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Market Commentary and Trade Rationale
At BlueStem Wealth Partners it is important to us that you are well informed about how we are managing your portfolio. The written commentary below is for the time period ending February 28th, 2026.
U.S. equities spent much of the past two weeks caught between competing forces before a dramatic escalation in the Middle East reshaped the landscape entirely. The S&P 500 traded in a narrow range around the 6,900 level for most of the period, weighed down by sticky inflation data and lingering concerns about AI-driven disruption in the software sector. That uneasy calm shattered on February 28, when coordinated U.S. and Israeli strikes on Iran killed Supreme Leader Ali Khamenei and sent shockwaves through global markets. Brent crude oil prices spiked, and gold jumped to nearly $5,400 per ounce as markets began pricing in the geopolitical risk.
The geopolitical shock compounded what had already been a turbulent stretch. Software stocks continued their steep repricing as fears grew that agentic AI tools could structurally erode traditional SaaS business models, a selloff Wall Street has dubbed the “SaaSpocalypse.” Nvidia’s fiscal fourth-quarter earnings offered a counterpoint, with revenue of $68.1 billion topping expectations. But even that beat failed to lift broader sentiment, as investors weighed the widening divide between AI infrastructure winners and sectors facing disruption. Brent crude closed around $72/barrel on Friday before the strikes, already up roughly 19% year to date1. Analysts project prices could spike by $10 to $20, particularly if Iran follows through on threats to close the Strait of Hormuz, a chokepoint for roughly 20% of global oil supply2,3.
On the economic front, the January Producer Price Index (PPI) surprised to the upside, rising 0.5% versus the 0.3% forecast4. Core PPI, which excludes food and energy, jumped 0.8%, well above consensus4. The data raised concerns ahead of the January Personal Consumption Expenditures (PCE) report, due March 13, as several PPI components feed directly into the Fed’s preferred inflation gauge. Those inflation worries now take on added urgency given the potential for an oil-driven price shock. The Supreme Court on February 20 struck down tariffs imposed under IEEPA by a 6-3 vote, though the administration pivoted to alternative legal authorities, leaving trade policy uncertain.
The bottom line: The weeks ahead will be defined by the trajectory of the Iran conflict. Duration and scope of any disruption to the Strait of Hormuz shipping lanes will determine whether the oil spike is a brief scare or a sustained supply shock with broader inflationary consequences. The January PCE report and the Fed’s March 17–18 meeting remains critical, but the calculus has shifted: a geopolitical energy shock layered on top of already sticky inflation narrows the Fed’s room to maneuver. Volatility is likely to remain elevated as markets digest a fundamentally altered risk environment.
Recent Trade Rationale: If you would like to see a high-level recap of recent changes to the model portfolios, please click on the link to read the March 2026 Trade Rationale. As a reminder, we utilize quantitative techniques to manage the models. Level Elements are designed to manage your model’s equity and fixed income exposure over time. This changes as fundamental, quantitative, and economic data changes. Style Elements are designed to manage what is in those equity and fixed income exposures.
All opinions expressed in this commentary are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable; however, BlueStem Wealth Partners cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This commentary is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through BlueStem Wealth Partners are only offered where BlueStem Wealth Partners and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place. The material provided is for informational purposes only and is not meant to be a solicitation or recommendation to buy/sell any security. BlueStem Wealth Partners is an investment advisory firm registered with the Securities and Exchange Commission (“SEC”). SEC registration does not imply a certain level of skill and or expertise.