Energy Stocks Surged 38% in Q1 While the Rest of the Market Fell

The first quarter of 2026 marked a sharp shift from the broad-based strength that closed out last year. The S&P 500 finished in negative territory as investors wrestled with a new war in the Middle East, stubborn inflation, shifting interest rate expectations, and uneven earnings across major industries. But the headline decline doesn’t tell the real story. What stood out in Q1 was the extraordinary divergence beneath the surface. A handful of sectors delivered strong gains, while the broader market struggled. The gap between winners…