Insights

Author: David I. Templeton, CFA, Principal and Chief Investment Officer

In a little more than a quarter's time, investors in the equity markets seem focused less on the so-called Magnificent 7 stocks and more on those stocks that have contributed less to the market's return over the past few years. This near-term transition is leading to a market that one might say is broadening out. This broadening out is evident by the top performing sectors in the S&P 500 Index in the first quarter being the lower weighted ones, Energy with a 4% sector weight, Materials at 2% weighting, Utilities at 3% weighting and Consumer Staples with a 5% weighting. These four sectors generated a positive 1.80 % return for the S&P 500 Index in the first quarter where the Index was down -4.33%. The Spring 2026 Investor Letter provides more commentary around this, noting the underperformance of the Mag 7 stocks relative to the broader market. At the same time this is occurring investors/the market must contend with the geopolitical risk occurring in the Middle East and its impact on energy prices. And not only are energy prices impacted by the conflict, but other commodities are as well as shipping through the Strait of Hormuz is restricted.

More of our thoughts on the quarter and year ahead are contained in the Spring 2026 Investor Letter. 

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