👋 Good morning! The stock market tread water before dropping on Tuesday as oil prices rose. Investors remained concerned about a fragile situation in the Middle East that could easily escalate further as Iran denies negotiations are taking place and President Trump claims the country gave him a “present.”

Meanwhile, over 3,000 members of the 82nd Airborne Division are reportedly en route to the region.

The S&P 500 (^GSPC) fell 0.4%, the Dow (^DJI) 0.2%, and the Nasdaq (^IXIC) 0.8%.

And in the relatively rare instances where stocks have seen declines greater than 10% in a calendar year, one of three reasons has been the trigger.

The problem for investors right now is that all three are in play.

In a note published Tuesday morning, DataTrek Research co-founder Nick Colas flagged that since 1928, there have only been a dozen years in which the S&P 500 fell more than 10% in a calendar year.

“Eight were due to recessions that deflated lofty valuations,” Colas wrote. “Widespread military conflict was the proximate cause of three. Unexpected hawkish Fed policy explains the last one.”

Through Tuesday’s close, the S&P 500 is down 4% for the year, with Colas noting, “There is still time to avoid a double-digit loss in 2026, but the clock is ticking.”

Now, for those keeping score at home, the years in which the S&P 500 fell at least 10% from Jan. 1 through Dec. 31 were 1930, ‘31, ‘37, ‘41, ‘57, ‘66, ‘73, ‘74, 2001, ‘02, ‘08, and ‘22.

It’s also worth noting that there have been recessions — such as the downturn in 1991, the recession of 1981-82, and the COVID-induced recession in 2020 — that didn’t send stocks down 10% in a calendar year.

It’s also March 25. This time last year, we hadn’t had “Liberation Day” yet, private credit fears were few and far between, and software stocks hadn’t become the AI trade’s punching bag.

Moreover, almost no economist on Wall Street right now is talking about a recession. Even Nouriel Roubini, who has earned the nickname “Dr. Doom,” told us he’s “not anticipating a recession right now.”

Oil prices are elevated, but some economists think current prices just about reflect the current supply disruption from the war in the Middle East. And the Federal Reserve seems unlikely to raise interest rates this year, even as rate cut hopes were soundly dashed by Jay Powell last week.

While Colas isn’t making anything like a call the stock market will end this year down 10%, his note is one that stood out because as the mood shifts on Wall Street, knowing what has and hasn’t ultimately driven sustained periods of poor performance needs to be top of mind.

Even if that knowledge is just for safekeeping.

War is not good for business, according to S&P Global. The firm’s initial read on business activity in the US showed that in March its combined gauge of manufacturing and services output hit an 11-month low.

We’d note, however, that this report showed growth continuing to expand, just at a slower rate.

“Companies are reporting a hit to demand from the additional uncertainty and cost of living impact generated by the conflict,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

“Travel, transport and tourism related issues are compounded by financial market jitters and affordability constraints, notably including concern over the impact of higher interest rates, surging energy prices and supply chain delays.”

Not mentioned explicitly in the report? AI.

Back in the Dark Ages of the AI race (2021 or thereabouts), the industry’s biggest goal – and fear – was developing an AI model that achieved AGI, or artificial general intelligence. In essence, AGI is when an AI model thinks like a human, or better.

Defining what counts as AGI is also not a settled matter. Defined a certain way, however, we may already be there.

On the Lex Fridman podcast, Nvidia CEO Jensen Huang was asked about AGI, which Fridman defined as “an AI system that’s able to essentially do your job. […] start, grow, and run a successful technology company that’s worth […] more than a billion dollars.”

“I think it’s now,” Huang said. “I think we’ve achieved AGI.”

Who else shares this vision of AGI isn’t clear. What exactly AGI is in the eyes of the industry also isn’t totally clear.

Back in the fall, for instance, OpenAI and Microsoft reshaped their financial arrangement, adding language that will essentially end their current arrangement once OpenAI achieves AGI. Verifying that claim will be an “independent expert panel.”

What is clear, we think, is that lawyers are going to spend a lot of time on this issue in the not-so-distant future.

Meaning white-collar employees will live to fight another day.

Read more.

“Well that’s illegal, but that doesn’t stop him.”

— United CEO Scott Kirby, on Elon Musk’s proposal to pay TSA agents

Private credit headlines continue in the background of…. all this (*waves hands*).

