Market Review

The first half of 2026 tested investors with geopolitical tensions, shifting expectations for interest rates, and periods of elevated market volatility. Despite these challenges, markets proved resilient, as improving sentiment and broader market participation helped drive positive returns across most major asset classes.

Global equities rebounded strongly during the second quarter. U.S. equities gained 15.2%, bringing year-to-date returns to 10.2%. International developed markets also posted solid gains, while emerging markets were the standout performer, returning 24.1% for the quarter and 24.0% year-to-date. Much of that strength came from technology-focused markets such as Taiwan and South Korea, where demand for AI-related semiconductors drove concentrated returns.

Within the U.S., one of the most encouraging developments was the broadening of market leadership. While artificial intelligence remained a key investment theme, leadership shifted from the large technology companies investing heavily in AI to the businesses building the infrastructure needed to support it, including semiconductor manufacturers and chip equipment companies. At the same time, gains spread beyond technology, with the broader S&P 500 outperforming the Magnificent Seven year-to-date. Small-cap stocks also participated in the rally, returning 19.7% during the quarter and 23.9% year-to-date, reflecting improving investor sentiment and a stronger outlook for the U.S. economy.

Fixed income delivered mixed returns. U.S. bonds gained 0.7% during the quarter and are up 0.6% year-to-date, while international bonds remain down 0.9% for the year as a stronger U.S. dollar weighed on returns. High-yield bonds led fixed income markets, gaining 2.5% during the quarter and 2.0% year-to-date, as improving investor confidence and resilient economic conditions supported riskier corporate debt.

Gold declined 13.5% during the quarter and is down 7.4% year-to-date, as expectations for higher interest rates and a stronger U.S. dollar reduced demand for the precious metal.

Overall, a diversified Global 60/40 portfolio gained 9.3% during the quarter and is up 6.8% year-to-date. The first half of the year reinforced that market leadership can evolve quickly, underscoring the value of maintaining a diversified, longterm investment approach.