U.S. and Canadian Markets
Stocks fell in the first quarter amid concerns that artificial intelligence (AI) could disrupt certain industries and geopolitical issues that unsettled investors.
The Dow Jones Industrial Average lost 3.58 percent while the Standard & Poor’s 500 Index fell 4.63 percent. The Nasdaq Composite declined 7.11 percent. By contrast, the S&P/TSX Composite gained 3.33 percent.1,2
“Never risk what you have and need for what we don't have and don't need.” - Warren Buffett
A Choppy January
Stocks trended higher in January as upbeat economic data offset geopolitical tensions. Investors liked what they heard about December’s inflation rate, which was followed by a solid retail sales report. However, the evolving geopolitical situations and mixed results from money center banks put some pressure on stock prices.3,4
The S&P 500 traded above the 7,000 level for the first time during the month.5
February’s Focus on AI
Stock prices struggled in February amid investor fears that AI would disrupt a wide swath of industries. Traders grew concerned that AI could reset certain business models, prompting some to reassess valuations in affected sectors.6
As the month drew to a close, the focus shifted once again to geopolitical events. While the Dow managed a modest gain in February, tech-led declines hurt the S&P 500 and Nasdaq.7
A Volatile March Finishes Strong
Volatility picked up in March as investors focused on the day-to-day updates from the Middle East. But stocks closed the month on a high note. A powerful last-day-of-the-month rally clawed back some losses for the quarter as fresh news offered renewed hope for an end to the conflict.8
U.S. Sectors
Despite the disappointing Q1, an in-depth review shows six of the 11 S&P 500 Index sectors finished in the green.
Energy (+37.91 percent) was the clear standout. Materials (+10.68 percent) were a distant second but still managed a double-digit gain. Utilities (+8.26 percent), Consumer Staples (+6.12 percent), and Industrials (+4.55 percent) all posted solid gains, while Real Estate (+1.87 percent) joined the winners.9
Technology (-7.57 percent) was under steady pressure during Q1. Consumer Discretionary (-8.55 percent) and Financials (-9.40 percent) were also under pressure, while Health Care (-4.90 percent) and Communication Services (-5.53 percent) trended lower.9
Canada Recap
Canada’s S&P/TSX Composite Index carried over its 2025 momentum into the first quarter, setting multiple record highs early in January. Mining and materials groups were among the best performers, while financial names also contributed to the rally.10
In February, Canadian markets benefited from global uncertainty. Investors sought safe-haven assets, which led to continued strength in the materials sector.11
The S&P/TSX Composite was under pressure in March amid uncertainty over the Middle East conflict, which disrupted global oil supplies. But a last-day rally tempered losses for the month.12
What Investors May Be Talking About in April
In the month ahead, be prepared for more volatility as investors continue to sort through updates on the Middle East and economic reports.
To provide some perspective, between 1980 and 2025, which is about 2,400 weeks, there were only 40 weeks in which the S&P 500 dropped 5 percent or more.13
During the other weeks, the S&P either held steady, gained ground, or dropped less than 5 percent. Past performance is no guarantee of future results.13
Keep in mind that no one can consistently predict when declines will happen, and it’s nearly impossible to tell the difference between a slight dip and a prolonged correction in the midst of a decline.
But pullbacks are an inevitable part of investing—even though they are the last thing most investors want to experience.
