July 4, 2026 Market Update
Market Recap: Chip Dip.
U.S. stocks ended the holiday-shortened week on a mixed note. The Dow finished Thursday at a record high, while the S&P 500 was little changed and the Nasdaq fell with semiconductor and chip manufacturer stocks tumbling as investors took profits following the sectors’ record-setting rally in the first half of the year.
The bond market found its footing after June payroll growth came in weaker than expected, easing fears that the Federal Reserve may need to raise rates soon to fend off inflation. That said, the softening labor market could be a precursor to an economic slowdown in the second half of the year.
Looking ahead, investors will return from the long weekend focused on whether the recent rotation away from AI-driven technology stocks will continue. With major indexes still near record highs, corporate earnings, inflation data, and Federal Reserve policies will all have a say in whether Mr. Market’s summer rally can continue.
Market Performance
Market Commentary: Patience Can Be Profitable.
Despite war in the Middle East, volatile oil prices, stubborn inflation, and persistent concerns about artificial intelligence valuations, U.S. stocks delivered one of their strongest quarterly performances in several years. Once again, much of the rally continued to be driven by companies expected to benefit most from the AI boom.
Even more remarkable, investors had to be especially diligent to take part in the second quarter's stellar returns.
- Benchmark Brent crude surged above $113 a barrel during the height of the conflict with Iran, before falling to roughly prewar prices.
- Bond yields vacillated dramatically before settling at elevated levels as a newly configured Federal Reserve under Chair Kevin Warsh signaled a rigid commitment to containing inflation.
Through it all, investors were willing to pay premium prices for businesses leading the next wave of technological innovation.
The question now is whether the rally can continue through the second half of the year. Even strong earnings reports may not be enough if future growth fails to match today's optimistic forecasts. Then again, the past quarter serves as another reminder that investors who remain patient through periods of uncertainty are often rewarded.
In Case You Missed It: God Bless America!
When the Declaration of Independence was signed in 1776, Britain had the world's most powerful military, the largest navy on earth, and a population roughly three times that of the American colonies. Few observers believed the thirteen colonies had any realistic chance of winning a war against the British Empire. This Fourth of July marks the 250th anniversary of one of history's most unlikely victories.