I heard that stocks go down when there's a war, but do ALL stocks go down?
Great observation! Actually, when a war or major event happens, not every stock moves in the same direction. Some sectors — groups of similar industries — go up while others go down. Today, let's look at what happened in March 2026 through the lens of sector performance.
This article is based on information available as of March 2026.
What Is a Sector?
I've heard the word "sector" before, but what does it actually mean?
A sector is just a way of grouping companies by the type of business they do. Think of it like classes in school — you have Class A, Class B, Class C, and so on. In the stock market, companies that do similar work get grouped together.
Here are some common sectors:
| Sector | What Kind of Companies? | Everyday Example |
|---|---|---|
| Energy | Companies that drill for and sell oil and gas | The companies behind gas stations |
| Defense / Industrials | Companies that make military equipment and heavy machinery | Fighter jet and ship builders |
| Tech | Semiconductor and software companies | Companies that make smartphone components |
| Consumer Discretionary | Companies that make everyday products | Clothing brands, automakers |
Oh, so it's basically grouping companies that do similar jobs!
Exactly! And the important thing is that when something big happens in the world, different sectors can be affected in completely different ways.
March 2026: A Tale of Sector Divergence
So in March 2026, with everything happening in the Middle East — how different were the sectors?
Let's look at the data. Here is how the S&P 500 sectors performed from the beginning of March through around the 24th.
| Sector | March Performance (MTD) | Direction |
|---|---|---|
| Energy | +18.2% | Sharply higher |
| Industrials (incl. defense) | +14.7% | Sharply higher |
| Consumer Discretionary | -12.3% | Sharply lower |
| Tech | Significant decline | Lower |
Wait — at the same time, one sector is up 18% and another is down 12%? That's a 30% gap!
That's right. This was described as the most significant sector rotation — meaning a large-scale shift of money from one group of industries to another — since the COVID-19 crash.
Sector rotation refers to the phenomenon where investors move their money from one group of industries to another. In this case, money flowed into energy and defense while flowing out of consumer and tech stocks.
Why Energy Stocks Rose
I'm guessing it has to do with oil prices?
Exactly right. The mechanism is actually quite straightforward. Let's walk through it.
During this period, Brent crude oil prices moved dramatically:
- Before the conflict: approximately $71 per barrel
- Peak: $120 per barrel
That is roughly a 77% increase in oil prices.
But why does higher oil mean higher energy stocks?
For oil companies, crude oil is their product. When the price of what you sell goes up, investors expect your revenue and profits to increase as well.
The general flow looks like this:
Middle East tensions → Oil supply concerns → Oil price surge → Expectation of higher oil company profits → Energy stocks rise
For example, Exxon Mobil's stock price rose approximately 4% immediately after the strikes began. The energy sector as a whole gained +18.2% in March alone.
So for oil companies, higher oil prices are actually a good thing for business.
That said, it is important to remember that oil prices are constantly changing, and energy company performance depends on many factors beyond just oil prices. This is simply what the data showed during this particular period.
Why Defense Stocks Rose
Defense stocks went up too, right? I can sort of understand why, but what's the actual mechanism?
Several factors came together.
Increased Defense Spending
When military conflicts occur, countries tend to increase their defense budgets. Japan's defense budget for fiscal year 2025 reached approximately 8.70 trillion yen. For defense companies, the prospect of increased government orders can raise expectations for future earnings.
US Defense Companies
Major US defense stocks posted significant year-to-date gains as of March 2026:
| Company | Year-to-Date Change |
|---|---|
| Lockheed Martin | +32.5% |
| RTX (formerly Raytheon) | +9.81% |
The S&P 500 industrials sector (which includes defense) rose +14.7% in March alone.
Defense stocks are usually pretty boring, aren't they?
They tend to fly under the radar, yes. But when geopolitical risk rises, they can suddenly attract a lot of attention. That said, this is a historical pattern and there is no guarantee that defense stocks will always rise during conflicts.
Why Consumer and Tech Stocks Fell
What about the sectors that went down? Why were tech and consumer stocks hit so hard?
There are several reasons that have been suggested.
Cost Increase Concerns
When oil prices rise, so do transportation and raw material costs. For consumer goods companies, the higher cost of making and delivering products raises concerns about shrinking profits. The consumer discretionary sector fell -12.3% in March.
Recession Fears
Higher energy costs squeeze consumers' wallets. The fear that "consumers will stop spending" tends to weigh on consumer-related stocks.
The Tech Sector
Tech companies may seem less directly affected by oil prices, but the following factors are thought to have played a role:
- Risk-off sentiment: When uncertainty rises, investors tend to pull money out of volatile tech stocks
- Economic sensitivity: Demand for products like semiconductors can be sensitive to economic conditions, and recession fears became a headwind
So what was a tailwind for energy and defense was a headwind for consumer and tech stocks. Same event, opposite effects!
That's a great way to put it. The same event can push different sectors in completely opposite directions.
How Japanese Sectors Performed
What about Japan?
Japan saw a similar pattern of divergence. On March 9, the Nikkei 225 fell to 52,728 — a drop of about 5.2% in a single day.
Defense-Related Stocks
Japanese defense-related stocks have seen dramatic gains in recent years. Here are their prices as of March 2026 along with the change since November 2022:
| Company | Price (March 2026) | Change Since Nov 2022 |
|---|---|---|
| Mitsubishi Heavy Industries | 4,572 yen | Approx. +650% |
| Kawasaki Heavy Industries | 17,285 yen | Approx. +280% |
| IHI | 4,215 yen | Approx. +480% |
These gains are attributed to Japan's expanding defense budget and changing security environment.
Tech-Related Stocks
Meanwhile, tech-related stocks were hit hard on March 9:
| Company | Decline on March 9 |
|---|---|
| SoftBank Group | -9.81% |
| Advantest | -11% |
| Lasertec | -8% |
So in Japan too, defense was strong and tech was weak? Sounds similar to the US.
Global markets are interconnected, so major trends tend to move in a similar direction. However, the Japanese market also has its own unique factors — such as the impact of the weaker yen and shifts in Japan's defense policy — so it is not an exact mirror of the US.
Summary
- In March 2026, the Middle East conflict caused a sharp divergence in stock performance across sectors.
- The energy sector rose +18.2% on the back of surging oil prices, while defense/industrials gained +14.7%.
- Consumer discretionary fell -12.3%, and the tech sector also declined significantly.
- In Japan, defense-related stocks (Mitsubishi Heavy Industries, Kawasaki Heavy Industries, IHI) held firm, while tech names (SoftBank Group, Advantest, etc.) were sold off heavily.
- Brent crude rose from approximately $71 before the conflict to a peak of $120, which is considered a major driver of the sector rotation.
- The same event affected different sectors in opposite ways — a reminder that "stocks going down" is an oversimplification, and looking at sector-level data provides a much clearer picture.
Data in this article is based on information available through approximately March 24, 2026. Market conditions change daily.
Disclaimer: This article is intended for general informational and educational purposes regarding stock investing and does not constitute a recommendation to buy or sell any specific securities. All investment decisions should be made at your own responsibility.