World Markets
The MSCI EAFE Index slid 1.87 percent in the first quarter.14
In Europe, the United Kingdom was a standout, picking up 2.47 percent during Q1. Meanwhile, Germany (-7.39 percent), France (-4.08 percent), Spain (-1.49 percent), and Italy (-1.41 percent) were under pressure for the three-month period.14
Other global markets were mixed for the quarter. China’s Hang Seng index lost 3.29 percent while Australia's ASX 200 fell 2.67 percent. Japan’s Nikkei rose 1.32 percent for the three months ended March 31, 2026.14
Indicators
Gross Domestic Product (GDP)
The U.S. economy grew 0.7 percent on an annualized basis in Q4, based on the Commerce Department’s first revision of GDP. Economists had initially expected 2.5 percent annualized GDP growth in Q4. For the full year, GDP grew 2.1 percent, down from 2.8 percent in 2024. The slowing pace of economic growth reflected a drop in consumer spending, business investment, federal spending, and international trade.15
The Canadian economy expanded at an estimated 0.2 percent rate in February, ahead of expectations. February would mark the third straight month of economic expansion.16
Employment
U.S. employers shed 92,000 jobs in February. Economists expected a net addition of 50,000 jobs. Unemployment rose slightly to 4.4 percent in February from January’s 4.3 percent pace. Wage growth rose 0.4 percent month over month and 3.8 percent year over year—ahead of expectations and faster than January’s annualized 3.7 percent rise.17,18
Canadian employers shed a net 83,900 jobs in February. Economists expected a net job gain of 10,000. Canada’s unemployment rate rose to 6.7 percent from 6.5 percent in January.19
Retail Sales
Consumer spending rose 0.6 percent in February over the prior month—slightly better than economists expected. February’s rise was mainly due to strong sales of autos, clothing, and personal care. Year over year, sales increased 3.7 percent in February and 3.2 percent in January—progressive increases from December’s 2.4 percent annual rise.20,21
Industrial Production
Industrial output rose 0.2 percent in February over the prior month, slightly better than an expected 0.1 percent rise but sliding from January’s 0.7 percent increase. Manufacturing output (+0.2 percent), which comprises 78 percent of total production, drove much of the gain.22
Housing
Housing starts rose 7.2 percent in January over the prior month (the latest available federal data), the third straight month of a pickup in pace. The multifamily segment rose an eye-catching 29.1 percent month over month. By contrast, single-family starts fell 2.8 percent. Year over year, overall starts rose 9.5 percent in January.23
Sales of existing homes rose 1.7 percent in February over the prior month. Economists expected a 1.3 percent decline. Mortgage rates dipped below a key level, which may have brought sellers off the sidelines. The median existing home sales price was $398,000, 0.3 percent higher than a year ago. The supply of unsold homes rose 2.4 percent month over month to 3.8 months of supply at the current sales rate.24,25
Sales of newly built homes fell 17.6 percent in January from the prior month, a steeper decline than expected (the latest available federal data). Regionally, sales in the Northeast (-44.0 percent) and the Midwest (-33.9 percent) were hit hard by winter weather. Sales also slowed in the West (-21.6 percent) and the South (-8.1 percent). The median new home sales price fell 6.8 percent from a year prior to $400,500. The inventory of homes for sale rose to 9.7 months of supply in January at the latest pace of sales, from 8 months in December.26,27
Consumer Price Index (CPI)
Consumer prices in the U.S. rose 0.3 percent in February from the prior month, which was in line with expectations. Core inflation, which excludes volatile food and energy prices, rose 0.2 percent month over month and 2.5 percent year over year. Both were in line with expectations.28,29
Consumer prices in Canada rose 1.8 percent in February. It marked the first time in six months that Canada’s CPI dropped below the central bank’s 2 percent target.30
Durable Goods Orders
Orders of manufactured goods designed to last three years or longer were flat in January (the latest available federal data), missing expectations of a 1.1 percent rise. Excluding transportation, which includes motor vehicles and parts, durable goods orders rose 0.4 percent.31
The Federal Reserve
The Federal Open Market Committee (FOMC) voted 11-1 to keep interest rates steady at its March 18 meeting. The Federal Funds Rate remains at a target range of 3.5 to 3.75 percent.
It marks the second consecutive Fed meeting at which the FOMC held rates steady.32
In late March, Fed Chair Powell said inflation expectations "appear to be well anchored beyond the short term," despite concerns about the Middle East conflict's potential inflationary effects.33
The Federal Reserve next meets April 28–29.
By the Numbers: Outdoor Recreation
U.S. residents who enjoyed an outdoor activity in 2024: 181.1 million34
The share of U.S. residents aged 6 and older who had fun outside in 2024: 58.6%35
U.S. outdoor retail sales in 2024: $28 billion36
The U.S. outdoor recreation economy's contribution to GDP in 2023: $639.5 billion37
U.S. jobs supported by outdoor recreation: 5 million38
Operating revenue of Canadian fitness and recreational sports centres in 2024: $5.8 billion39
Operating revenue of Canada's amusement and recreation subsector in 2024: $16.9 billion40
Canada's outdoor recreation economy's annual contribution: $101.6 billion41
Full-time jobs directly supported by outdoor recreation across Canada: 1,096,84942