On Monday, an Apollo business development corporation — or a publicly traded private credit vehicle aimed at individual investors — said it would pay out redemptions equal to 5% of the fund.

(Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)

In other words, the firm said it would stick to its prospectus and in so doing not meet a little more than half of the redemption requests it received from investors. A similar BDC sponsored by Ares Management said it would do the same.

After initially falling sharply on Tuesday, shares of both companies actually rallied through the day somewhat, with Apollo closing in the green.

On the one hand, receiving an influx of redemptions for your private credit fund isn’t good. On the other hand, this influx of redemptions is what your investors are doing, not what the fund sponsor and investor of this capital is doing.

One of the key selling points of the private investment universe is that less liquidity allows investors to make better bets and their investors, in turn, to realize better returns with less volatility.

And shares of both Apollo and Ares recouping some/all of the losses on Tuesday suggest investors see the firms’ decisions to redeem the fund-defined amount of capital as a sign of confidence.

We got some really interesting responses from our question about whether you’d allow AI to make investment selections. For the most part, people were bullish about using the technology for research, while expressing some reservations and the need to check any recommendations.

Here’s a sampling. We really do have readers of the highest quality; thank you all who wrote in.

• “Do investors buy the top picks recommended by brokerage firms? Generally no. Because they know that favored clients got the information earlier and the best return has already been made. To think that AI won’t be manipulated and will actually level the playing field is naive.” — J.F.

• “I don’t see AI picking investments anytime soon, just as AI cannot pick the next hit song or movie, until it can understand human emotion.” — S.W.

• “Using AI to help you make decisions seems to be the best use case right now. Using AI to make decisions for you will not end well …. at least not yet. All you need then is a period of beating the benchmark and the herd will come, AUM will rise, and we’ll start to hear people brag about using “Strategic AI for Investment Leverage (SAIL)” at your next dinner party. P.S. I used AI to come up with the acronym.” — C.D.

• “I really do think there’s a future for AI in this area. After all isn’t the broker simply crunching data to make his/her decision on a recommendation?” — J.K.

• “AI is a tool. Think socket wrenches, socket security layers for IP, and Wikipedia. And for screwing the pooch, nothing, but nothing, beats human intuition.” — B.D.

• “I would not ask for stock suggestions but I will discuss my views on assets I’m considering and will read the pluses and minuses before I make the final decision on any investment. “ — S.D.

• “I love having AI options! Do I trust it to manage my account? Heck no! But I am totally onboard with making use of it as another wrench in my toolbox.” — C

We’ll do more of these soon; we love hearing from you.

• Economic data: MBA mortgage applications, week ended Mar. 20 (-10.9% previously); Import price index, month-on-month, February (+0.2% previously); Import price index, year-on-year, February (-0.1% previously); Export price index, month-on-month, February (+0.6% previously); Export price index, year-on-year, February (+2.6% previously)

• Earnings calendar: PDD Holdings (PDD), Cintas Corporation (CTAS), Paychex (PAYX), JBS N.V. (JBS), Chewy (CHWY), Jefferies Financial Group (JEF)

• Economic data: Initial jobless claims, week ended Mar. 21 (205,000 previously); Continuing claims, week ended Mar. 14 (1.857 million previously); Kansas City Fed manufacturing activity, March (5 previously)

• Earnings calendar: Commercial Metals Company (CMC), Argan, Inc. (AGX), BRP (DOO), Pony AI (PONY), Seabridge Gold (SA), Braskem (BAK), Kodiak Sciences (KOD), Newsmax (NMAX)

• Economic data: University of Michigan sentiment, March final reading (55.5 previously); U. Mich. current conditions, March final reading (57.8 previously); U. Mich. expectations, March final reading (541. previously); U. Mich. 1-year inflation, March final reading (+3.4% expected previously); U. Mich. 5-10 year inflation, March final reading (+3.2% expected previously); Kansas City Fed services activity, March (6 previously)

• Earnings calendar: Carnival Corporation (CCL), Legence Corp. (LGN), Perpetua Resources Corp. (PPTA), TMC the metals company (TMC), Standard Lithium (SLI), Nano Labs (NA)

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.

Ethan Wolff-Mann is a Senior Editor at Yahoo Finance, running newsletters. Follow him on X @ewolffmann.

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