Market Commentary – June 2026
This post was originally published on this site.
as of 06.30.2026
- The S&P 500 and Nasdaq closed out Q2 2026 with their largest quarterly gains since Q2 2020 with the S&P 500 up 15.2% and the Nasdaq up 21.6% for the quarter, driven by a semiconductor-led AI infrastructure rally and the unwinding of Iran war risk.
- On the month, the Dow Jones rose 2.7% and the Russell 2000 gained 3.7%, while the S&P 500 fell -1.0% and the Nasdaq Composite declined -2.8%, reflecting a pronounced rotation from large-cap tech into value and small-cap names.
- Applied Materials Inc, Micron Technology Inc, and Lam Research Corp were the top three contributors to return for the S&P 500 in June whereas Microsoft Corp, Apple Inc, and Broadcom Inc were the biggest detractors.
- Several memory and AI-linked stocks have posted triple-digit year-to-date gains. After a mid-month pullback driven by concerns about overcrowded positioning and stretched valuations, Micron’s strong earnings and upbeat sales outlook renewed investor confidence in the AI spending cycle.
- WTI crude settled near $70/barrel as of month end, down over 24% on the month and over a third for the quarter, the biggest quarterly decline since 2020. The collapse was driven by the US-Iran ceasefire, resumption of Hormuz traffic, and Iran exporting over 40 million barrels post-blockade.
- The Strategic Petroleum Reserve fell to roughly 340 million barrels, the lowest since 1983, as the US Energy Department released 172 million as part of a coordinated effort by nations around the world to ease surging oil prices. The drawdown helped cap domestic gasoline prices but left the reserve at historically depleted levels.
- Gold fell -10.5% in June while silver dropped a steep -20.9%, as the easing of Middle East tensions unwound safe-haven demand that had built up during the height of the Iran war.
- The FOMC left rates unchanged and during his first press conference as Fed Chair, Kevin Warsh signaled a hawkish shift, vowing to restore price stability and an “unambiguous and unanimous” commitment to the 2% inflation target. His communication style was notably shorter and less forward guidance is expected.
- The Municipal Bond index experienced strong returns, adding 96bps, while the U.S. Intermediate Agg bond index rose a more modest 14bps.
- The Personal Consumption Expenditures (PCE) price index rose 4.1% YoY in May, the fastest pace since April 2023, driven by the Iran war’s impact on energy prices. Core PCE (ex-food & energy) came in at 3.4% YoY.
- The Consumer Price Index (CPI) climbed 0.5% MoM and 4.2% YoY in May, the highest annual rate since early 2023, as energy costs surged. Core CPI rose a more modest 0.2% MoM, below expectations.
- May payrolls came in at 225,000, well above the survey median of 88,000, with the unemployment rate holding steady at 4.3%. Average hourly earnings rose 0.3% MoM and 3.4% YoY.
- Expectations for a Fed rate cut have shifted toward a bias of rate hikes with Cleveland Fed President Beth Hammack stating it may soon be appropriate to raise interest rates, citing a labor market “right around full employment” and inflation that is “still too high.” She noted a “more broad-based picture of inflation pressure” is emerging.
Index Definitions
The S&P 500 (S&P 500) Total Return is a market capitalization-weighted index composed of the 500 most widely held stocks whose assets and/or revenues are based in the US; it’s often used as a proxy for the U.S. stock market. TR (Total Return) indexes include daily reinvestment of dividends.
MSCI EAFE Total Return Net is the Morgan Stanley Capital International Europe, Australia, and Far East index that is a market-capitalization-weighted index of 21 non-U.S. industrialized country indexes. The index includes net dividends reinvested minus-tax-credit calculations, but subtracts withholding taxes retained at the source for foreigners who do not benefit from a double taxation treaty.
The MSCI Emerging Markets (MSCI EM) Index captures large and mid cap representation across 27 Emerging Markets (EM) countries.
Bloomberg Municipal Bond Index Total Return Index Value Unhedged USD (Municipal Bond Index) covers the US-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and prerefunded bonds.
The Bloomberg Intermediate U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the performance of investment grade, U.S. dollar-denominated, fixed-rate taxable bond market with less than 10 years to maturity. The securitized sector includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS.
The federal funds rate is the interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight. When a depository institution has surplus balances in its reserve account, it lends to other banks in need of larger balances. In simpler terms, a bank with excess cash, which is often referred to as liquidity, will lend to another bank that needs to quickly raise liquidity. (1) The rate that the borrowing institution pays to the lending institution is determined between the two banks; the weighted average rate for all of these types of negotiations is called the effective federal funds rate.(2) The effective federal funds rate is essentially determined by the market but is influenced by the Federal Reserve through open market operations to reach the federal funds rate target. All Key Rates and Returns by Index are quoted out of Bloomberg.
The CPI Index represents changes in prices of all goods and services purchases for consumption by urban households. Retail Gas Prices are provided by AAA using data from up to 120,000 retail stations. West Texas Intermediate (WTI) crude oil is a specific grade of crude oil and one of the main three benchmarks in oil pricing, along with Brent and Dubai Crude.
Equity Returns by Sector are based on the GICS methodology. Return data are calculated by Bloomberg using constituents and weights as provided by Standard & Poor’s. Returns are cumulative total return for stated period, including reinvestment of dividends.
Chart Definitions
The Services and Manufacturing PMI from the Institute for Supply Management (ISM) is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. The Manufacturing PMI is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries, and Inventories (seasonally adjusted). Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.
The PCE Price Index Excluding Food and Energy, also known as the core PCE price index, is released as part of the monthly Personal Income and Outlays report. The core index makes it easier to see the underlying inflation trend by excluding two categories – food and energy – where prices tend to swing up and down more dramatically and more often than other prices. The core PCE price index is closely watched by the Federal Reserve as it conducts monetary policy. The PCE price index, released each month in the Personal Income and Outlays report, reflects changes in the prices of goods and services purchased by consumers in the United States. Quarterly and annual data are included in the GDP release.
Total Nonfarm, commonly known as Total Nonfarm Payroll, is a measure of the number of U.S. workers in the economy that excludes proprietors, private household employees, unpaid volunteers, farm employees, and the unincorporated self-employed. This measure accounts for approximately 80 percent of the workers who contribute to Gross Domestic Product (GDP).
The diffusion non-farm payrolls chart are based on the percent of industries with employment increasing plus one-half the industries unchanged employment, where 50% indicates an equal balance between industries with increasing and decreasing employment.
Disclaimer
This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professional, if any investment mentioned herein is believed to be appropriate to their financial situation and investment profile. Investors should ensure that they obtain all available relevant information before making any investment. It should be noted that investments involve risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted.
Past performance does not guarantee future results. Diversification does not guarantee investment returns and does not eliminate the risk of loss.
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