The S&P 500 in 2026: Five Weeks of Losses, One Big Question, and a Market Trying to Find Its Floor

S&P 500 futures opened almost 1% lower on Sunday night at 6:00 PM Eastern, but they completely reversed and turned green within hours. The speaker of Iran’s parliament referred to the US stock market as a “reverse indicator,” implying that investors should go long when the US “dumps” stocks. What came next was either the most bizarre piece of unsolicited trading advice in recent memory or an amazing coincidence. The index’s market capitalization increased by about $900 billion from its overnight lows by the following morning, following President Trump’s announcement that “great progress” was being made on peace negotiations with Iran. Less than twenty-four hours passed during the entire episode. Welcome to the March 2026 S&P 500, where markets are moved more quickly by geopolitical announcements than by earnings reports, and nobody is quite sure whether to laugh or consult their financial advisor.

The index ended Monday’s trading session at 6,343.72, down 0.39% for the fifth week in a row. The Dow gained 0.11% on the day, but since January’s peak of 7,002, the overall situation has been steadily declining. Analysts are closely monitoring the distance between that peak, which was reached on January 28, and the market’s closing price on Monday. It is currently 9.4% above that level. The S&P 500 has dropped by about 7% since the United States first attacked Iran in late February, losing over $1.7 trillion in market capitalization in just five sessions at one point. From its recent peak, the Dow has fallen by almost 4,000 points. With a decline of over 13% from its October high, the Nasdaq has formally entered correction territory.

There is a sense that the market is torn between two opposing narratives and hasn’t yet chosen which to believe when observing the daily price action. With Brent crude hitting $115 per barrel, Treasury yields at 4.356%, Federal Reserve Chair Jerome Powell admitting it’s too early to evaluate any policy response to rising energy prices, and an Iranian conflict with no clear near-term solution, the pessimistic case comes together rather easily. In the past, oil prices above $110 have been sufficient to squeeze corporate margins, slow consumer spending, and cause the kind of inflation repricing that pushes rate cuts farther into the future. The optimistic case, advanced most explicitly by Evercore ISI analyst Julian Emanuel, argues that the market is approaching something close to maximum fear — and that those moments, historically, tend to be worth buying rather than fleeing.

Because Emanuel’s thesis isn’t ambiguous cheerleading, it is specific and merits consideration. He anticipates that the S&P 500 will fall to about 6,150, which is about 3% below Monday’s close and would formally move the index into correction territory. On CNBC, he contends that level is more of an opening than a warning. His year-end goal of 7,750 indicates a 22% increase from current levels, mostly due to the earnings power of large-cap technology and AI-related companies, whose revenue streams are unaffected by changes in oil prices. He pointed out that going into April, the Nasdaq 100’s price-to-earnings ratio appears to be lower than the S&P as a whole, a difference not seen since the pandemic. That could indicate a more fundamental change in the market’s perception of technology, or it could be a valuation anomaly worth taking advantage of. Which interpretation is correct is still up for debate.

Emanuel’s comparison to the “tariff tantrum” of the previous year merits careful examination. The S&P 500 dropped 19% before rising in early 2025 when 145% tariffs on Chinese imports caused concurrent drops in stocks and the dollar. Investors who added at the lows were significantly rewarded by May, while those who sold at the panic bottom locked in losses. The mechanism Emanuel outlines—a “policy breakthrough” on Iran that sets off a coiled-spring rally akin to the tariff pivot—is conceivable but not assured. Geopolitical disputes end on their own schedule, and President Trump’s anticipated lifting of the ban on attacking Iranian energy infrastructure on April 6 could either hasten a resolution or significantly worsen the situation. Neither result is guaranteed. From the outside, a 7% year-to-date decline indicates that the market is pricing in uncertainty.

The longer view of the S&P 500’s current position is one statistic that frequently gets overlooked in the daily drama. The index has come a long way even after this year’s decline, as evidenced by the 52-week low of 4,835, which is about 24% below Monday’s close. Buy-and-hold investors continue to see strong five-year returns. The entire weight of American corporate earnings power is included in the index’s total market capitalization, which is still approximately $61 trillion. Just six months ago, tech stocks were trading at a 47% premium to the S&P 500 as a whole. Today, they are trading at about a 4% premium, which is their narrowest valuation gap since 2017. They may be on track to trade at a discount for the first time since that year. The main topic of discussion among serious market observers at the moment is whether that compression signifies a structural repricing of risk or a buying opportunity.

The S&P 500 is more than just a figure. It serves as a gauge for the collective confidence—or lack thereof—that millions of institutions and investors have in the short-term future of the US economy. That barometer is currently reading uncertain, vacillating between real concerns about inflation, energy prices, and a Fed that has fewer comfortable options than it did a year ago and cautious optimism about Iran ceasefire talks. Strategists at Morgan Stanley think the correction is almost over. By December, Emanuel at Evercore hopes to reach 7,750. As of Monday’s close, the index itself is just sitting at 6,343, waiting to see which story proves to be accurate.