CWS Market Review – March 24, 2026

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

I recently came across a stunning fact in the Wall Street Journal. It said that over the last two years, the healthcare sector has accounted for 77% of all jobs growth.

That’s one of those facts that initially strikes you as amazing, but the more you think about it, the more it makes sense. As the rest of the economy gets weaker, the healthcare sector is doing most of the heavy lifting.

Check out the growth of healthcare jobs:

The WSJ notes that over the last year, the U.S. economy has added 156,000 new jobs and healthcare was responsible for 375,000 new jobs. That means that if we take away the healthcare sector, then the economy is shedding jobs. If you’re not at the doctor’s office, then you’re probably in a recession.

Don’t expect these trends to let up anytime soon. According to the WSJ, by 2035, the number of Americans over the age of 85 is expected to double. Now let’s look at what’s had the market so annoyed recently.

The Fed’s Next Move May Be a Rate Hike

The stock market is starting to show some cracks. During the day on Friday, the S&P 500 fell to its lowest point in six months. We got a minor relief rally on Monday, but Tuesday was another down day. The S&P 500 has closed lower eight times in the last eleven sessions. The index is below its 50- and 200-day moving averages. Historically, that’s not a good sign.

There’s even talk of the Fed’s next move being an interest rate hike. To be sure, that possibility is still a long way from being a certainty, but the futures traders peg the odds of a Fed hike before the end of the year at around 20%. The odds of an upcoming interest rate cut are…well, in the garbage can. In a very short period of time, the odds of a Fed cut went from probable to not happening.

If you ever want to know what the Fed is thinking, the cheap and easy way is to look at the yield on the two-year Treasury. On February 28, the two-year yield was at 3.38%. By March 20, it got to 3.88%. That’s a jump of 50 basis points in less than one month. War has been the forerunner of inflation so many times in history.

What’s interesting is that the price of gold has been dropping lately. When hostilities started, gold was around $5,400 per ounce. Yesterday, gold got down below $4,100 per ounce. Gold often rallies during times of geopolitical stress. This time, the drop in gold makes sense if real interest rates rise. In plain English, lower gold hints that the Fed will have to raise rates well above the level of inflation. That’s not good for the economy.

There’s still a lot of fear in the markets, and the big issue is, not surprisingly, the price for oil. While oil is still well below its peak (near $120) from two weeks ago, it’s still elevated. For what it’s worth, betting markets don’t see traffic in the Strait of Hormuz returning to normal for several weeks.

The market was helped on Monday by an optimistic tweet from President Trump regarding “a resolution of hostilities” in the Middle East. The Iranians, however, said there have been no direct talks. Oil dropped down to $88 per barrel on Monday which is the lowest in two weeks. Before the war, oil was around $65 per barrel.

Oil stocks have been the big winner so far this year. The S&P 500 Energy ETF (XLE) is up about 38% in 2026, and the year isn’t yet one quarter over. I also like to keep my eye on the performance of the S&P 500 Industrial Sector (XLI). This is often an overlooked part of the market, but it’s very important for the overall economy.

Starting in December, industrials performed very well compared with the rest of the market. It was one of their best runs in 20 years, and it lasted through February. Since hostilities started, industrials have started to lag. That could be a sign for the entire economy.

We still don’t know the impact of Operation Epic Fury, outside of oil prices. It’s true that the U.S. economy is far less dependent on oil than it used to be. We’ll soon learn more. Next Friday, April 3, the government will release the March jobs report. This will show us how well the economy has been holding up.

We should also bear in mind that the labor market has been quite weak for the last several months. Less jobs growth means less money to go shopping and that cuts into corporate profits. For February, the U.S. economy shed 93,000 jobs.

Abbott Labs Drops to a Good Price

One of our favorite Buy List stocks, Abbott Labs (ABT), has performed poorly. That puts off a lot of investors, but I always pay attention when the stock of a good company does poorly. That’s where you can often find a good bargain.

