2026 Midyear Market Review: A Tale of Two Quarters
As we reach the midpoint of 2026, we wanted to share a brief recap of the first half and our outlook for the months ahead. For a more detailed walkthrough, we invite you to watch our accompanying midyear review video here:
The first half was truly a tale of two quarters. The year opened with the conflict in Iran and the blockade of the Strait of Hormuz, which sent oil prices from around $61 per barrel to roughly $117 at the March peak and pushed the S&P 500 down 4.3% in the first quarter. A ceasefire and much stronger than expected corporate earnings then fueled a 15.2% second quarter gain, the best since 2020, leaving the index up 10.2% for the half and at record highs. Notably, leadership broadened well beyond the largest technology names, with international markets and US small caps among the strongest performers.
The energy shock has passed, with oil ending June near $69, but its effects linger. Core inflation stands at 3.4%, well above the Federal Reserve’s 2% target, and new Fed Chair Kevin Warsh has struck a notably hawkish tone. Meanwhile, artificial intelligence investment continues at a remarkable pace, with estimated capital spending of $765 billion this year and more than $1 trillion next year, benefiting industries well beyond technology.
Looking ahead, we remain constructive on equities. Earnings momentum is strong and broadening leadership is encouraging, though returns of this magnitude rarely persist indefinitely. We are watching two things closely: signs of tighter Fed policy and any slowdown in AI spending.
As always, we welcome the chance to discuss what this means for your portfolio. Please reach out anytime.
Your SEIA Advisory Team
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