By William Power
To some stock investors, this is the "could have been worse" market.
In the first quarter, stocks and bonds were both battered, as the U.S. war with Iran continued and oil prices jumped. But a stock rally on the last day of the quarter -- helped by indications that there could be an end to the conflict and the ramifications before long, an optimistic take that quickly became known as the "Hormuz Rally" -- made the final numbers a bit easier to digest.
The average U.S.-stock mutual fund or exchange-traded fund posted a total return of minus 2.8% for the first quarter, according to statistics from LSEG. That decline was entirely caused by the 5.6% drop for March alone. (See Mutual-Fund Yardsticks table.)
International-stock funds, which have been outpacing their U.S. counterparts after years of trailing, posted a total return of minus 0.3% in the quarter, after being hit even harder in March than the U.S. funds, with a minus 8.8% performance.
Still, stocks rallied as April began, and the April 3 jobs report -- which easily surpassed expectations -- was encouraging to many investors. The report "shows the economy still has a pulse -- but it's not racing," said Gina Bolvin, president of Bolvin Wealth Management Group.
The employment report was a "classic 'could've been worse' jobs report," Bolvin added, and the markets breathed a sigh of relief. "But the real story is under the surface: Corporate America is still in solid shape. Earnings expectations are moving higher even as valuations cool, which is a healthy reset."
Bond funds fell in March but are largely unchanged, on average, so far this year. Funds focused on investment-grade debt (the most common type of fixed-income fund) posted a total return of minus 1.9% for March and are down 0.1% so far this year, according to the LSEG data.
Fund flows
Investors in the first quarter continued to send their money to international stocks, and to the comfort of bonds.
They sent a net $105.1 billion to international-stock mutual funds and ETFs -- though the positive flow was lighter in March than earlier in the year -- and $242.4 billion to bond funds, based on Investment Company Institute estimates. In contrast, investors withdrew an estimated $23.7 billion from U.S.-stock funds in the quarter.
That's still relatively encouraging for U.S. stocks. The outflow pales in comparison to the full-year 2025, when investors withdrew a net $391.6 billion from U.S.-stock funds -- much of it occurring during July when there were intense concerns over tariffs, a market worry that abated as the rest of the year wore on.
FINANCIAL FLASHBACK
A look back at Wall Street Journal headlines from this month in history
-- 35 YEARS AGO: The Dow's 3000 Milestone
When President Ronald Reagan took office in 1981, America's economy and stock market began to bounce back. By the summer of 1990, some investors were concerned that the long rally and economic growth were coming to an end. During that time, the Dow Jones Industrial Average bashed through the 3000 level on July 13 and July 16, but only intraday. Shortly after that, in October, the market retreated to a low of 2365.10 on the Dow.
By April 17, 1991, with the first Gulf War in the rearview mirror, Wall Street was betting on an economic recovery. And that day, the Dow reached the 3000 milestone -- closing at 3004.46. The six-month 27% rally was dominated by growth stocks and, to a smaller level, cyclical stocks.
"What you are seeing here is a market moving on the expectation of economic recovery and being buoyed by lower interest rates," Edward Kershner, a market strategist at PaineWebber Group, told The Wall Street Journal.
It wasn't just the Dow that surged. The Journal reported that the S&P 500, the Nasdaq Composite Index and "just about every other market index is setting records." And the paper also said the impressive rally had "more of the hallmarks of a classic bull market."
Looking at a longer-term perspective, the rally from 2000 to 3000 took approximately four years. And it would take around another four to reach 4000, which would quickly morph into the dot-com bubble.
-- 30 YEARS AGO: Apple and Microsoft Share a Few Brews: Once-Bitter Rivals Are Seeking to Mend Relations
-- 70 YEARS AGO: Bonds vs. Stocks: Some Investors Earn More for Their Money by Switching to Bonds
--By Simon Constable
(END) Dow Jones Newswires
April 10, 2026 14:49 ET (18:49 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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