Market Update: Q2 2026 

Hello! I’m happy to share our stock market update for the last quarter, Q2 2026. 

After the first three months of 2026 saw sharp declines in stocks, now the last three months stocks rebounded. The S&P 500 US stock index had its best three months since 2020. 

This shows something important: markets can change fast. Bad months can be followed by good months. This is why we tell people: stay invested. Do not panic when markets are down and sell.

What happened in Q2?

Here are the main things that happened from April to June:

• Technology stocks came back strong. In Q1, technology and AI (artificial intelligence) companies struggled. In Q2, they did very well. Companies that make computer chips and AI technology had strong profits. This helped push the whole stock market up.
• Middle East conflict continued. Tensions between the U.S. and Iran caused oil prices to go up significantly in the first quarter. In May and June, this settled for a while and oil prices dropped accordingly. But near the end of June, fighting escalated again. We will have to see what will happen to oil prices in the near future.
• Interest rate expectations changed. Previously, we thought the Feds would continue to lower interest rates. But now, as the prices for many things went up more than people expected (rising inflation), investors now think the Federal Reserve may pause their cuts or may even raise interest rates instead. 
• Company profits were strong. About 85 percent of S&P 500 companies made more money than expected this quarter. This is a very high number.

Overall, Q2 2026 was the opposite of Q1 2026. Technology stocks led the market down in Q1. Technology stocks led the market up in Q2. Small companies, and international companies (those domiciled outside the U.S.), also did well this quarter.

How Did Investments Perform in Q2 2026?

• S&P 500 (large U.S. companies): up about 14 percent
• Nasdaq Composite (many technology companies): up about 21 percent
• Dow Jones Industrial Average (30 large U.S. companies): up about 13 percent
• Russell 2000 (small U.S. companies): up about 9 percent

• MSCI EAFE (companies in developed countries outside the U.S., like Europe and Japan): up about 11 percent
• MSCI Emerging Markets (companies in developing countries, like China, India, Brazil): up about 20 percent

• The U.S. bond market (representing investor loans to companies or governments) was mostly flat. It went up only about 1 percent.

What Should We Watch for Q3 2026 and Beyond?

The second quarter brought good news. But here are some things we are still watching:

• The Federal Reserve’s next move is unclear. For most of 2025, the Federal Reserve was cutting interest rates. Many thought that would continue but now there is more uncertainty and we are still watching how they will move next. It depends on inflation.
• Stock prices are high again. After this quarter’s rally, stock prices are high and may be overvalued compared to their earnings. This means if there is some report of bad news,  the markets could react more strongly.
• The Middle East situation is not fully solved. We will still be watching to see how this conflict will continue to impact oil prices and if they will spike again. 
• Company profits still look strong. Experts still expect company profits to grow a lot for the rest of 2026. This is a good sign. 
• History shows patience is important. In years with midterm elections, the third quarter (July, August, September) is often more volatile and difficult after a strong first half of the year. Usually, the market recovers by the end of the year. Of course, this is not a guarantee. We will continue to be watching to see if this happens again.

Key Takeaways

• Markets can change quickly, in both directions. That’s why it’s critical to remain invested. Reacting to short-term news is usually not a good strategy.
• Diversification (spreading investments across different types) worked well. Small companies, international companies, and emerging market companies all did well this quarter, along with large U.S. companies. This shows the value of not putting all your money in just one type of investment.
• Bonds still played their role. Even though bond returns were small this quarter, bonds still helped keep portfolios more stable during a quarter with big swings in stocks and interest rates.

As always, we focus on long-term planning. The market will always surprise us in the short term. This is normal. What matters most is staying disciplined, staying diversified, and keeping a long-term perspective. We are here to help you do that.

[Video Thumbnail Image Description: There is a cutout of a woman with brown hair in professional attire smiling at the camera. The background shows a red-tinted stock market graph with numbers in various places. There are rectangular boxes on the bottom right that are in red and white. Text reads: “Quarterly Marketing Insights, Q2 2026, With Lisa Dewing.”]