How did Financial Markets do?
Stocks delivered a mixed performance in the first quarter of 2026, as investors weighed U.S. military action in Iran and a shifting outlook for interest rates and economic growth. U.S. large-cap stocks declined as higher-valuation growth stocks were punished, while U.S. high-dividend stocks surged as investors rotated to more defensive sectors as well as energy. International developed stocks posted modest gains despite heightened volatility, while emerging markets were mixed. Fundamental indexing outperformed its market-cap counterpart in all five categories in the Intelligent Portfolios investment universe. It also provided positive returns in U.S. large-cap and emerging markets, which saw negative returns in their respective market-cap indices.
In fixed income, bonds broadly fell for the quarter as yields moved higher, with only cash providing a positive return. The Federal Reserve held the federal funds rate steady at its January and March meetings, maintaining a target range of 3.50%–3.75%. Credit spreads widened during the quarter, and geopolitical and inflation fears sent emerging market bonds lower.
Figure 1: Market performance (ranked by Q1 2026 total return)
How did Schwab Intelligent Portfolios do?
Almost all Schwab Intelligent Portfolios advanced in the quarter, with some of the most conservative models that hold no equities declining slightly. Volatility in U.S. large cap and weakness in bonds was offset by strong returns in fundamental indexing, international stocks, and U.S. and international high-dividend stocks. Global strategies generally outperformed U.S.-focused strategies due to relative strength overseas.
Looking ahead
Schwab Intelligent Portfolios is designed to help our clients pursue their objectives over the long term. While the first quarter featured heightened volatility and uneven performance across markets, we know that creating and sticking to a plan, maintaining a diversified approach to investing, and avoiding overreaction to short-term market moves gives investors the best chance of achieving their objectives. We have many resources available designed to help you achieve your investment goals and we're always available by phone to answer any questions you may have.
Thank you—we look forward to continuing to serve you in the coming quarters and years ahead.
1This quarterly commentary is designed to provide you with insight into the market environment during the quarter. How your portfolio performed is dependent upon your asset allocation across the risk spectrum from conservative to aggressive, as well as criteria such as when you opened your account, the timing of any deposits/withdrawals, timing of portfolio rebalances, whether you are enrolled in tax-loss harvesting and other criteria.
Please read the Schwab Intelligent Portfolios disclosure brochure at Schwab.com/transparency/advisory for important information, pricing, and disclosures relating to the Schwab Intelligent Portfolios program.
Schwab Intelligent Portfolios is made available through Charles Schwab & Co., Inc. ("Schwab"), a dually registered investment adviser and broker-dealer. Portfolio management services are provided by Charles Schwab Investment Management, Inc. ("CSIM"). Schwab and CSIM are subsidiaries of The Charles Schwab Corporation.
Schwab Intelligent Portfolios is designed to monitor portfolios on a daily basis and will also automatically rebalance as needed to keep the portfolio consistent with the client's selected risk profile. Trading may not take place daily.
Tax‐loss harvesting is available for clients with invested assets of $50,000 or more in their account. Clients must choose to activate this feature.
Diversification, asset allocation, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.
Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly. For more information on indexes please see https://www.schwab.com/indexdefinitions.
Past performance is no guarantee of future results.
Investing involves risk, including loss of principal.