(July 1): The best quarter in six years for stocks ended on a positive note, with chipmakers extending their surge from war-driven lows and signs of economic resilience fueling optimism about corporate earnings.
A rally that’s added more than US$8 trillion to the S&P 500’s value in three months powered ahead as data showed strength in both jobs and consumer sentiment. In a tech-led advance, the Nasdaq 100 climbed 1.7% while a gauge of semiconductor firms notched the best quarter ever. Treasuries fell. Oil declined on hopes for a permanent deal to end the Iran war.
A fresh batch of economic data continued to underscore growing momentum. Though a surge in prices during the Middle East conflict has depressed consumer sentiment and eaten into wage gains, it’s had less of an impact on demand for workers as spending has remained strong.
Today marks the end of what’s turned out to be a “monster” first half on Wall Street despite the rocky geopolitical issues and choppy trading that’s been prevalent across the board during the period, according to JJ Kinahan at Cboe Global Markets.
“The markets have proven to be the ultimate grinder as they keep crushing it despite a lot of hand-wringing that has gone along with this incredible rally that has endured deep sell-offs, the Iran war and a number of other outside influences,” he said.
For all the swings during the first half of 2026, buying the dip has become the go-to strategy for retail investors. The group has bought almost three-and-a-half times the average daily amount on days the S&P 500 has dropped, according to data compiled by Scott Rubner at Citadel Securities.
See also: SEC mulls new ETF rules as US$16 tril boom disrupts status quo
“Despite some twists and turns, the path of least resistance for stocks broadly remained up and to the right for much of the last three months,” said Jeff Buchbinder at LPL Financial. “While stock market enthusiasm has increased, we do not believe it has crossed the threshold into outright irrational exuberance.”
Some sentiment surveys are stretched, but others remain near long-term averages while positioning has begun to moderate, he added. Meantime, Buchbinder noted that other indicators — including record margin debt and highly overbought conditions in key leadership groups like semiconductors — point to a market with an overly optimistic outlook.
“Strong fundamentals and powerful structural themes such as AI can justify elevated valuations for a while, but they do not eliminate the typical ups and downs,” he said. “Rather than signaling the end of the bull market, current conditions appear more consistent with a mature bull market that may be due for a pause. We remain constructive on equities.”
See also: US stocks mixed as indices head for best quarter since 2020
A rotation into cyclical corners could have legs especially if oil prices keep heading toward levels prior to the war and the economy remains resilient, according to Mona Mahajan at Edward Jones. She would recommend both large-cap stocks, which offer exposure to the AI story, and mid-cap shares, which could continue to do well if the broadening theme delivers.
Uploaded by Isabelle Francis
