How Q1 2026 ended for VOO
The Vanguard S&P 500 ETF closed out the first quarter of 2026 trading near $580, roughly 9% below the all-time high of $641.81 reached on January 28. It was the fund's first negative quarter since Q3 2023.
The quarter started quietly, with VOO hitting its record high in late January. The turn came in mid-February when the Iran conflict entered its second month and Brent crude pushed above $100 per barrel. By late March, oil had settled above $112, the Federal Reserve had raised its 2026 inflation forecast from 2.8% to 4.2%, and the S&P 500 had posted five straight weeks of losses.
The 10-year Treasury yield ended the quarter at 4.44%, up from 3.97% at the start of the conflict. Higher yields compress the present value of future earnings, which is one reason technology stocks, which make up roughly 33% of VOO's holdings, have been hit hardest this quarter.
The YTD return for VOO now stands at approximately -9.09%. That is painful in isolation, but it remains well within the range of normal S&P 500 intra-year drawdowns. Since 1980, the average maximum intra-year decline for the index has been about 14%, even in years that finished with positive annual returns.
The earnings season setup heading into April
The next major fundamental test for VOO comes from Q1 2026 earnings season, which begins in earnest in mid-April. What analysts expect matters: corporate earnings growth is the primary long-run driver of S&P 500 returns, and therefore the primary driver of VOO's returns.
According to data compiled by FactSet, the consensus estimate is that S&P 500 companies grew earnings by approximately 13% in Q1 2026 compared to Q1 2025. If that estimate proves accurate, it will mark the sixth consecutive quarter of double-digit earnings growth. That streak would be notable precisely because it has continued despite the geopolitical turbulence of the past several months.
The practical question for the April earnings season is whether companies can beat estimates while also providing upbeat forward guidance. Earnings beats matter, but guidance for Q2 and the full year will tell investors whether corporate America sees the Iran conflict and elevated oil prices as temporary headwinds or lasting structural costs. Companies with significant energy inputs, global supply chains, or consumer-facing businesses are most exposed. The biggest VOO components, including Apple, Microsoft, Amazon, and Nvidia, all report in late April or early May and carry the most weight in moving the index.
A strong earnings season will not erase the macro risks, but it can provide fundamental support beneath the current price. Prior to each of the major VOO recoveries since the fund's 2010 inception, a sustained earnings growth cycle was typically visible in the data. You can trace the long-term relationship between those earnings cycles and VOO's price using the historical returns calculator.
Three things to watch in April
Beyond earnings, April carries several other events that could influence VOO's trajectory in Q2.
The Federal Reserve's next meeting is scheduled for early May, but Fed officials will speak publicly throughout April. Markets are currently pricing in the Fed holding rates at the current range of 3.50% to 3.75% through at least mid-year. Any language signaling a willingness to cut rates if economic growth slows materially would likely be received positively by equity markets. Conversely, talk of additional hikes to contain oil-driven inflation would pressure both growth stocks and bonds simultaneously.
Jobs data is also in focus. The March nonfarm payrolls report publishes in early April. A soft number would ease inflation fears and potentially shift rate expectations toward cuts. A strong number would reinforce the "higher for longer" scenario that has weighed on equities since February.
Finally, any substantive update on the Iran ceasefire talks remains the single factor most capable of a rapid market reversal. Oil prices are the transmission mechanism: a credible ceasefire deal would almost immediately reduce energy costs, ease inflation expectations, and shift rate pricing toward cuts. For VOO holders, a ceasefire announcement combined with a solid earnings season would represent a significant tailwind.
What a negative Q1 does, and does not, tell you
Over the past 50 years, the S&P 500 has ended Q1 in negative territory 18 times. In many of those years, the full calendar year still finished positive. A negative first quarter is a data point, not a verdict.
What the quarter does confirm is that the macro backdrop for VOO has shifted meaningfully from January. The question for Q2 is whether corporate earnings, Fed policy, and geopolitical developments push the fund toward a recovery or a deeper drawdown. None of those outcomes are predetermined. Both are plausible.
Long-term VOO holders have navigated negative quarters before. The fund's structure does not change based on short-term price movement. It still holds all 500 or so S&P 500 constituents, still charges 0.03% per year, and still tracks the same index it has tracked since September 2010. The price has changed. The instrument has not.