Mid-Year 2026 Market Update

Quarterly Market Update: Staying Focused Through a Changing Market

As we move into the second half of the year, investors continue to navigate a market that’s been more resilient than many expected. While headlines have focused on inflation, interest rates, tariffs, and geopolitical tensions, the markets have largely looked beyond the day-to-day noise.

The biggest takeaway? The economy continues to grow, just at a more moderate pace. That’s actually a healthy environment. Growth isn’t overheating, inflation pressures have eased from earlier highs, and corporate earnings remain strong, particularly among companies benefiting from continued investment in artificial intelligence.

A Look at the Markets

Here’s how major asset classes performed during the second quarter and year-to-date:

Asset Class	Q2 2026	YTD 2026
S&P 500	+15.2%	+10.2%
Dow Jones Industrial Average	+6.2%	+4.5%
International Developed Stocks (MSCI EAFE)	+12.1%	+16.8%
U.S. Bonds	+1.8%	+2.9%

One notable shift this year has been the improving performance of international stocks. As inflation has moderated overseas and the U.S. dollar has softened, markets outside the U.S. have become increasingly attractive. After several years of U.S. market leadership, global diversification is beginning to pay off again.

Good News Isn’t Always Perfect News

Economic growth remains positive, but it is slowing from the rapid pace we’ve seen over the past couple of years. That’s not necessarily a bad thing.

Think of it like driving on the highway. You don’t want to be accelerating indefinitely, you want to settle into a comfortable cruising speed. Today’s economy appears to be doing just that.

Inflation has continued to cool, helped by lower energy prices, although the Federal Reserve remains cautious about cutting interest rates too quickly. Higher rates can create some headwinds, but they also provide attractive opportunities in high-quality bonds and help keep inflation under control.

What We’re Watching

As we head into the second half of the year, several themes remain in focus:

• Economic growth is slowing but remains healthy.
• Corporate earnings continue to support stock prices.
• Inflation has eased, though interest rates are likely to remain elevated for a while.
• International markets are showing improving fundamentals.
• Diversification continues to be one of the best tools for managing uncertainty.

Markets rarely move in a straight line, but long-term investors have consistently been rewarded for staying invested rather than trying to time every twist and turn.

Chart Spotlight: The Evolution of Market Leadership

The companies leading the S&P 500 have changed dramatically over the past four decades—from industrial giants like IBM, GE, and Exxon to today’s technology-driven leaders such as Nvidia, Apple, Microsoft, and Amazon. While the names have changed, one thing hasn’t: successful long-term investors have benefited by staying invested through each new era of market leadership, rather than trying to predict the next winner.

Final Thoughts

It’s easy to let headlines drive emotions, especially during periods of uncertainty. But history reminds us that temporary pullbacks, changing economic conditions, and unexpected events are all part of the investing journey.

Rather than trying to predict every market move, we remain focused on what we can control: maintaining a diversified portfolio, managing risk appropriately, and keeping your long-term goals at the center of every investment decision.

As always, if your financial goals or circumstances have changed, or if you’d simply like to discuss the markets and your investment strategy, I’m always happy to connect.

Thank you for your continued trust and confidence.