Marching Through Iran? – A First Quarter 2026 Review
The month of March followed the old aphorism nicely from a weather and climate perspective. For most of the country, it went in like a lion with harsh weather conditions while the month ended like a lamb with relatively mild weather. The stock market, however, was another story altogether. It came in with hopeful trepidation like a rabbit and exited like a rabid dog, biting and chewing anything its size that entered its path. No one’s quite sure whether the “mad dog” is clearing the way for a bull, a bear, or something unknown after the first week of April that consisted mostly of buying the dip in US markets.
Trade ValuEngine supported portfolio strategies, www.ValuEngineCapital.com
Most investors are well aware that in the long-term the markets always shrug off even the most major geopolitical disturbances But some are worried that this may be the exception that proves the rule. At any rate, there can be little doubt that the aggressive war in the name of the pre-emptive strike that the US and Israel is waging in Iran has injected a level of uncertainty into the markets that hasn’t been seen in most of our lifetimes. Without going into details, the high stakes, potential perils and complete unknowns are exigent factors that are difficult if not impossible to integrate into even the most sophisticated of automated trading models – even those using AI. At ValuEngine we will concede that the longer such an environment envelops the world, the more difficult it becomes to use risk and predictive models and it will be difficult to distinguish leading future performers from laggards. However, ValuEngine’s models usually do very well when major geopolitical issues begin to wind down and markets regain some semblance of normalcy.
Fortunately, hindsight is still 20/20 so one thing we can have confidence in is our annual first quarter performance review. There is an interesting breakpoint here. The first two months saw momentum increase slightly on one of the trades that started in July 2025 and permeated the rest of the year. That was easing out of positions in “the Magnificent Seven” mega-cap tech giants and other large cap growth stocks and into previously underperforming small cap and value stocks. The month of March did not discriminate that much and took all major US equity market size and style ETFs down at least 3.8%, and at most 6.4%. This is a relatively sharp decline for just one month.
Free Trial: Direct Access to ValuEngine Research on over 5,000 stocks and 700 ETFs HERE
This table provides the data.
| Ticker | Name | VE Rating | Description | Assets ($Bil) | 1 Month Returns | 1st Qtr. Price Change | 1 Year Returns | 5 Year Returns | ER |
| VTI | Vanguard Total Stock Market ETF | 3 | US All-Cap | 543.9 | -5.01% | -4.01% | 18.10% | 10.87% | 0.03% |
| VOO | Vanguard S&P 500 ETF | 4 | US Large-Cap | 791.4 | -5.01% | -4.42% | 17.67% | 12.08% | 0.03% |
| RSP | Invesco S&P 500® Equal Weight ETF | 2 | US Equal- Weighted S&P | 83.5 | -5.97% | 0.62% | 12.65% | 7.84% | 0.20% |
| MDY | SPDR S&P MIDCAP 400 ETF Trust | 3 | US Mid-Cap | 23.5 | -5.29% | 2.49% | 17.01% | 6.64% | 0.24% |
| IWM | iShares Russell 2000 ETF | 3 | US Small-Cap | 69.5 | -4.96% | 0.93% | 25.66% | 3.88% | 0.19% |
| QQQ | Invesco QQQ Trust Series I | 5 | Focused US Large Cap | 360.2 | -4.84% | -5.93% | 23.68% | 13.60% | 0.18% |
| VUG | Vanguard Growth ETF | 4 | US Large Cap Growth | 178.5 | -5.12% | -10.37% | 18.30% | 12.11% | 0.03% |
| VTV | Vanguard Value ETF | 2 | US Large Cap Value | 161.3 | -4.81% | 3.29% | 16.02% | 10.87% | 0.03% |
| IWO | iShares Russell 2000 Gro. ETF | 4 | US Small Cap Growth | 11.7 | -6.37% | -2.82% | 23.40% | 1.97% | 0.24% |
| IWN | iShares Russell 2000 Value ETF | 2 | US Small Cap Value | 12.1 | -3.77% | 4.91% | 27.81% | 5.59% | 0.24% |
Current ValuEngine reports on all covered 5000+ stocks and ETFs can be viewed HERE
Interestingly, although IWN (the iShares Russell 2000 Value ETF) had the best or least bad month by “only losing” 3.8%, its counterpart IWO representing small cap growth lost 6.4%. This is the worst of any of the size and style index ETFs. Between skyrocketing fuel costs and an expected credit crunch as a result of a perfect geopolitical storm, small cap stocks took a real beating in the second half of the month.
