Market rally fizzles due to geopolitical uncertainty

What happened: The market rally lost momentum in late March due to geopolitical uncertainty, particularly the conflict in Iran. The S&P 500 and Nasdaq posted their worst quarterly performance since 2022, with the S&P 500 down around 5%. Oil prices soared due to the conflict, adding pressure to the economy. Despite a brief rally on hopes of a diplomatic resolution, stocks finished Monday's session with a softer tone, with the Nasdaq and S&P 500 down 0.3% and 0.2% respectively.

Market impact: Energy stocks initially benefited from rising oil prices, but broader markets suffered as investors reassessed geopolitical and energy risks. The conflict in Iran and its impact on oil prices pushed recession odds to nearly 50/50, according to economist Mark Zandi. The market's choppy performance in March led strategists to warn of a 'bumpy ride' ahead, with investors bracing for further volatility.

What to watch next: Investors will closely monitor geopolitical developments, particularly any progress or setbacks in the Iran conflict. Upcoming economic data releases, such as the March jobs report on April 7, will provide insights into the impact of rising oil prices on the economy. Additionally, earnings season starting in mid-April will offer a clearer picture of corporate health amidst the geopolitical headwinds.