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Chapter 1: What were the key events that defined Q1 of 2026?
Welcome back to the Rundown for another weekend deep dive. Today, we are doing something a little different. We're looking back at Q1 and doing a full market recap. Q1 of 2026 might go down as one of the wildest first quarters in recent memories. Stocks had their worst quarter in four years.
Tech and Magnificent Seven stocks got crushed, not to mention a war broke out in the Middle East, sending oil prices surging. So in today's episode, we're gonna break down what happened in Q1, highlight some of the biggest winners and losers, and talk about what all this might mean for the rest of 2026. We got a great one for you today. Let's dive in.
Before we get into the winners and losers, let's first start with the big picture because Q1 was really a tale of two halves. January started off pretty decent. The S&P 500 actually hit all-time highs a few times to start the year, building off a strong 2025 where the index was up over 16%.
The general consensus on Wall Street was that 2026 would be another solid year for stocks driven by AI spending and strong earnings. Well, then by February, things started to unravel. First, there was growing anxiety around software companies being disrupted by AI.
In late January, Anthropic launched Cloud Code, which was a tool designed to automate the kind of work that people normally use software subscriptions for. I'm talking things like data analysis, legal research, and CRM workflows. And then by early February, Anthropic took over the market narrative. They started dropping industry-specific plugins nearly every week.
One week, it was insurance companies. The next week, it was logistics and wealth management and marketing. And every time one of these plugins would come out, stocks in that industry would tank. Analysts called this the SaaSpocalypse. We did a whole deep dive on it, and we're gonna talk more about that in a bit.
So yeah, the market was feeling a bit jittery about AI, and then things took another dramatic turn on February 28th. That's when U.S. and Israeli forces launched military operations against Iran, and then things escalated quickly from there. Iran responded with drone and missile strikes on cities and energy infrastructure across the Gulf region.
They also effectively shut down the Strait of Hormuz, which has about 20% of the world's oil supply pass through it every single day. So millions of barrels of oil could no longer move through the Strait of Hormuz, causing oil prices to go vertical. Brent crude was up 57% in March alone, hitting highs of $120 a barrel. For context, oil was trading around $70 a barrel before the conflict started.
In all of that sense, shockwaves through the entire market because higher oil prices means higher gas prices, which means higher inflation, which means the Fed couldn't cut interest rates anymore. So that dragged down the market. And by March 31st, the S&P 500 was down 4.6% for the year, while the NASDAQ dropped around 7%.
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Chapter 2: How did geopolitical tensions impact the stock market in Q1?
Here's another interesting stat. About one in four stocks in the S&P went up more than 10% for Q1. So this wasn't a broad market meltdown. A lot of stocks are actually hitting all time highs. So let's talk about a few of the winners from Q1. All right, let's get into some of the winners from Q1. And we have to start with the energy sector as a whole.
The energy sector was up 39% in Q1, which is the best quarter on record for the sector. And the reason here is pretty straightforward, oil prices. When Iran shut down the Strait of Hormuz, trapping 20% of the world's oil, oil prices went from $70 to nearly $120 a barrel. And when oil prices go up, energy companies make more money.
Exxon and Chevron, the two biggest names in energy, were both up over 30% in the first quarter, hitting all-time highs. Other names like Occidental Petroleum, which is one of Warren Buffett's favorite stocks, was up nearly 60%, and some of the smaller exploration companies did even better.
Now, I was actually pretty bullish on the energy sector as well, heading into 2026, but I was basing that all from all the demand that would come from AI data centers. I didn't expect the Strait of Hormuz to be shut down for a month. Now, the big thing to watch going forward here is obviously what happens with Iran and the war.
If there's a resolution soon, the Strait of Hormuz reopens, well, then oil prices could drop 20 to 30% pretty quickly, and energy stocks would come back down. So the trade here is essentially a bet on how long this conflict lasts. It's kind of like a hedge on the overall portfolio.
If this war drags on through the rest of the summer, then some analysts think that oil prices could go even higher, potentially $150 a barrel. But if there's a de-escalation or a ceasefire soon, then you could see prices drop pretty quick. So yeah, the energy sector was a big winner in Q1, but moving forward, it carries a lot of geopolitical risks.
Now let's talk about the best performing stock in the S&P 500 for Q1, which was Sandis. Sandis stock has surged 148% in the first three months of the year. And don't forget, Sandis was also the best performing stock in the S&P 500 for all of 2025 as well. So that momentum from last year has carried over into this year. This is an AI-related surge.
SanDisk makes NAND flash memory, which is the backbone of modern digital storage. Every photo on your iPhone, every document on your laptop lives on NAND memory. And right now there's a massive shortage of NAND memory.
Demand is surging right now, especially from AI data centers that need tons of storage, while supply has been constrained because memory manufacturers have shifted their focus from NAND memory to high bandwidth memory, which is needed for AI chips, and it's a more profitable business. So there's an insane demand for NAND memory and a limited supply, which is sending prices through the roof.
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