2Q26 Quarterly Market Review
Quarterly Market Review
Three months ago, oil was spiking, geopolitical tensions were rising, and the S&P 500 had just closed a rough first quarter, down more than 4%. If we'd told you the next quarter would turn into one of the best in years, you'd have been right to ask what we knew that the headlines didn't. Nothing, honestly. We didn't see this coming, and we're skeptical of anyone who says they did.
That's worth sitting with because the uncertainty behind the first quarter's decline hasn't disappeared. It just stopped getting worse, and markets did the rest. The lesson isn't that markets always come back. It's that a portfolio built for uncertainty doesn't need you to time the scary part or the euphoric one. It just needs you to stay in it.
What We'll Cover
Key Takeaways
U.S. stocks posted their best quarter since 2020, as tensions behind the first-quarter decline eased and corporate earnings continued to beat expectations.
The rally broadened well beyond the largest technology names. Small-cap, international, and emerging-market stocks all kept pace or did better.
A new Federal Reserve chair took office mid-quarter, but inflation running above 4% means interest rates may stay higher for longer than many had hoped.
The real lesson of the last six months: fear and fear-of-missing-out are both bad reasons to abandon a plan.
What the Headlines Don't Show
MSCI All Country World Index with selected headlines from 2Q26
These headlines aren't offered to explain market returns. Instead, they serve as a reminder that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.
Past performance is not a guarantee of future results.
In USD. MSCI All Country World Index, net dividends.
MSCI data © MSCI 2026, all rights reserved.
Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.
Headlines are sourced from various publicly available news outlets and are provided for context, not to explain the market's behavior.
How Markets Performed
Returns as of June 30, 2026
Surge and Skepticism
Stocks Roared Back
The S&P 500 posted its best quarterly gain since the 2020 rebound, and the tech-heavy Nasdaq did even better, up more than 20%. Semiconductor stocks had their best quarter on record, driven by continued demand for AI infrastructure.
What made this rally different was breadth. It wasn't only the largest tech names doing the work: small-cap stocks had their best first half since 1991, and emerging markets outpaced the S&P 500 outright. International developed markets gained too, just by less. That's healthier than a market riding on a few names, even when the headline number looks the same either way.
Energy, last quarter's best-performing sector, became this quarter's worst as oil prices retreated. That's exactly what a diversified portfolio is built for: you don't need to guess which sector leads next, because you already own the one that will.
A New Chair, an Old Problem
Jerome Powell's term as Federal Reserve Chair ended in May, and Kevin Warsh took over as the new chair. Markets spent part of the quarter guessing what he actually wanted, and what they got wasn't entirely what many were hoping for. Inflation is running above 4%, more than double the Fed's target, largely because energy prices remain elevated relative to earlier in the year. At his first meeting in mid-June, the new chair held rates steady and stopped hinting that cuts were still coming. Yields rose, and mortgage rates climbed back above 6.5%.
New leadership is a real change. The math of inflation, energy prices, and a growing federal deficit isn't. Bonds did exactly what they're supposed to this quarter: provide income and a reminder that "higher for longer" is still in play.
A Good Quarter, Not a Guarantee
It's worth naming the other side honestly. Valuations are rich by historical standards, and parts of the market are behaving in ways that should make a disciplined investor more careful, not less. Gold slid after a historic run, and silver, which had just topped $50 for the first time in decades, gave back more than half those gains. Even "safe haven" trades can get crowded and unwind fast.
None of this predicts that stocks are about to fall. It's a reminder that easing tensions, an unresolved inflation problem, and a market pricing in real optimism are conditions, not guarantees. Tensions like this don't stay resolved just because markets move on.
Reaction Is Still the Risk
We wrote last quarter that the biggest risk wasn't volatility. It was reacting to it. This quarter proved the point from the other direction: anyone who moved to cash or "waited for clarity" during the worst of the first quarter's headlines missed one of the strongest quarters for stocks in a generation. The instinct to protect yourself after a scare is human. It's also one of the most reliable ways to turn a paper loss into a permanent one.
The same is true in reverse. A quarter this strong creates its own pressure: to chase what's working, to skip a rebalance because "this time is different," to feel behind if your portfolio didn't capture every point of the rally. That deserves the same skepticism as fear does. Discipline isn't a strategy reserved for bad quarters.
Looking Ahead
A rally like this one raises a different question than a scare like last quarter's did. It's not "can I handle this." It's "does my portfolio still look like what I actually meant to build." Two quarters of big swings in both directions is a good time to check, since good news can drift you away from a plan just as easily as bad news can.
Rates, inflation, and whatever the new Fed chair does next will continue to make headlines. None of them are questions you need to answer correctly. The ones worth answering are the ones only you can: how much you're spending and saving, how diversified you actually are today, and whether the risk in your portfolio still matches what you're comfortable carrying, not just what felt fine three or six months ago.
What Actually Matters
If the first quarter tested your discipline on the way down, this one tested it on the way up. Neither is a signal to abandon a plan built for decades, not one earnings season. If this rally has pushed your portfolio away from its target allocation, this is a normal time to rebalance, which, after a quarter like this, usually means trimming what's worked rather than adding to it. That's uncomfortable the same way selling into a decline is, and useful for the same reason.
A plan built around long-term goals should tolerate both kinds of quarters: the ones that scare you and the ones that make you feel like a genius. This one, like the last one, is a reminder that it's the plan doing the work, not the prediction.
Disclosures
All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. The content on this blog is for informational and educational purposes only and should not be construed as personalized financial advice, tax advice, legal advice, an offer or solicitation to buy or sell any security, or a recommendation to pursue any specific investment strategy. The information provided is general in nature and may not be suitable for your individual circumstances.
Olio Financial Planning, LLC (“OLIO”) is a registered investment adviser with the United States Securities and Exchange Commission, domiciled in Virginia. Investment advisory services are only provided to investors who become OLIO clients under a written agreement. Past performance does not guarantee future results, and all investments involve risk, including the potential loss of principal.
Nothing contained herein should be interpreted as a guarantee of any specific outcome. Forward-looking statements or projections are based on assumptions and current market conditions, which are subject to change without notice. Actual results may differ materially.
You should consult your own financial, legal, tax, or other professional advisors before making any financial decisions. OLIO does not guarantee that the information presented is current, accurate, or complete, and assumes no responsibility for any errors or omissions.