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Key Points:
Geopolitical tensions drive equity markets lower and fuel energy price surgesTech sector shows divergence, highlighted by losses in Nvidia (NASDAQ:NVDA)Oil and gas exploration outperforms equipment industries during volatilityMajority of US large-cap managers underperform S&P 500Rising idiosyncratic risk seen in mid and small cap stocks
Overnight, global markets faced heightened volatility amid escalating conflict in the Middle East, with Israeli and US forces targeting Iran and Iran responding with retaliatory strikes. Andrew Geoghegan highlights steep declines across equity markets, including a plunge in the S&P 500 to its lowest level in more than two months. Notably, small caps tracked by the Russell 2000 also fell, while Wall Street’s Cboe Volatility Index surged to a fresh three-month high. Energy prices soared as the Strait of Hormuz faced disruption, leading to a spike in oil and liquefied natural gas prices and renewed worries about inflation and the broader economic impact.
Anu Ganti from S&P Dow Jones Indices comments on the substantial fluctuations, drawing attention to elevated volatility levels, particularly within energy and technology sectors. Ganti notes a strong outperformance by oil and gas exploration compared to oil and gas equipment industries. The technology sector reveals a divergence, with chipmakers like Nvidia ($NVDA) experiencing notable losses, while software stocks reveal mixed performance. Despite high volatility, Ganti observes increased idiosyncratic risk, especially among mid and small cap stocks.
Anu Ganti points to the S&P Indices Versus Active scorecard, showing that 79% of US large-cap managers underperformed the S&P 500 in 2025, attributing these results to pronounced sectoral rotations and macroeconomic disruption. The active management landscape remains challenging, especially during such market tumult.
