Markets struggled to move higher on the week despite a potential diplomatic off-ramp to the Middle East conflict. Negotiations remain ongoing but could help ease recent signs of inflationary pressures from higher energy prices and stabilize falling consumer sentiment. Consumers and investors are still betting that the economic shock will be limited and temporary rather than a sustained hit to economic growth.
Economic Highlights:
- U.S. business activity slowed to an 11-month low in March as the war in the Middle East raised prices for energy and other inputs. The S&P Global Flash US PMI slipped to 51.4 from 51.9 in February. Numbers above 50 indicate expansion while those below signal contraction. Inflation was top of mind as businesses began to pass on higher costs to consumers at rates not seen since August 2022.
- Rising inflationary pressures and economic uncertainty pushed the University of Michigan Consumer Sentiment Index to its lowest level since December 2025. The Index of Consumer Sentiment fell to 53.3 from 56.6 in February. The drop was broad-based with declines seen across age and political party. Sentiment for middle income and higher income households in particular took a hit as both were buffeted by rising gas prices and volatile financial markets in the wake of the Iran conflict.
U.S. Markets Poised for Rebound on Potential Iran Off-Ramp
Markets struggled to find their footing for the fifth week in a row despite Washington and Tehran seemingly moving to de-escalate tensions and bring an end to the war. With the Middle East conflict now entering its fifth week, the Trump administration and the Iranian regime are in the initial stages of negotiations with both parties extending ceasefire proposals. Late Thursday, Washington offered an additional olive branch as it extended a pause in attacking Iran’s energy facilities by 10 days as a goodwill offering, following the Iranian’s having allowed ten tankers to pass through the Strait of Hormuz. Following the move, Trump in a Truth Social post reiterated “talks are ongoing.” However, the move failed to lift market sentiment on Friday as Brent Crude, the international benchmark, moved above $110 a barrel after new incidents in the Strait of Hormuz exacerbated investors’ energy supply concerns. Consequently, the Dow Jones Industrial Average briefly fell into correction, having declined 10% since its record set in October. With Middle East tensions high, economic data showed investors and consumers remain concerned over the recent price shock. Businesses are beginning to pass on higher costs to consumers as seen in the S&P Global Flash US PMI report. Meanwhile, consumer sentiment moved into a lower gear in March as higher energy prices hit consumers and the negative wealth effect weighed on investors.
With first quarter trading wrapping up next week, Iran is the market’s sole focus. The Trump administration seemingly intends to stick to its 4-6 week self-imposed timeline, claiming to have met their objectives. On-going negotiations are certainly a positive sign and markets are placing odds on Trump’s penchant for a deal to be greater than the risk the conflict escalates. According to a Deutsche Bank survey of global investors conducted at the start of this week, 54% of investors expect a cease-fire to take shape by the end of April. The figure rises to 74% for a late May ceasefire. The optimism among investors is not reflected by the consumer, however. This week’s consumer sentiment survey clearly showed a sharp uptick in consumers wariness over a short-term economic shock, but fortunately they remain confident with respect to the longer-term economic and inflation outlook. Markets also seem to agree the hit to the economy is temporary. While the S&P and NASDAQ have been volatile, the economically sensitive Dow and U.S. focused Russell 2000 index have at times been showing signs of strength. Both indices were poised to finish higher this week. Through Thursday’s close, the Dow was up 0.84% on the week but then dipped into correction on Friday on news of ships being turned away from crossing the Strait of Hormuz. The move higher ahead of the development suggests investors are rotating into asset classes best positioned to surge higher once the war concludes. Time of course is of the essence, and it remains to be seen what can ultimately be hashed out at the negotiation table given that publicly both parties are very far apart.
The Week Ahead
Markets will be closed on April 3rd for Good Friday. Week in Review will pause in observance. Our next edition arrives on April 10th with the latest inflation and durable goods numbers.
Tax Day Reminders
The April 15th tax deadline is a little more than two weeks away. Tax season is a good time to consider how your tax return fits into your broader financial plan. Changes in income, investments, or family circumstances can all have tax implications that extend beyond a single year. If you consistently owe a large tax bill after filing your taxes or if you receive a significant refund, it may be worth adjusting your withholding or estimated payments for the current year. Working with a tax professional and a financial planner can help ensure that your decisions today support and optimize your broader financial strategy.
As you gather documents and prepare to file your 2025 returns or to file an extension, here are some important things to keep in mind. This list is by no means exhaustive, and we encourage you to reach out to your tax professional with any questions.
Reminders for Tax Filing Season
Filing an Extension. Taxpayers have until April 15th to file their returns, however, filing an extension can be a valuable tool if you need additional time to gather information or work through more complex aspects of your return. An extension to file is not an extension to pay. Any taxes owed are still due by April 15th, and failing to pay on time can result in penalties and interest. If you anticipate owing taxes but are not ready to file, it is generally advisable to make a good-faith estimated payment when submitting your extension.
Forms needed for your taxes.
Whether you hire a professional or do it yourself, below is a list of items most taxpayers commonly need to complete their taxes:
- W-2 forms (wages)
- 1099-INT (interest)
- 1099-DIV (dividends)
- 1099-B (investment sales)
- Combined 1099 (brokerage combined tax statement)
- 1099-MISC (independent contractor work, royalties)
- 1099-R (retirement plan distributions)
- K-1 (MLP, Partnership or S-Corp share of income)
- SSA-1099 (Social Security benefits)
- 1099-G (unemployment benefits and state tax returns)
- 1099-C (forgiven debt)
- Income Adjustment Documents, including Form 1098-E (student loan interest); 5498 (IRA contributions); 5498-SA (HSA/MSA contributions); and 1098-T (tuition)
- Documentation for deductions, such as receipts or proof of payment, account statements, or cancelled checks for the following:
- Retirement account contributions
- Educational expenses
- Medical bills
- Property taxes and mortgage interest
- Charitable donations
- State and local taxes
Retirement account contributions.
If you haven’t already maxed out your contributions to your retirement account for 2025, you have until the April 15th tax filing deadline to fund your IRA.
Business owner contributions.
Contributions to a Simplified Employee Pension (SEP), Profit Sharing Plan, or other type of retirement savings benefit must be deposited for the 2025 year by the due date (including extensions) for filing your federal income tax return for 2025. If you obtain an extension for filing your tax return, you have until the end of that extension period to deposit the contribution, regardless of when you actually file the return.
Review deductions and credits carefully
Contributions to Health Savings Accounts (HSAs), deductible IRA contributions (if eligible), education credits, and energy efficiency incentives can all provide opportunities to lower your tax bill.
Evaluate capital gains and losses
If you realized investment gains, consider whether losses can offset them. Also, remember to apply any capital loss carryforwards from prior years to reduce current tax liability.
Think beyond this year’s return
Tax season is a good time to evaluate your current financial picture and how it aligns with your broader goals and whether any changes may be necessary to your tax strategy and financial and retirement plans going forward. Our advisors are available to help you examine these issues.