A screen displays the Dow Jones Industrial Average and other trading numbers following the closing bell at the New York Stock Exchange (NYSE) in New York City, U.S., February 23, 2026. REUTERS/Brendan McDermid
Index Performance
U.S. broad-based indices finished the period in a sea of red for the fifth consecutive week. The Nasdaq declined 3.23%. The S&P 500 Total Return Index ticked down 2.10%, and the Dow Jones Industrial Index also moved lower, ending the period down 0.90%. The Russell 2000 showed a glimpse of green, ending the period with a marginal gain of 0.47%.
Broad-based fixed incomes indices also ended the period, painted in red. The FTSE Municipal Tax-Exempt Investment Grade Bond Index fell 0.69%, while the FTSE High Yield Total Return Index tumbled 0.55%. The FTSE U.S. Broad Investment Grade Bond Total Return Index dipped 0.12%.
Macro Viewpoint
The conflict in the Middle East is weighing heavily on U.S. equities. The Nasdaq has officially entered correction territory, falling more the 10% from its October high. The Russell 2000 has stumbled more than 7% this month alone and entered correction territory last week. The S&P 500 and Dow Jones are not too far behind. The selloff has been broad-based, with mega-cap technology names leading the decline and the Dow giving back nearly 470 points in a single session.
Pressure intensified despite U.S. President Donald Trump stating he will halt military action against energy infrastructure in Iran. European Central Bank (ECB) President Christine Lagarde cautioned that equity markets were too optimistic given the real economic shock unfolding in the region. Small-cap stocks, with their heavier exposure to cyclical sectors, are particularly vulnerable to rising oil prices and a slowing growth backdrop. Energy costs are feeding directly into the consumer; the national average price of gas climbed roughly a dollar over the past month and is approaching $4 per gallon for the first time since mid-2022. As investors position for the second quarter, oil prices remain elevated, growth expectations are softening, and risk assets are likely to remain under pressure, until there is a credible path toward de-escalation.
On the Yield Front
Yields were mixed following the news. The two-year Treasury yield dipped 7 basis points (bps), the five-year declined 2 bps, and the 10-year inched higher by 2 bps. On the other hand, the 30-year yield jumped more than 4 bps.
Fund Flows by Asset Type
U.S equities snapped a multi-week losing streak during the LSEG Lipper Fund Flows week ending March 25, 2026. Some investors shy away from volatile markets, but others seized the chance to enter highly volatile names at steep discounts.
U.S. Large-Cap Funds has been at the center of the selling pressure, posting outflows in nine of the past twelve weeks, including a single-weak peak of $36bn. That trend reversed sharply this week as the classification $45bn in net inflows; a clear signal that investors are inching back despite geopolitical headwinds and broader uncertainty. Internationally, momentum faded, U.S. Emerging Market Funds had an outflow of $1.5bn, U.S. Developed Global Market Funds shed $1bn, and U.S. Developed International Market Funds had modest inflows of $739m.
Within the Fixed Income universe, U.S. Municipal Bond Funds posted a net outflow of $544m, led by High Yield Municipal Debt ($556m) and General & Insured Municipal Debt Funds ($286m). Taxable Bond Funds reached the impressive Elite-12, extending their inflow steak to twelve consecutive weeks. U.S. Short/Intermediate Government & Treasury Funds and U.S. Short/Intermediate Investment Grade Debt Funds remained the favorites, pulling in $9bn and $2bn, respectively.
U.S. Commodities Funds continue to struggle, recording net outflows of $2.5bn. Precious Metals weighted heavily on the category, as gold also entered correction territory, trailing nearly 17% from its January record high.
U.S. Money Market Funds saw the sharpest reversal, with a staggering outflow of $57.9bn, the second-largest weekly outflow of the year. The drawdown suggests investors are actively redeploying cash and repositioning portfolios for the upcoming quarters.
U.S. Alternative Equity Funds had a small inflow of $214m, while U.S. Mixed Assets Funds recorded an outflow of $1.4bn.
