Eight Observations on the Current Market – BVB Group’s Take
Every Friday we share our friend Ross Mayfield’s Five for Friday, a quick hit piece about Five highlights during the week. While we know you enjoy seeing Baird’s internal experts, many of you also want to know our take. Many of our stances align with Baird’s, however since we know the more personal details of our clients, we might have a personal take that aligns directly with our clients.
- The monthly stretch of performance of the S&P 500 has been impressive. Below is a chart that shows the market has been up for the last 8 of the last 13 months – with a 9-month consecutive flat or positive trend. We highlight this because while large corrections (2008-2009) are easily remembered, the fact we were down 6% in March of 2025 and again in April of 2025 can be forgotten, because those portfolios have recovered.
https://finance.yahoo.com/quote/%5EGSPC/history/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAKHjXB3Qg4YSKIisQrBqjXUEsAgEmjztGhtYNpDQJP7ddBDhO31-HBTouN18NpZJkQnCiZvg1RRD_GUBbO1c40IRcPKx5-Yr6PdtaKqVhrK81hbuy0Jm4fnmPxvwAi6giRMrN4WCzjjebAt2rYBFEfq_QYmCYwQR7XUArWu80s7H
- The never-ending news cycle about the market volatility likes to highlight the “real numbers” of the market declines. The bigger the numerical drop the bigger the headline. Ross highlighted this in a recent Five for Friday where a 1% drop in the Dow Jones 10 years ago was 177 points. (The Dow was at 17,700 in April of 2016), vs now a 1% drop is 457 points. In relative terms, the impact is the same, but marketing is very different and can easily create fear and anxiety.
- Currently the intra-year draw down on the S&P 500 this year is about 6.45% from the high market over the last 12 months. Below is a chart that shows the intra-year downs since 2006. The average intra-year decline is -15.36%. Hypothetically if you check your account statements every day and see your “high number” there is a chance you will see that drop by 15.36% during an average market year.
- Diversification Helps - In our managed portfolios it has helped buffer the full impact of the market, which has been a surprise to most of our clients when they call to see how “everything is going with the markets and their accounts”. While the S&P 500 is down 3.22% YTD as of March 20th 2026, the Russell 2000 (Small Caps) is up 0.75% YTD, Emerging Markets are up 5.44%, EAFE (International) is down 0.21% and the US Aggregate Bond Index is up 0.12%.
- Sadly, war and geopolitical turmoil are not abnormal occurrences during human history. This does however provide us with a framework of how markets react and the impact on wars and geopolitical events. The chart below shows the number of major global conflicts where the market moved higher. We view geopolitical events as shorter term impacts of the market where once they are resolved or shift out of the near-term spotlight (think Russia/Ukraine) the market refocuses on earnings, jobs, and fundaments.
- Heading into the year, the general expectation was that the Federal Reserve would likely cut interest rates in 2026 leading towards a tailwind for markets. However, persistent inflation and the recent concern with oil prices rising due to the War in Iran has caused a shift in thinking. Currently there is a 37% chance, per the Federal Reserve Bank of Atlanta, that there might be a 0.25% Fed Rate increase. The dramatic shift in Fed expectation can prove to be a headwind if rates do rise.
- Profits have remained strong – despite some of the tough news and volatile markets, underneath that noise, S&P 500 companies posted a very strong 4Q2025 earnings. Per FactSet – 73% of S&P 500 companies exceeded earnings per share expectations, growth in earnings was at 14% and a higher-than-average number of companies issued positive guidance for Q4.
https://insight.factset.com/earnings-insight-infographic-q4-2025-by-the-numbers
- We consistently hear the headlines of layoffs, job cuts and weaking job market. In this market, initial jobless claims, which track those who file for unemployment, have remained low and consistent since 2022. It’s even lower than April of 2025. While it’s impossible to determine if this trend continues, it still shows there is a reasonably strong job market, which supports consumer spending.
*The information offered is provided to you for informational purposes only. Past performance is not indicative of future results and diversification does not ensure a profit or protected against loss. All investments carry some level of risk, including loss of principal. An investment cannot be made directly in an index. Robert W. Baird & Co. Incorporated.