For the entire quarter, the prior two-month trend prevailed. Large cap growth stocks were used by many as sources of funds for buying smaller cap stocks and stocks that are more value-oriented. As a result, IWN had the best quarterly price change, up 4.9%, while the Vanguard US Growth ETF, VUG, lost 10.4% making it by far the worst performer. QQQ, an Invesco ETF representing the Nasdaq 100, was the second worst quarterly performer with a 5.9% loss. The second best performer was VTV, the Vanguard Large Cap ETF.
What did this all mean for US sector index ETFs? Investors shifted toward essential services and commodity-linked sectors amid rising oil prices and a pullback in AI-driven tech stocks. The following table provides the details.
Current ValuEngine reports on all covered 5000+ stocks and ETFs can be viewed HERE
| Ticker | Name | VE Rating | Assets ($Bil) | 1 Month Return | 1st Qtr. Price Change | 1 Year Return | 5 Year Return | ER |
| XLB | State Street Materials Select Sector SPDR ETF | 2 | 6.4 | -6.03% | 10.67% | 18.23% | 6.82% | 0.08% |
| XLC | State Street Communication Services Select Sector SPDR ETF | 3 | 23.5 | -5.79% | -5.53% | 16.36% | 9.81% | 0.08% |
| XLE | State Street Energy Select Sector SPDR ETF | 3 | 44.1 | 10.26% | 37.90% | 34.73% | 24.33% | 0.08% |
| XLF | State Street Financial Select Sector SPDR ETF | 2 | 46.8 | -3.52% | -9.40% | 0.64% | 9.44% | 0.08% |
| XLI | State Street Industrial Select Sector SPDR ETF | 3 | 27.4 | -8.44% | 4.55% | 25.05% | 12.06% | 0.08% |
| XLK | State Street Technology Select Sector SPDR ETF | 5 | 80.8 | -4.11% | -7.58% | 29.38% | 16.12% | 0.08% |
| XLP | State Street Consumer Staples Select Sector SPDR ETF | 1 | 15.5 | -8.41% | 6.13% | 3.15% | 6.41% | 0.08% |
| XLU | State Street Utilities Select Sector SPDR ETF | 3 | 24.4 | -3.19% | 8.24% | 19.30% | 10.86% | 0.08% |
| XLV | State Street Health Care Select Sector SPDR ETF | 2 | 37.9 | -8.11% | -4.90% | 2.20% | 6.40% | 0.08% |
| XLY | State Street Consumer Discretionary Select Sector SPDR ETF | 3 | 20.8 | -6.56% | -8.55% | 11.15% | 6.34% | 0.08% |
Energy is clearly the big story here. The State Street Select Sector SPDR Energy, XLE, had already come back from being dead last in 12-month performance among the Select Sector SPDR ETFs for the period ending March 31, 2025, to third in overall 12-month performance when March began. By March 31, 2026, it had captured the top spot by a wide margin with a whopping 34.7% return as compared with the 29.4% posted by the prior runaway leader, State Street Select Sector SPDR Technology, XLK. Altogether, XLE gained 37.9% in the 1st quarter including 10.3% in March. On the other hand, the second best performing Select Sector SPDR for the quarter, XLB, containing the materials and mining stocks in the S&P 500, slid back 6% in the same month which cut its 1st quarter gain to 10.7%.
