By John Stewart
Chief Investment Officer at Farmers Trust Co.

Week in Review: Fed Stays Pat

The Federal Reserve met again this past week, as they do every six weeks, for their decision on whether to make adjustments to their current monetary policy.

As expected, the committee left their interest rate target unchanged; however, the situation in the Middle East has the Fed governors on edge regarding inflation.

The Fed is less worried about a growth slowdown than they should be given recent weakness in the labor market, along with signs of cracks in the private credit market.

Typically, these growth concerns would cause the Fed to lean toward cutting interest rates to support economic growth, but with rising oil prices due to the conflict in the Middle East, the Fed is wondering if inflation could become a bigger problem yet again.

Despite some of the Fed’s rhetoric, monetary policy has little to no effect in fighting a supply-driven spike in oil prices. Therefore, the Fed should focus on the growth slowdown, which could actually be made worse by the aforementioned rise in oil prices. Cutting rates at their next meeting would be appropriate.  

There’s a saying out there that risk happens slowly – and then all at once.

It’s akin to Ernest Hemingway’s explanation of how bankruptcy happens – gradually, then suddenly.

Investors have been lulled into a sense of complacency over the past few years, and the level of optimism was running high heading into 2026.

That set the stage for an adjustment period in markets. All we needed was a catalyst.

We obviously have our catalyst in the form of an oil price shock caused by Iran’s closure, or near-closure, of the Strait of Hormuz. Let’s just hope we can resolve the situation before the risk overwhelms us.

Looking Ahead: When Will March End?

For many investors, March can’t end fast enough.

Markets are fast moving, but as of my last look, the S&P 500 index was down around 5% for the month so far, which is good enough for the worst monthly return since, well, March of last year. And then, of course, we all remember what happened in March 2020.

March is quickly becoming a scary month for investors – in some ways it’s the new September/October, which have historically been the worst two months of the year.

March has been the fifth best month on average since 1950, with an average return above 1%. But it’s the second worst month since 2020, with an average loss of more than 2%.

Of course, this could all just be a coincidence but, hopefully, April will live up to its long-run average return of 1.5%, which has been the average for the month of April since 1950, as well as over the past five years.