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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 March 31st, 2026.
March was one of the most turbulent months for financial markets in recent memory. A confluence of geopolitical disruption, shifting monetary policy expectations, and unusual cross-asset behavior has left investors navigating unfamiliar terrain. The S&P 500 finished March down 5%, its worst month since 2022, capping a quarter in which all three major indexes posted meaningful losses. At its lowest point, the index sat roughly 9% below its late-January all-time high after five consecutive weekly declines. A sharp rally on the final trading day, sparked by reports that the Iranian President was open to ending the conflict, lifted the broad market nearly 3% and provided a jolt of relief, though it barely dented the monthly damage.
The war in Iran, now in its second month, continued to overshadow everything else. The effective closure of the Strait of Hormuz, through which roughly 20% of global oil supply normally flows, kept oil prices elevated and volatile. A coordinated release of 400 million barrels from global strategic reserves helped contain a further spike but could not resolve the underlying disruption. As a result, U.S. gasoline prices crossed $4 per gallon for the first time since 2022. Energy was the lone bright spot in an otherwise dismal market, with the S&P 500 Energy Index surging 39% for the quarter and outpacing every other sector by a historic margin.
The Federal Reserve held its benchmark rate steady at 3.5% to 3.75%, citing elevated uncertainty from the conflict1. Updated projections raised the 2026 inflation outlook to 2.7% and still penciled in one rate cut this year, but a growing number of officials now expect no reductions at all2. Chair Powell acknowledged that surging oil could weigh on growth but said it was too early to gauge the war’s full economic impact. The January Personal Consumption Expenditures (PCE) report reinforced that caution, with core PCE, which excludes food and energy, running at 3.1% year over year, well above the Fed’s 2% target3.
The bottom line: The path forward hinges on the conflict’s resolution. Investors will focus on the March Consumer Price Index (CPI) on April 10, the first release to capture a full month of the oil shock, and the next PCE report on April 9. Until energy markets stabilize, geopolitical risk and rate-cut expectations will continue to drive sentiment.
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 April 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.