Market Overview for March 31: End of Q1, S&P drops over 7%, writing the war bill

Author: Shen Chao TechFlow

US stocks: On the quarter-end settlement day, the bills for Q1 are laid out in front of everyone

On Tuesday, the calendar turned to March 31—and to the last page of the first quarter of 2026.

As of the close on Monday (March 30), the S&P 500 was at 6,343, down over 7% for the entire quarter. It has already deviated by more than 9% from the record high at the end of January, sitting just one step away from the correction zone. The Nasdaq has already entered the correction zone, and the Dow officially fell into correction last Friday—Dow and Nasdaq declining simultaneously. This is a situation never seen since the Fed’s aggressive rate hike cycle in 2022. Russell 2000 small caps performed even worse, closing at 2,414, with the correction depth exceeding 12%. The S&P 500 has declined for five consecutive weeks, the longest streak since 2022.

The quarter-end “window dressing” effect should have provided some support. Fund managers tend to rotate holdings at quarter-end, selling “junk” and buying “winners,” creating a visually appealing portfolio. But in this first quarter, the term “winners” itself has become highly controversial: energy and defense stocks rose, at the expense of technology and consumer stocks falling sharply. The “best holdings” locked in by fund managers are often oil stocks that outperform the market on the run, rather than Nvidia and Microsoft.

This distorted internal structure is clearly reflected in Monday’s trading. The Dow gained only 49.5 points (+0.11%), supported by Wells Fargo, JPMorgan, and energy companies; the S&P 500 fell 0.39%, and the Nasdaq dropped 0.73%, with the tech sector once again acting as the drag. Micron plunged 9.7% in a single day, exemplifying how this war is slowly trimming the chip sector: Google’s computational compression algorithms and the uncertainty in the semiconductor supply chain under the Hormuz blockade have already turned the most favored AI hardware stocks into frightened birds. The tech sector’s 50-day moving average has fallen below the 200-day moving average, forming a “death cross,” and five months of consecutive decline mark the longest streak since the internet bubble burst in September 2002.

There’s another statement worth recording in history: during a speech at Harvard University, Federal Reserve Chair Jerome Powell explicitly stated that the Fed’s policy is “in the right place,” leaning toward “seeing through” this supply-side shock. He said, “When the tightening effects of monetary policy truly transmit into the economy, this oil price shock has most likely already passed; at that point, it would be inappropriate to further suppress the economy.” This is a textbook-level dovish stance—but the market’s reaction was continued decline, as oil prices are still climbing: WTI is above $102.88, and Brent is above $108.

Powell’s “seeing through,” contrasted with oil’s “not seeing through,” represents the most intractable contradiction in this quarter-end market.

Today’s key focus is on data and earnings: the Consumer Confidence Index (March) and JOLTS job openings (February) will be released during trading, while Nike will report after the close—this is the only major Dow component earnings report this quarter, and the first end-of-quarter review for consumer giants since this war began. Wall Street’s consensus estimates: EPS around $0.29, down approximately 46% year-over-year; revenue around $11.2 billion, roughly flat compared to last year. Under the low base effect, the impact of the Hormuz blockade on supply chains in Vietnam and India will be a key variable in management’s language.

Morgan Stanley’s assessment is worth highlighting: the firm downgraded its global stock rating to “neutral” ahead of quarter-end, and simultaneously upgraded U.S. Treasuries and cash to “overweight.” The reason: “The uncertainty regarding the scale and duration of oil supply disruptions makes the outlook for risk assets increasingly asymmetric”—using the most restrained language, Morgan Stanley expressed the most pessimistic outlook.

Gold and oil prices: oil remains high at quarter-end, gold rebounds inversely

Oil prices: $103, with the war premium still intact

WTI crude oil closed Monday at $102.88 per barrel, and Brent crude is in the $108 to $109 range, both reaching new intermediate highs since the Iran war outbreak. The catalysts came from a new escalation over the weekend: Yemen’s Houthi forces launched missiles at targets in Israel and U.S. military positions; Iran carried out an overnight attack on an oil tanker passing through Kuwaiti waters—directly triggering a new surge in after-hours futures on Monday.

