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Since the Iran shock on 27 Feb, the index has fully round-tripped. On the surface, that looks like a clean recovery. Quant Insight’s MFERM says otherwise. 

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When you compound macro contribution across the full 27 Feb to 17 Apr window, macro is still a net drag for 9 of 11 US sectors. Put simply: the shock delivered a sharper macro hit than the recovery delivered a macro tailwind. 

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That matters because most of the “good” performance still sits in the top-left of the chart below: positive idio, negative factor. In other words, sectors have recovered despite macro, not because macro has turned supportive. 

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A few things stand out: 

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• Tech is the only clean alpha story ‍

XLK printed roughly +9.5% idio, with macro drag fully recovered. This is the one sector where stock-specific drivers, not macro repair, explain the move. The AI narrative survived the sell-off and strengthened in the rebound. 

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• Defensives did not protect 

XLP, XLV and XLU offered little shelter in the drawdown and did not lead on the way back. Hiding in defensives was not the winning trade. 

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Continue reading our analysis by downloading the PDF above