For the period covering June 1, 2026, through June 30, 2026.

Global Perspective

The Circle of Market Winners Broadens

The S&P took a modest step back in June after another run toward record highs, but strength underneath the surface shifted toward small-cap and value-oriented companies. In general, the pullback felt more like a breather than a warning sign. Investors had plenty to sort through: tensions involving Iran, lingering inflation concerns, shifting expectations for the Fed, and an AI-driven market that continues to reshape where money is flowing.

While the headlines created some uncertainty, the bigger picture remained intact. Year-to-date returns stayed strong, though corporate leadership became less uniform beneath the surface. Companies tied to AI and strong earnings continued to attract buyers, while areas more sensitive to higher interest rates and slower economic growth lagged behind.

In short: Not every pullback is a reason to worry. Markets don’t move in a straight line, especially after a strong rally. June looked less like the start of a downturn and more like a market resetting expectations as investors continue to balance a still-resilient economy against a growing list of moving parts.

Oil Cools, Inflation Lingers

Oil prices moved lower as tensions around Iran stabilized, giving markets some welcome relief. But energy remains an important piece of the inflation story. Even after oil falls, earlier price spikes can continue working their way through the economy, from transportation and manufacturing costs to what consumers pay at the pump. So, consumers may not feel immediate relief. 

The bigger question is not where oil prices landed at the close of June, but where it goes next. If prices remain contained, inflation pressures should continue to ease. But if geopolitical tensions flare up again, energy could quickly return to the center of the market conversation. For now, oil remains less of a headline and more of a key variable investors are paying attention to, because they can’t afford to ignore it.

The Economy Still Has Muscle

The U.S. economy continues to show more staying power than many expected. Consumers are still spending, businesses are still investing, and the labor market remains on solid footing. As long as people are working and earning paychecks, it’s difficult for growth to slow meaningfully.

But there’s a catch. A strong economy gives the Fed less reason to cut rates anytime soon. It’s good news for economic growth, but it also means investors may need to get comfortable with higher interest rates sticking around longer than they’d hoped. In other words, the economy’s strength is helping support markets, while simultaneously pushing back the timeline for easier monetary policy.

Dollar Strength Tells a Story

The U.S. dollar had a strong month as investors grew more confident in the economy and began pricing in the possibility that interest rates could stay higher for longer. A resilient labor market gave the Fed room to stay focused on inflation, while policy paths abroad became increasingly mixed, making the U.S. look attractive by comparison.

Dollar strength isn’t just a currency story, though. It reflects how investors are weighing growth, inflation, and interest rates. It can help keep import costs down, but it can also create challenges for multinational companies and emerging markets. In June, the stronger dollar was another sign that markets were betting on U.S. resilience.

Equities Overview

The Market’s Cast Is Expanding

The “Mag 7” tech leaders are still a major force, but they’re no longer carrying the entire stock market. Corporate leadership broadened in June, with smaller companies, semiconductor stocks, and parts of emerging markets playing a bigger role in driving returns.

That’s a healthy development because, for much of the past few years, a handful of mega-cap tech stocks accounted for an outsized share of market gains. While those companies remain important, and generally have strong balance sheets, investors are becoming more selective and looking beyond the usual names. Market concentration in tech is still elevated, but broader participation suggests the rally is no longer resting on the shoulders of a handful of companies.

AI Is Still the Main Character

AI held onto its throne as the market’s biggest growth story. Demand for chips, memory, and computing power continued to fuel strong performance among semiconductor companies, in particular. South Korea was one of the biggest beneficiaries of this, largely due to its advanced leadership in the space, with some of the largest manufacturers of the memory chips needed to power AI systems and data centers around the world. Emerging markets with deep ties to the AI supply chain benefited as well.

What’s notable is that this is no longer just a U.S. tech trend. The AI buildout spans manufacturers, suppliers, and infrastructure providers around the world, creating winners across multiple regions. The opportunity remains significant, but so does the market’s reliance on the theme. As long as AI investment keeps accelerating, the beneficiaries of its growth should remain in favor. If expectations begin to outpace results, however, the ripple effects could be felt much more broadly.

From Chips to Concrete

Large technology companies continued pouring money into AI infrastructure, and that spending is reaching far beyond the tech sector. Investments in data centers, power generation, utilities, and networking equipment have all climbed as companies race to build the capacity needed to support future AI demand.

That’s what makes this phase of the AI story different. It’s no longer just about software or chatbots; it’s about the physical infrastructure required to power them. As demand for computing power grows, companies providing the electricity, equipment, and facilities behind the scenes are becoming just as important as the firms building the technology itself. For this reason, the AI winners now extend well beyond Silicon Valley.

SpaceX Adds Fuel to Innovation

The SpaceX IPO grabbed investors’ attention and underscored the collective enthusiasm for companies tied to major innovation trends. From space and communications to satellite networks and next-generation AI infrastructure such as data centers in space, SpaceX sits at the intersection of several areas investors believe could shape the future.

