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In June we pointed out that Health Care looks cheap. Even though it has been rallying hard of late, the sector continues to trade at a 59% price-to-sales discount to the S&P 500, despite having an 18% return on equity (ROE) that is just a hair below the 19% ROE accorded the S&P 500.

Although economic conditions did not change much between the first and second quarters, investors were far more bullish in the second quarter.

After a difficult start to the year, investor sentiment reached a low point near the end of March as concerns around inflation, geopolitics, and rising interest rates weighed on risk assets.

What were the key takeaways from last month’s numbers? Our corporate bond specialists look back at the market’s performance and provide incisive commentary to help you make sense of what drove the market—and what may be on the horizon for fixed income investors.

The current level of stock market valuations remains – easily – the most speculative extreme in U.S. financial history, beyond both the 1929 and 2000 extremes. Our baseline estimate is that the S&P 500 has a material risk of losing something on the order of 75% over the completion of this cycle.

The first half of 2026 reinforced an important lesson for fixed income investors: Tax-loss harvesting opportunities don’t always arrive at year-end, often appearing during short periods of market dislocation when interest rates rise, new-issue supply increases or investor sentiment shifts.

The tech-heavy NASDAQ benefited from a semiconductor rebound and renewed enthusiasm for AI infrastructure names. The Dow, weighted more toward “old economy” stocks than high-growth names, captured none of last week’s gains.

LPL Research examines how sticky inflation, Fed leadership changes, and AI-driven borrowing are shaping the fixed income outlook for 2026.

Historically, many in the pension industry viewed funding above the "plan termination level" as having little incremental value. Once a plan reached “plan termination level”, thought of as roughly 110% funding, conventional wisdom suggested additional surplus had little economic value because it is effectively "trapped capital."

It has been an eventful six months, and we are delighted that the Equity Dislocation Strategy has risen to the occasion. The Strategy generated a 9.05% net return in the first half of 2026, compared with a 1.3% return for MSCI ACWI Value minus MSCI ACWI Growth, a broad proxy for the value-growth spread.

The Fed's recent shift into a more hawkish mode creates concern about banking profits later this year, but second-quarter results are seen strong thanks to IPOs, mergers.

Regardless of how inflation is measured or debated, households continue to feel the cumulative effect of higher prices. The cost of goods and services have risen at a high pace over the past several years, and wage growth has not always kept pace evenly across households.

After a wild last 12 months in a technology stock boom – and more recent volatility – the question du jour, in our view, is not whether AI is transformative.

Every year in early July, we update our interactive Periodic Table of Commodities Returns to reflect the performance of raw materials in the first six months of the year. Maybe I’m biased, but I believe it’s one of the clearest snapshots of the commodities landscape you’ll find anywhere.

The first wave of upgrades came after the AI hyperscalers reported, by and large, strong earnings. But most of the improvement has stemmed from the rest of the non-financials index, with analysts quadrupling their one-year aggregate EBITDA (earnings before interest, taxes, depreciation, and amortization) growth expectations, from 5% at the end of January to more than 20% as of 30 June.

If you knew you were standing inside a stock market bubble, you wouldn’t be standing in it for long. You’d sell. So would I, and so would everyone reading this. And if spotting market bubbles was something everyone could do in real time, the bubble couldn’t form in the first place.

Despite renewed geopolitical tensions in the Middle East, markets continue to display remarkable resilience. Major equity averages sit within striking distance of new all-time highs while oil, perhaps the biggest surprise of the year, remains anchored in the low $70s despite renewed hostilities.

What makes this earnings setup truly unique is the behavior of Wall Street analysts over the last 90 days. Because corporate guidance tends to be conservative, analysts historically cut estimates ahead of time.

Despite geopolitical headwinds, the broader macro backdrop remained constructive in the first half of the year. Economic growth proved resilient, consumers kept spending and the S&P 500 gained 10%. That favorable mix drove strong earnings growth, with S&P 500 earnings rising 27% year over year in 1Q26, led by the tech sector.

Markets enter the second half of 2026 facing a familiar wall of worry—geopolitical conflict, oil prices, inflation, Federal Reserve policy, and questions around the durability of an AI-led equity rally. Yet the economic backdrop still looks resilient: growth remains solid, inflation has moderated, unemployment is reasonable, and market leadership appears to be broadening.

Fixed income experts James Donahue, John Lloyd and Mike Talaga revisit the levels of supply related to the AI buildout and explain why they remain cautious towards investment grade tech issuance.

For investors who have been tracking this space, the signing is a continuation of a policy architecture that has been assembling with surprising speed.

The sharp correction in gold prices during the first half of 2026 has left many investors wondering whether the precious metal's bull market has come to an end. According to Money Metals' Mike Maharrey, however, the market's recent weakness is largely a matter of perspective.

