Stocks Finish Strong Q2; Bonds Mixed Last Week

The Dow (+2.0%), NASDAQ (+2.1%), S&P 500 (+1.8%), and EAFE (+2.7%) were all up sharply in the holiday-shortened week.  Conversely, bonds were mixed as taxable bonds fell 0.5% while tax-free municipal bonds gained 0.1%.  The 10-year Treasury yield rose 0.12% to finish the week at 4.49%.

Last week marked the end of the month, as well as the end of the 2nd quarter of 2026.  Despite the AI-related stocks getting crushed (almost 10%) in June, the technology stocks still finished the quarter on a high note, as the NASDAQ posted a 21.6% gain, the largest gain since 2020.  The other stock indices also exhibited a strong quarter, erasing losses incurred in Q1, most notably in March following the start of the Middle East conflict.  At this point, all three stock indices are up over 10% for the year, with the small cap index (Russell 2000) up over 20%.

In economic news, the June employment report showed a gain of only 57,000 jobs, well below the estimate of 115,000.  In a separate report, the unemployment rate fell from 4.3% to 4.2%, demonstrating that the labor market remains strong.  As I have stated numerous times, I don’t like when good news is bad news, and vice versa.  Well, the same occurred with this data, as stocks and bonds both rallied on the news, as it eased concerns of an interest rate hike by the Fed.  In other economic news, the Institute of Supply Managers (ISM) Manufacturing data also slipped slightly but remains in expansion territory.  More importantly, the prices component fell sharply, suggesting that inflationary pressure may be easing as well, now that oil prices have come down off their lofty highs.

For the next three weeks, I am joined by Brad Sorensen, CFA, from Cornerstone Portfolio Research on our video / podcast Financial Planning: Explained.  The first episode airs this Wednesday, as we talk about what happened in the 2nd quarter.  Next week, we review where the economy currently stands, and on Wednesday, July 22, we will be discussing where we are going from here.  These episodes can be found on social media, YouTube, and our website.  Have a great day and terrific week

^{Source:  Yahoo Finance}

^{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.}

^{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}

^{The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.}