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Markets entered the second quarter under pressure, with investors still absorbing the aftershocks of tariff headlines, inflation concerns, uncertainty around interest rates, and rising geopolitical tensions tied to conflict in Iran. That weakness did not last. As trade tensions eased and economic data held up better than feared, investor sentiment improved and stocks recovered sharply.
The rebound was not evenly distributed. Large U.S. companies, especially technology and AI-related names, led the way, while smaller companies and more cyclical areas of the market remained more uneven. Bonds were steadier but still sensitive to changing expectations around inflation, Fed policy, and the path of economic growth.
The result was a quarter that rewarded staying invested, but also reinforced why diversification still matters.
- Broad Market (S&P 500): +15.2% 2Q | +22.3% last 12 months
- Small Companies (Russell 2000): +21.5% 2Q | +40.8% last 12 months
- International Stocks (EAFE): +10.8% 2Q | +20.2% last 12 months
- Emerging Markets (MSCI EM): +24.1% 2Q | +43.5% last 12 months
- Bonds (Bloomberg Agg): +0.7% 2Q | +3.8% last 12 months
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How the Stock Market Performed in Q2 2026
by Prem Patel
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