S&P slides: March rout
The S&P 500 closed Friday down 1.67% at 6,368.85, capping a brutal March with a roughly 7.4% monthly loss — volatility traders are pointing to oil and credit as the drivers. Morgan Stanley says the correction may be nearing its end but specifically flagged oil and credit signals as the key things to watch next. (benzinga.com) (seekingalpha.com)
A New York Fed corporate-bond distress index jumped to 0.16 in March from 0.09 in late February, with the investment‑grade sub-index rising to about 0.28, signaling unusually stressed high‑grade market functioning. (bloomberg.com) ICE BofA’s high‑yield option‑adjusted spread was about 3.17% (317 bps) on March 25, while Nomura reported U.S. high‑yield yields near 6.84% and spreads widening roughly 24 basis points in March. (fred.stlouisfed.org) (nomura-asset.co.uk) Brent crude surged through March, settling at $94/b on March 9 (a roughly 50% year‑to‑date jump from the start of 2026) and climbing above $112 by March 27 as Strait‑of‑Hormuz disruptions and geopolitical risk pushed oil higher. (eia.gov) (tradingeconomics.com) Morgan Stanley’s Mike Wilson wrote that the S&P’s forward P/E has compressed about 17% since the 2025 high and that the “threshold remains high for the oil spike to threaten the business/earnings cycle,” noting the correction may be “closer to its ending stages.” (morningstar.com) (bloomberg.com) The firm and other strategists say the specific signals to watch are sustained crude above the $100–$125 range or a 75–100% year‑over‑year oil move, and renewed widening or issuance freezes in the investment‑grade market. (seekingalpha.com) (bloomberg.com) Implied volatility spiked alongside these moves — the Cboe VIX averaged roughly high‑20s to low‑30s in late March — while options and futures volumes recorded heavy activity earlier in the month as traders hedged the oil shock. (tradingeconomics.com) (reuters.com)