The Great Moderation has given way to a more volatile era, where inflation shocks and market dispersion favor flexibility and diversification.

As we move through 2026, the political and geopolitical landscapes remain key drivers of policy uncertainty. For the midterm elections, our base case is a Democratic House and Republican Senate, a historically favorable outcome for equities.

One of the bigger questions facing advisors and investors right now revolves around credit. Inflation, volatility, and Fed rate hikes all loom, potentially heightening credit risk for portfolios. Navigating that risk may be a crucial task in the second half of this year.

Chief Investment Officer Sean Taylor reviews a strong second quarter for emerging markets, where AI and reindustrialization were key drivers of investor returns.

Assessing the year so far, much of the portfolios’ declines have been a compression of valuations, not a deterioration of earnings. For many of our holdings, the two have moved in opposite directions. Revenues, profitability, and cash flow have continued to build, even as the multiples placed against them have fallen.

The small-cap stock rally we highlighted back in April has continued over the past few months, driven by factors such as robust U.S. economic growth disproportionately benefiting smaller, domestically focused businesses and the AI capital spending boom spreading to smaller tech and energy companies.

ClearBridge Investments: Although markets often pause to digest after large gains, history suggests these episodes usually prove fleeting, meaning major indexes could move higher in the second half of 2026.

Markets move on data, earnings, interest rates, and economic conditions. But they can also be heavily influenced by human behavior. Even experienced investors can fall into emotional or psychological patterns that affect decision-making, particularly during periods of uncertainty or market volatility.

For much of the last decade, investing felt relatively one dimensional. Falling inflation, near zero interest rates and abundant liquidity rewarded long duration growth assets, compressed dispersion and made passive exposure difficult to challenge.

The June jobs report underscored our thesis that while the labor market remains in the 'economic plus column,' some of the prior months' increases in new hiring seemed a bit too high.

Over the first half of 2026, markets faced some expected — and unexpected — tailwinds and headwinds, ranging from geopolitical developments, blockbuster corporate earnings, increasing artificial intelligence (AI) scrutiny, resilient economic data, and a new Federal Reserve (Fed) Chair.

Royce Investment Partners: In this second quarter recap, Francis Gannon discusses how US small-and micro-cap stocks have continued to lead the US equity market in a robust period for equities.

Fixed income transition costs are increasingly driven by what happens in credit markets. As credit trading becomes more efficient, the cost of transitioning fixed income portfolios is coming down, and how those transitions are executed is changing too.

The shortened trading week brought the second quarter of 2026 to a positive close. Stocks ended slightly lower for month, but closed the quarter on a nice uptick. The US and Iran resumed peace talks, helping stocks push higher.

It feels like gold has tanked this year, but the yellow metal was only down about 7 percent through the first six months of 2026. The sharp price rally to kick off the year exacerbated the scope of the ensuing correction. Gold is down about 28 percent from its record highs.

The first half of 2026 has provided a considerable amount of news for investors to digest. Notably, equity markets were higher by nearly 10%, oil prices spiked over 50% before retreating nearly back to where they started, there is a new Chair of the Federal Reserve in Kevin Warsh, and AI infrastructure spending surged.

Significant interest appears to be accumulating around capacity expansion in the market. The primary mechanism driving this activity may be a structural capital expenditure cycle (CapEx). One where a prevailing market dynamic could transform one company’s CapEx directly into another company’s revenue. .

Global equities rebounded in the second quarter as confidence in the AI investment cycle strengthened. As the third quarter begins, we believe markets have become priced for a smooth and profitable AI build-out, leaving little margin for error. June’s sharp sell-off in the Magnificent Seven stocks underscored how quickly sentiment can shift when crowded AI trades are priced for near-flawless execution.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

The June employment report’s headline readout was softer than expected, but the details reinforce my view that the U.S. economy remains on a stable footing. Headline payroll growth disappointed, yet the previous two months—which had surprised to the upside—were revised lower, bringing hiring back toward a pace that is far more consistent with a mature expansion.

Higher rates, weaker underwriting, and software concentration are exposing vulnerabilities in direct lending and leveraged loans, while high yield bonds appear better positioned.

The S&P 500’s recent advance is masking a more dynamic story for US equity investors. Market winners remain confined to a tight clique of AI-related technology stocks, yet more companies are showing attractive fundamentals. For active equity investors, we believe this points to a more diversified and differentiated opportunity set ahead.

Bypass the headaches of individual closed-end funds. Discover how Invesco's PCEF bundles over 100 CEFs to capture June's debt rallies.

The U.S. Treasury launched the Trump Accounts for childhood wealth building. Discover the five low-cost index ETFs anchoring the program.

While the Federal Reserve left interest rates unchanged at the latest meeting, investors increasingly speculate that rate hikes are on the table in 2026.