As with any high-profile IPO, excitement can drive volatility in the near term. But the bigger takeaway is that investors are still willing to pay for long-term growth stories. Whether it’s AI, space, or emerging technologies, markets continue to reward companies that are building what’s next.

The Hidden Opportunity

Strong earnings helped justify higher valuations and eased concerns that the market had run too far, too fast. While AI-related companies continue to capture most of the attention and capital, not every opportunity is tied to the AI trade.

In fact, some high-quality businesses with strong balance sheets, dependable cash flows, and solid earnings growth have been largely overlooked as investors crowd into a handful of AI winners. That’s creating opportunities in places few are paying attention to. In a market dominated by one theme, some of the most compelling ideas may be hiding just outside the spotlight.

Fixed Income Overview

Rates Rewrite the Script

Bond markets stayed relatively steady, but the outlook for interest rates became a lot less clear. Earlier this year, investors were focused on when rate cuts would begin. Now, with inflation proving sticky and the economy holding up better than expected, the conversation has shifted toward how long rates might stay elevated, and whether additional hikes can be ruled out.

That uncertainty matters because interest rates influence everything from borrowing costs to stock valuations. For now, markets are taking their cues from incoming numbers on inflation and the labor market, making the path forward more dependent on the data than the calendar.

Warsh Enters the Fed—and the Rate Debate

Kevin Warsh’s arrival as Fed chair has given markets a new voice to analyze. While the Fed’s primary goals—keeping inflation under control and supporting employment—haven’t changed, investors are watching closely for signs about how Warsh interprets an economy that’s still growing and a labor market that’s still holding up.

More than anything, markets want clarity. With inflation proving stubborn and growth remaining resilient, there’s a question mark as to whether the Fed’s focus stays on fighting inflation or begins shifting toward supporting growth. How Warsh strikes that balance could play a meaningful role in shaping interest rate expectations in the months ahead.

Good News Is Complicated News

A strong labor market has become both positive and complicated for markets. Healthy hiring supports consumer spending and helps keep the economy on solid footing, but it also gives the Fed less reason to cut rates anytime soon.

That creates an unusual dynamic where strong economic data can actually dampen hopes for easier policy. Add in inflation that’s still sensitive to energy prices, and the outlook for rates becomes far less straightforward. For now, the Fed has the flexibility to be patient, which means investors may need to be patient, too.

Bonds Still Pay

Despite an uncertain rate outlook, bonds continue to do what many investors want them to do: generate income. Corporate balance sheets remain in good shape, yields are still attractive by historical standards, and municipal bonds continue to benefit from strong underlying credit quality.

Credit markets aren’t signaling widespread stress, and tax-exempt municipal bonds remain particularly appealing for investors focused on after-tax income. Fixed income may not be grabbing headlines, but it’s once again playing a meaningful role in portfolios by providing steady income and diversification, which is exactly what it’s supposed to do. 

A Look Ahead

More Paths, Less Certainty

Investors should be prepared for a wider range of outcomes than we’ve seen in recent years. The market is still supported by solid earnings, resilient economic growth, and continued AI investment. But several key variables—including oil prices, Fed policy, and AI expectations—could quickly shift the outlook.

Rather than betting on a single scenario, this is an environment that rewards flexibility. Growth can remain healthy even as inflation stays stubborn. AI can continue driving profits while creating concentration risks. And the Fed may keep rates elevated longer than markets expect. That’s why diversification, regular rebalancing, and a disciplined approach remain as important as ever.

Oil Is Still a Wildcard

Oil remains an important swing factor for markets. If tensions in the Middle East continue to ease, lower energy prices could help take pressure off inflation and support both consumers and businesses.

But that story can change quickly. A renewed rise in oil prices would raise costs across the economy and make the Fed’s job even more difficult. The key isn’t just where oil prices are today; it’s whether they stay contained. Markets can absorb short-term spikes. But a longer-lasting move higher would be much harder to ignore.

AI Needs to Keep Delivering

AI investment is likely to remain a major market driver, but investors are starting to ask tougher questions. The focus is shifting from how much companies are spending to what they’re getting in return.

So far, heavy spending on chips, data centers, and infrastructure has fueled growth across the AI ecosystem. But expectations are high, and markets will increasingly want proof that those investments are leading to stronger revenues, higher productivity, and better profits.

AI is still a powerful long-term story. The difference now is that investors are becoming less interested in potential and more interested in results. The next phase won’t be about who spends the most. It will be about who creates the most value.

Breadth Is the Next Test

Market breadth (how many stocks are participating in the rally) will be an important test in the months ahead. If leadership continues to expand beyond mega-cap technology, it suggests the market’s gains are being supported by a wider range of companies and sectors.

But if returns remain concentrated in a handful of names, the rally becomes more vulnerable to setbacks. That’s why diversification still matters. Even in a strong market, relying too heavily on one theme can increase risk.

The bottom line: markets are still supported by solid fundamentals, but they’re becoming more selective. AI, oil, and Fed policy will continue to shape the outlook, making discipline and diversification equally as important as finding the next opportunity.

This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor’s specific circumstances. Investing involves risk, including possible loss of principal.

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