From the data, the total bill of this war on oil prices: WTI was about $57 at the start of the year, now up roughly 80%. This is the most significant market story of the quarter.

A macro perspective worth noting: some economists compare the current global supply contraction to the OPEC embargo during the 1973 Arab-Israeli war. The IEA has characterized this crisis as “the most severe global energy security challenge in history.”

Gold: seeking conditions to take off again amid the inflation chain driven by oil prices

Gold rose about 1.4% on Monday, trading between $4,542 and $4,544, having already recovered from falling below $4,100.

Gold’s structural situation remains complex: on one hand, it is pressured by the strengthening dollar during rising inflation expectations; on the other hand, the demand from the war itself and central banks’ continued reserve accumulation have never disappeared. March’s overall decline of about 17% was the worst single month since 1983—though that was after reaching a record high near $5,600. At quarter-end, gold still posted a positive return for the full quarter, making it one of the best-performing major assets this year besides energy stocks.

Cryptocurrency: Bitcoin stabilizes after falling, but the quarter-end bill still looks grim

Bitcoin was around $66,727 on Monday. During the day, it briefly recovered to about $67,747, but its performance for the quarter was bleak. From a peak of roughly $97,000 at the start of the year, Q1 declined over 30%, making it the worst-performing mainstream asset class this year.

An unexpected signal came at quarter-end: Strategy paused Bitcoin purchases for the first time this week. The record of 13 consecutive weeks of buying was broken during this most intense week of the war. This doesn’t necessarily signal a bearish outlook; it could also be an internal management move. But against the backdrop of Bernstein recently declaring “the bottom is already in,” this pause at this timing is particularly noteworthy.

Bitcoin’s situation in Q1 is inherently complex: it initially plunged along with all risk assets at the outbreak of the war, then rebounded at certain stages, showing some “geopolitical crisis resilience.” However, in a macro environment where interest rate expectations drift toward hikes, it ultimately cannot escape the gravity of liquidity. The total global crypto market cap shrank by about 25% in Q1, to around $2.5 trillion. The Fear & Greed Index remains near 25 (extreme fear).

Throughout Q1, the main suppressor of the crypto market was not a single crash but a persistent expectation of tightening liquidity—when the Fed’s next move shifts from “cutting rates” to “possibly hiking,” all high-risk assets are being revalued.

Today’s summary: The first quarter’s conclusion of the war—how history will record these 32 days

March 31, 2026—Q1 ends:

US stocks: The S&P 500 declined over 7% for the quarter, with the Dow and Nasdaq falling into correction territory. The tech sector’s five-month decline streak is the longest since 2002, and the VIX remained above 30. Almost all of this quarter’s decline occurred within the 32 trading days after the U.S. and Israel launched strikes against Iran on February 28.

Oil/gold: WTI crude rose from about $57 to $102, an increase of roughly 80%, the most direct transmission of the war’s shock to the global economy. After hitting a high near $5,600, gold retreated to around $4,500. It still posted a positive quarterly return, but March’s single-month decline was about 17%, the worst since 1983.

Cryptocurrency: Bitcoin fell over 30% for the quarter, making it the worst performer among mainstream assets in Q1. However, it has rebounded from the low of about $62,800 and is now steady in the $66,000 to $68,000 range.

The market now only cares about one question: when April 6 arrives, will Trump really press the button?

April 6 is Trump’s latest deadline. If the Hormuz Strait remains closed by then, he will face a choice: strike Iran’s energy infrastructure or delay again. Both options carry market costs: the former could push oil prices above $130 and trigger a real recession; the latter would further erode Trump’s negotiation credibility, and the market will start to seriously price in a “long-term blockade” scenario.

No one knows which path will be chosen. What is certain is that the first quarter has already ended, and the cost of those 32 days is written into the candlestick charts of every asset class.