Two sector ETFs that have been stagnant for the better part of a year are XLV which owns Health Care stocks, and XLF representing the Finance Sector. Since both are currently rated 2, ValuEngine’s predictive model is not expecting a rebound from either in the near future.
For individual stocks in the first quarter of 2026, energy and technology infrastructure companies dominated the top performers list of U.S. mega-cap stocks. SanDisk (SNDK) led the group with a surge of over 130%, followed by significant gains in the energy sector as oil prices reacted to geopolitical tensions. SNDK benefited from a global NAND flash shortage and the massive expansion of AI data centers. Exxon Mobil (XOM), ConocoPhillips (COP) and Chevron (CVX) all posted record quarterly gains courtesy of global political tensions. GE Vernova (GEV) saw significant gains as investors rotated into “defensive growth” companies supporting the global energy transition and grid infrastructure needs. The following table summarizes the quarter from the perspective of five stocks. All are rated buy or strong buy by ValuEngine with the exception of Chevron.
Free Trial: Research on over 5,000 stocks and 700 ETFs HERE
| VE Rating | Company (Ticker) | Market Cap (appro.) | Q1 2026 Gain |
| 5 | SanDisk Corp (SNDK) | ~$102 Billion | +130.8% |
| 4 | Exxon Mobil (XOM) | ~$670 Billion | +41.8% |
| 4 | ConocoPhillips (COP) | ~$123 Billion | +41.9% |
| 3 | Chevron (CVX) | ~$340 Billion | +36.9% |
| 5 | GE Vernova (GEV) | ~$115 Billion | +33.7% |
The top five stocks previously mentioned (SanDisk and energy majors) massively outperformed the seven traditional tech titans, which all finished the quarter in negative territory. Interestingly, the two with the smallest losses are rated as strong buy stocks by ValuEngine while the other five are rated “hold” and this hierarchy of order held before the quarter began.
Magnificent 7 Q1 2026 Returns:
- Nvidia (NVDA): -1.6%; rated 5
- Alphabet (GOOGL): -2.8%; rated 5
- Meta (META): -4.8%; rated 3
- Apple (AAPL): -6.8%; rated 3
- Amazon (AMZN): -9.7%; rated 3
- Tesla (TSLA): -10.9%; rated 3
- Microsoft (MSFT): -17.9%; rated3
Trade ValuEngine supported portfolio strategies, www.ValuEngineCapital.com
Is the market buying the dip during the first week in April a sign that the market is ready to return to normal? That is highly doubtful.
What is not doubtful is that investors are most often poorly served by letting global tensions affect their investment decisions. This is why quantitatively driven services such as ValuEngine exist. We provide a consistent baseline against which other investing ideas can be benchmarked. ValuEngine’s models historically have performed best when major geopolitical and other events begin to wind down and ‘data’ begins to mean something again. The recovery is often fast and furious.
Herb Blank
ValuEngine Chief Quantitative Analyst
www.ValuEngine.com (Valuengine, Inc) is a stock valuation and forecasting service founded by Ivy League finance academics. VE utilizes the most advanced quantitative techniques and analysis available to analyze over 4,200 US stocks, 700 US ETFs, and 1,000 Canadian stocks. Fair market valuations, forecast target prices, and buy/hold/sell recommendations are updated DAILY.
www.ValuEngineCapital.com (ValuEngine Capital Management, LLC) is a Registered Investment Advisory firm that trades a variety of different portfolios based upon the ValuEngine.com research models. Each portfolio has a different risk/return profile, so clients can be placed in strategies that fit their specific investment needs.
BLOG.VALUENGINE.COM for the full history of ValuEngine.com financial blog posts
_____________________________________________________________________
Existing subscribers alert: ValuEngine has launched a completely redesigned and new website! Please check it out at ww2.ValuEngine.com
Free trials will full access to over 5,000 stocks, 15 sectors, over 200 industries, and 700 ETFs updated DAILY to respond to market changes HERE
