oxford3

May was a month of records. The S&P 500, Nasdaq, Dow, and Russell 2000 all set new all-time highs, but the gains were powered almost entirely by technology and semiconductor stocks. These gains came despite an interest rate scare, as back-to-back hot inflation readings increased the probability of a Federal Reserve rate hike and sent long-term Treasury yields rising. Meanwhile, a sharp drop in oil prices somewhat eased the inflation concerns. Corporate earnings growth remained strong with record profit margins, though the strength was concentrated in a handful of large companies and AI-related stocks.

The S&P 500 Index gained more than 10% in April, recovering its March decline and setting a new high. Nine of eleven sectors traded higher as stocks recovered from the March selloff, but eight sectors underperformed the index as mega-cap stocks represented a majority of the gains. Bonds traded lower in April as Treasury yields increased. However, corporate bonds outperformed Treasury bonds as credit spreads tightened.

In this commentary, we recap the fourth quarter’s defining themes and events, review performance across key market areas, and look ahead to 2026.

Markets finished lower as an early-week rally faded into a late-week selloff. Stocks initially rallied as President Trump said the “war is very complete, pretty much” and oil prices plunged, but the strength reversed as geopolitical tensions escalated and oil rebounded. The S&P 500 fell 2%, with Energy the only sector in positive territory. The Nasdaq had a smaller decline of 1.5% as investors rotated toward tech stocks and mega caps amid the volatility, while the Russell 2000 declined by 3%. Bonds also traded lower as rising oil prices and inflation concerns pushed Treasury yields higher. Commodities were mixed: oil rebounded toward $100 per barrel as the Strait of Hormuz remained closed, while gold posted a modest loss despite the market volatility. The week ended with tensions unresolved.

February offered a tale of two markets. On the surface, the S&P 500 declined 0.8%, but beneath that headline number, a notably healthier picture emerged. The equal-weighted S&P 500 gained 3.5%, Large Cap Value rose 2.6%, and the Russell 2000 added 0.8%, a clear signal that market participation is widening. The narrow dominance of mega-cap technology stocks that defined much of the prior bull market cycle appears to be giving way to a more broadly distributed rally. Diversified investors, often frustrated during the period of tech-led concentration, are beginning to see their patience rewarded.