrastructure demands increase.

Markets have digested the initial shock of the weekend's attacks more quickly than many feared. Equities have stabilized, and while oil prices have moved higher, the reaction has been orderly.

Ted and Stuart discuss Stuart’s background and experience with the bank, along with key market developments including the recent government shutdown, Federal Reserve interest rate decisions, the nomination of Kevin Warsh as Federal Reserve Chair, and what these events may mean for future rate policy and economic conditions.

The bond market is emerging from a turbulent few years marked by shifting market conditions and increased volatility. Figure 1 graphs the MOVE Index, a measure of volatility in the U.S. Treasury market. Like the more well-known VIX Index, higher readings signal expectations for more bond market volatility. The bond market was stable in the late 2010s, but when the pandemic struck in 2020, it became more volatile. The MOVE Index spiked above 100 as the pandemic and economic uncertainty made financial markets more volatile, but it quickly retreated as the Federal Reserve cut interest rates to near 0%. The bond market was significantly less volatile in 2021 as the economy reopened and the Fed held interest rates steady, although rising inflation and expectations for Fed rate hikes caused volatility to creep higher.

Markets navigated a complex environment in Q4. The quarter started with a government shutdown, which lasted 43 days and delayed key economic data releases. The lack of timely information made it difficult to assess the economy’s strength and contributed to periods of volatility as the market reacted to incomplete information. The Fed cut interest rates by -0.50% but signaled a pause, hinting that it could cut less than the market expects in 2026. Investors remain excited about the potential of artificial intelligence, but they’ve become more focused on which companies are best positioned to turn AI demand into near-term profits. Against this backdrop, the S&P 500, Nasdaq, and small-cap stocks each set new highs. In this letter, we recap Q4’s defining themes and events, review performance across key market areas, and look ahead to 2026.

With AI dominating headlines and stock prices soaring, many investors are asking whether a correction is coming. In this Market Update, CIO John Cunnison explains why predicting timing is nearly impossible and why preparation and diversification matter more than speculation.

The key to making your generosity truly impactful is to thoughtfully integrate your giving goals into your broader financial strategy.

As we approach the end of the year, now is the perfect time for business owners to take a comprehensive look at their operations and prepare for the year ahead.