July 1, 2026

Jennifer Sheffler |
Categories
Monthly Market Commentary

Since declining at the end of March, equities have rebounded to reach new highs. The recovery has coincided with strong first-quarter earnings, which grew more than 25% and exceeded consensus expectations. Strong corporate earnings, continued labor productivity improvements, fiscal spending, and ongoing investment in artificial intelligence infrastructure have contributed to a favorable backdrop for equities.

Concerns regarding a softer labor market have eased. The May jobs report was stronger than expected, with 170,000 jobs added, while prior months were also revised upward. Payroll gains averaged 188,000 over the past three months, and the unemployment rate remained steady at 4.3%. As a result, market attention has shifted back toward inflation, which remains above the Federal Reserve's long-term target.

Federal Reserve Chair Kevin Warsh has emphasized the Fed's commitment to price stability while supporting maximum employment. Although inflation shows signs of moderating, inflationary pressures remain uneven. As always, the current environment presents reasons for both optimism and caution.

Artificial intelligence continues to attract significant investment across many industries. As with other transformative technologies, some businesses are likely to benefit substantially, while others may face challenges generating attractive returns. We continue to monitor these developments as we evaluate long-term investment opportunities.

Bond yields remain relatively elevated by recent historical standards, and the timing of future Federal Reserve policy changes remains uncertain. While bonds may not offer the same growth potential as equities, they continue to play an important role in diversified portfolios by helping manage risk.

Through June 30, the Dow Jones Industrial Average, S&P 500, and NASDAQ returned 8.85%, 9.55%, and 12.79%, respectively. The 10-year and 2-year U.S. Treasury yields ended the month at 4.38% and 4.10%, respectively.

Market returns are presented for informational purposes only. Past performance is not indicative of future results.