The Year Volatility Returned, 2018 Financial Market Summary and Outlook

What is the efficient market theory? Textbooks have been written to fully explain the theory. But if we can sum it up in one sentence: Assets, such as stocks, reflect all publicly available information. It is a foundational principle of finance.

Over the weekend, global markets were shaken by significant geopolitical developments, as the US and Israel carried out coordinated strikes on Iran that resulted in the death of Iran’s Supreme Leader. Iran responded with missile strikes, which escalated tensions and heightened uncertainty in global markets.

The government shutdown proved to be a far greater drag on the economy than earlier estimates indicated. On Friday, the U.S. BEA reported that fourth-quarter Gross Domestic Product (GDP), the largest measure of economic output, grew at a 1.4% annualized pace. This compares with a 4.4% annualized pace in Q3.

The US Bureau of Labor Statistics published its final benchmark revisions covering employment during the 12‑month period between April 2024 and March 2025. The revisions showed that payrolls were revised lower by 898,000 jobs compared with the originally reported figures.

After leading markets for much of the past two years, AI, tech stocks, and software specifically, are losing leadership in early 2026, as investors rotate capital toward other sectors, including energy, industrials, and defensive sectors.