Denise Chisholm's sector and factor perspectives – March 26, 2026

In this episode of FidelityConnects, host Pamela Ritchie sits down with Fidelity Director of Quantitative Market Strategy Denise Chisholm to navigate the current market turbulence driven by geopolitical tensions and soaring oil prices. Chisholm challenges the conventional fear-driven narrative, arguing that historical data shows equity markets often rise during periods of geopolitical stress—averaging 8% returns in the year following conflicts like Pearl Harbor or Russia’s invasion of Ukraine. She emphasizes that today’s economic context differs significantly from the 1970s oil shocks: energy now represents only 3% of consumer spending versus 8% then, and U.S. shale production has made the country a net oil exporter. This structural shift, combined with offsetting factors like tax rebates and reduced tariffs, reduces the stagflationary risk. Chisholm also highlights that the market may already be pricing in much of the current anxiety, and that long-term equity returns are more likely to be preserved by staying invested than by reacting to short-term volatility. She identifies technology, industrials, and housing-related consumer discretionary sectors as top opportunities, while cautioning against chasing energy stocks amid a supply shock that historically leads to whipsawing and underperformance. Key takeaways include: 1) Geopolitical stress doesn’t automatically lead to market downturns—historically, equities have risen 70% of the time post-crisis; 2) The current oil shock is less economically damaging than the 1970s due to energy efficiency and structural changes; 3) Offsets like tax cuts and lower tariffs are currently neutralizing the inflationary impact of higher oil prices; 4) Technology is undervalued relative to history, offering strong odds of outperformance even under negative scenarios; 5) Energy stocks may be overbought and vulnerable to a sharp reversal; 6) Consumer sentiment is low, but spending remains resilient—suggesting underlying strength; 7) The Fed is less likely to hike rates after large oil price spikes, as they act as a regressive tax that reduces consumer demand; 8) Staying the course through volatility is critical, as the biggest risk to returns is emotional selling during corrections.