Financial matters
- S&P 500 financials down 10% this year
- Private-credit risks to sector exaggerated?
- A look at gold—and the “other gold”
While Monday provided at least a temporary respite in the US stock market’s recent pullback, the S&P 500 (SPX) was still in negative territory for 2026—and one sector remained its weakest component, by a fairly wide margin.
Roughly halfway through the trading day, financials were down roughly 10% this year—the only sector with a double-digit percentage loss:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
As Morgan Stanley Wealth Management strategists noted on Monday, “Markets continue to be buffeted by controversies, with financials seemingly in the crosshairs of them all.”1
Concerns about risk in the private credit market have been one of the most conspicuous weights around the financial sector’s neck. However, the strategists describe its exposure to this risk as “manageable and nonsystemic.” And with regulatory catalysts and excess capital deployment poised to offset private credit exposure, they argue US financials may be among the best places to search for “fear-driven valuation anomalies” in the market.
Gold may glitter, but the franc shines: Gold opened trading this week to the downside, extending the relative weakness it has displayed since the US and Israel launched their attacks on Iran at the end of February. Since rallying to a roughly one-month high on March 2—the first trading day after the offensive started—April gold futures (GCJ6) had declined roughly 6% as of Monday:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
While this behavior may appear to contradict gold’s traditional “safe-haven” role during times of economic or geopolitical stress, a few factors may be at work. In addition to the possibility that the record-setting gold rally was experiencing a certain measure of exhaustion, the uncertainty surrounding recent events—specifically, the potential for high oil prices to reheat inflation—has likely decreased the odds of sooner-rather-than-later Fed rate cuts. And as Morgan Stanley & Co. analysts noted shortly before the conflict began, gold “gains in shocks when real rates are falling.”2
The report, which compared the relative performance of different "safe-haven" assets, concluded that the Swiss franc (especially relative to the Euro) may be the “most-proven” in terms of its performance across different types of shocks and its consistency of positive performance.
More recently, Morgan Stanley & Co. gold analysts noted that traders and investors selling their gold holdings as a source of liquidity has also contributed to the recent decline. They acknowledge that history suggests the yellow metal can rebound quickly after shocks, but add that signs of more-persistent inflation (that results in rate hikes) could make the bullish gold case challenging. While they continue to see upside, they say “two-way risks are rising.”3
Market Mover Update: While events in the Middle East and their impact on oil prices will likely continue to dictate the stock market’s near-term-term path, Monday’s rally appeared to support the reversal signals sent by the Cboe Volatility Index (VIX) late last week.
But it was no coincidence that oil prices eased yesterday. April WTI crude oil futures (CLJ6) rallied above $102 in the Sunday-Monday overnight session, but closed the day down more than 5% at $93.42.
Today’s numbers include (all times ET): Pending Home Sales (10 a.m.).
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1 CNBC. The GIC Weekly: Peak Private Credit Pain. 3/17/26.
2 MorganStanley.com. Franc-ly, My Dear: Buy CHF as the Standout Safe Haven. 2/23/26.
3 MorganStanley.com. Scenarios for Gold. 3/16/26.