Quarterly Newsletters

Quarterly Newsletter for the 2nd Quarter of 2026

The second quarter of 2026 was a period of resilience amid uncertainty. Geopolitical tensions and inflation concerns weighed heavily on investor sentiment; yet the markets flourished. The Dow Jones Industrial Average (DJIA), on a price return basis, was up 12.90% for the quarter- bringing it positive on the year with a gain of 8.85%. Following suit was the Standard and Poor’s 500 (S&P 500), as it was up 15.20% for the quarter and 10.21% for the year and the NASDAQ that finished the quarter up 21.41% and is now up 12.79% year-to-date through June 30. The overseas market, after a slight loss in the first quarter, rebounded with the MSCI All Country World ex-U.S. Index posting a 14.49% return and the Emerging Markets Index returning an impressive 24.05% for the second quarter. In the fixed income environment, the Merrill Lynch 3-month Treasury Bill Index yielded 0.89% and the Bloomberg Aggregate Bond Index returned 0.67% for the quarter.

Fixed Income Market (Bonds): Chairman Kevin Warsh took the helm, presided over his first Fed meeting in June and placed his stamp on the direction of the Fed under his leadership. Simply stated, he said that some of the economic data that the Fed had looked at for guidance in determining interest rate policies might be a thing of the past. He wants to rely on new, more current data sources- “real-time” information. Additionally, he will not be giving forward-looking guidance. The new Chairman’s emphasis is to secure a 2% inflation backdrop, and he clearly stated that he would not be a rubber-stamp for interest rate cuts. Labor markets and inflation indicators have shifted from earlier this year and have removed the need for rate cuts at this point. Nor is the Fed feeling an urgency to hike rates either. Outside of housing, it is hard to say that interest rate policies are restrictive. The path of the FOMC (Federal Open Market Committee - The Fed) continues to be “steady as she goes”. At this point, we may not see a change in interest rates this year.

U.S. Equity Markets (Stocks): Despite renewed geopolitical pressure in the Middle East, the U.S. stock market continues to display remarkable resilience and enthusiasm. In point of fact, major equity indexes are continuing to hit all-time highs. Oil prices, as a function of the conflicts in Iran and the Strait of Hormuz, seem to be the biggest concern and an important economic signal. Expanded global oil production, alternative export routes, adequate inventories and stable reserves have aided in the control of energy prices. If oil refining margins normalize over the few next months, gasoline prices could resume their downward trend and provide a modest tailwind for increased consumer spending and lower inflation. The broad economy is showing few signs of deterioration or weakness. Estimates for the second quarter GDP (Gross Domestic Product- total market value of all finished goods and services in a country) appear to be a healthy 2% to 2.5%. This is encouraging considering the uncertainty created by tariffs and other geopolitical events. Consumer spending remains strong, money supply continues to expand, financial conditions remain accommodative, inflation pressure appears to be under control, and corporate profits continue to outperform. These fundamentals continue to support economic expansion.

Overseas Equity Markets (Stocks): Ongoing conflicts, particularly in the Middle East, and elevated energy prices have introduced added uncertainty into the global supply chains. Oil prices, fortunately, are on the decline and it appears that the vast majority of headline issues are somewhat mitigated. Geopolitical risks should pivot back to where they were earlier this year- based on fundamentals. The relationship between the U.S. and China, the AI revolution and foreign government investment across the technology sector should become the focal points of most investors. As a function of their respective policies, investors remain cautious about China and Asia. Higher commodity prices and currency pressures may add volatility to emerging markets. Foreign stocks are, however, still priced at “value stock” levels as their P/E Ratios (price/earnings ratios) are extremely low when compared to U.S. equities. This makes the overseas market very attractive. Should the Middle East issue reach resolution in the near future, overseas markets could benefit greatly.

In conclusion, our positions remain unchanged. Recognizing the fact that we still have a formula for volatility, we remain very positive toward the U.S. stock market and the Overseas market. Regarding the fixed income environment, we are still neutral - stay the course. We favor short-term and intermediate-term fixed income investments. Foremost, we continue to emphasize the importance of diversification and encourage all investors to focus on long-term results.

Permit us to express our sincere appreciation for the opportunity to be of service to you. As always, should you have any questions or wish to discuss the above in more detail, please do not hesitate to contact us.

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Sincerely,

COMPREHENSIVE FINANCIAL PLANNING, INC.