March 9, 2026
Markets Tested as Iran Conflict Continues
Jeffrey Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
In our 2026 Outlook: The Policy Engine, we listed several risks to stocks that could prevent the S&P 500 from achieving our forecast for high-single-digit returns in 2026 (to a fair value target range of 7,300–7,400). One was narrow stock market leadership. Well, as mega cap technology leadership faded in recent months, the cyclicals and defensives picked up the slack. The traditional market-cap-weighted S&P 500 Index is down 1.5% year to date as of March 6, 2026, but the average stock in the index is up 3.2%.
Another risk we cited was a potential artificial intelligence (AI) bubble. Although scrutiny on AI and fears of business model disruption have increased, we wouldn’t call AI a bubble with NVIDIA (NVDA) shares trading at a price-to-earnings ratio (P/E) of 21.6 based on the consensus earnings estimate over the next four quarters (by no means is this a recommendation, but NVDA grew revenue more than 70% and nearly doubled its net income last quarter). Rising interest rates and midterm elections, both largely non-factors so far, were also on our 2026 risk list.
What about geopolitical risk? Yes, it was there, too. Last week reminded us why geopolitical threats should always be on lists of risks from Wall Street strategists. It’s just a matter of time before it comes around again. Our key message for investors dealing with these unnerving headlines and market volatility is simple. Be patient. Stay diversified. Maintain balanced portfolios that include some investments well-positioned for volatility. Look for opportunities on the other side. Those who ride out the ups and downs, in time, will be grateful they did.
2025 Market Outlook - LPL Financial