On January 22, Abbott reported solid earnings results, but the shares took a bath. Abbott Labs reported fiscal-Q4 earnings of $1.50 per share. That beat expectations by one penny. That was also inside the company’s own guidance for Q4 earnings of $1.47 to $1.53 per share. Abbott’s quarterly earnings were up 12% over last year.

For the full year, Abbott made $5.10 per share, which was up 10% over last year. CEO Robert Ford said, “Abbott is well positioned for accelerating growth in 2026.”

Despite the earnings beat, the stock got dinged due to poor results from its baby-formula business. The company offered mostly optimistic guidance. For 2026, Abbott sees earnings coming in between $5.55 and $5.80 per share. At the midpoint, that’s 10% growth. Wall Street had been expecting $5.68 per share. Abbott sees full-year organic-sales growth of 6.5% to 7.5%. For Q1, Abbott expects earnings between $1.12 and $1.18 per share. Wall Street had been expecting $1.19 per share.

Abbott’s Q4 sales rose by 4.4%. That’s organic growth of 3.0% to 3.8% when excluding Covid-testing sales. For 2025, sales were up 5.7%. That’s organic growth of 5.5%, or 6.7% when not counting Covid sales.

Abbott had Q4 sales of $11.5 billion, which was $300 million below expectations. Nutrition sales were $1.9 billion, which was well below expectations. Abbott said it was forced to raise the price for baby formula when manufacturing costs increased.

Medical devices are Abbott’s largest business. Quarterly sales were $5.67 billion, which matched estimates. The company just completed its acquisition of Exact Sciences for $21 billion. This should help the company expand its footprint.

In December, Abbott increased its dividend by 6.8% to 63 cents per share. This marks the 54th year in a row that Abbott has increased its dividend. Since 2020, the dividend has grown by 70%.

On Tuesday, shares of ABT fell to a new 52-week low. Going by the most recent price, ABT is currently going for about 17 to 18 times this year’s earnings. Bear in mind that Abbott’s estimates tend to be quite conservative. In our premium service, we rate ABT a strong buy up to $115 per share.

That’s all for now. The first quarter comes to a close next week. On Friday, April 3, we’ll get the jobs report for March. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

P.S. You can sign up for our premium service here.

P.P.S. Here’s something for fun I wrote earlier this week about math and March Madness:

Today is the day I’ll take something fun and ruin it with math! Who’s with me?

We’re in the middle of the NCAA basketball tournament. Most brackets are scored linearly, but here’s the big secret: basketball teams generally follow a Power Law distribution.

Simply put, this means that the difference in quality of teams tends to get smaller the lower you go. In practical terms, this means the #1 seed is really, really good. The quality difference between #2 and #3 tends to be smaller than the difference between #1 and #2. This continues through the entire bracket.

How can we see this in action? A good example is the bettor’s favorite, the #12 vs #5 game. Despite the difference of seven places, the teams aren’t that far apart. Historically, #12 wins about 35% of the time. It’s an upset, but a pretty minor one.

Interestingly, that’s close to the record of #3 against #1 (36%). In other words, the implied quality difference between those two spots is about the same difference with the seven spots between #5 and #12. That’s the Power Law in action.

For basketball fans, the Power Law means avoiding the #1 as long as you can, or hoping they get knocked out early. Earlier I mentioned the #12 seed. They’ve made it to the Sweet Sixteen 22 times, and 20 times they’ve faced off against #1. They’ve lost every single time.

The Power Law means the worst seed is #8 or #9. That means you have a very hard time getting to the Sweet 16 because you face #1 in Round 2. #1 has beaten #9 92% of the time.

The best seed is #11. Why? Because you avoid #1 for a long time. Assuming the higher seed wins, #11 plays #6, then #3, then #2, then #1.

Here’s the most remarkable stat. #11 has made to the Final Four more than #16, #15, #14, #13, #12, #10, #9, #8 and #7. #11 is tied with #6 and since they play each other in the first round, this means #6 follows the same course as #11.

The NFL avoids these issues because it “reseeds” its playoffs. Personally, I prefer how March Madness does it.

Posted by on March 24th, 2026 at 5:34 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.