MARKET OVERVIEW

As of Close of 2nd Quarter 2026

Market Recap

U.S. small caps led major equity asset classes as the most attractively priced part of the market coming into the year. Additionally, value stocks outpaced growth categories amid a broader dispersion in technology.
The second quarter of 2026 was defined by geopolitical volatility, stubborn inflation stemming from global supply and energy shocks, and shifting monetary policy expectations. The Federal Reserve kept rates on hold, causing the 10-year U.S. Treasury to hover generally in the 3.75% to 4.25% range as rate-cut expectations were pushed back to late Q3.
Investment grade corporate bond spreads have widened slightly but remain near historic tights, pressured by heavy new corporate issuance and geopolitical tensions.
US labor market remains solid despite slowing growth while home sales remain slightly above 2025 levels.

Consensus S&P 500 earnings growth for 2026 remains robust, projected at roughly 16.4% year-over-year. The S&P 500 is trading at roughly 20.5 times 2026 earnings, remaining slightly elevated but reflective of an underlying market backed by fundamental earnings
growth.
We expect the Federal Reserve to hold rates steady in the 2nd half of 2026. Rate hike expectations have cooled as we see energy
prices stabilizing despite sticky inflation.
Economic growth is expected to be a driving force for US equities. Real GDP is holding steady, with underlying demand buoyed significantly by data-center builds, artificial intelligence intellectual property, and high-tech investments.
We anticipate earnings growth to remain strong and be a catalyst for a bull equity market. We favor equities over bonds while bond yields remain attractive at these current levels.