Quarterly Insights

2026 Mid-Year Outlook

July 1, 2026

Mike Ovshak, CFP® | President, Owner, Senior Financial Advisor
Nick Ovshak, CFP®, CRPC® | Financial Advisor, Manager

Click the image below to view a video of Nick’s Market Commentary: 

There's a saying that smooth seas don't make skillful sailors. That was certainly true for investors in the first half of 2026. We faced the war in Iran, an oil-driven jump in inflation, and big questions about artificial intelligence. Yet markets climbed to new highs, company profits grew at a strong pace, and most types of investments performed well. The takeaway: staying invested and keeping a long-term view continues to pay off.

This lesson matters even more now because we're deep into both the economic growth phase and the market's upward run. It can feel like the same worries (inflation, the Federal Reserve, high stock prices) keep resurfacing. Managing through that discomfort, rather than reacting to it, is what rewards patient investors over time.

Where We Stand in the Cycle

The current period of economic growth started in April 2020 and just passed its sixth anniversary. Economists have worried about a possible downturn several times along the way, including when inflation spiked in 2022 and when tariffs disrupted trade last year. The economy has proven resilient each time.

Today's picture is mixed but generally healthy: inflation is elevated but could ease if oil prices stay low, hiring has picked back up, and businesses are investing more. Consumers say they feel pessimistic, but they're still spending. Historically, this “healthy but mixed” backdrop has been a good sign for markets long-term.

Markets Delivered Broad Gains

Through June, the S&P 500 rose 9.6%, the Nasdaq 12.8%, and the Dow Jones Industrial Average 8.9%. The second quarter alone was one of the strongest on record, aided by a market rebound that began in April once the Iran conflict started to stabilize.

It wasn't just U.S. large companies that did well. Bonds gained a modest 0.6%, even as the 10-year Treasury yield rose to 4.47%. International stocks in developed countries gained 7.7%, emerging-market stocks jumped 22.7%, and commodities rose 12.3%. This wide participation shows the value of holding a diversified mix of investments rather than betting on just one area.

The strong environment also fueled a wave of high-profile stock market debuts, including SpaceX, with OpenAI and Anthropic expected to follow. These listings expand the choices available to everyday investors, though what matters most is how these companies perform over years and decades, not their first days of trading.

One thing to watch: U.S. stocks are now priced at about 20x expected earnings, which is above the long-term average of 16x. This doesn't tell us much about what will happen over the next year or two, but it's a reminder to stay balanced and not overly concentrated in one area.

Inflation and Oil Prices

Much of this year's inflation story traces back to energy. Conflict in Iran disrupted oil shipping routes, pushing Brent crude to nearly $120 a barrel and gas prices above $4.50 a gallon. However, both have since fallen back, with oil near $73 and gas under $4.00.

Overall consumer prices (CPI) rose 4.2% over the past year, the highest reading in years, driven largely by that spike in gas prices. But “core” inflation, which strips out food and energy, rose a milder 2.9%. That gap tells us this round of inflation has been concentrated in energy costs rather than spreading broadly, and many economists expect it to ease as oil prices normalize.

Ups and Downs, but Nothing Unusual

Markets experienced brief bouts of turbulence this year tied to tariffs, the Middle East, and Fed uncertainty. Even so, the VIX (a common measure of market volatility) sits at 16, below its long-term average of 18.4. The S&P 500's worst decline this year was 9% from peak to trough, and the index has already bounced back to notch 24 new highs in 2026. The real risk for investors isn't volatility itself, it's how we react to it; jumping in and out of the market often backfires.

Why Staying Invested Beats Sitting in Cash

Many investors have parked money in cash during uncertain periods. Money market fund balances have hit a record $7.9 trillion, more than double pre-pandemic levels. While cash feels safe, it often doesn't keep pace with inflation. Given current inflation and interest rates, the real, after-inflation return on cash like CDs is currently negative, meaning its purchasing power is quietly eroding over time.

This is why a balanced portfolio, one built for growth, income, and stability together, remains the better long-term strategy as this cycle continues.

The Bottom Line

The first half of 2026 rewarded investors who stayed diversified and kept a long-term perspective, even as headlines about geopolitics and the economy created short-term noise. Expect more surprises in the second half, from developments in the Middle East to the midterm elections to new IPOs. The same principles apply: stay diversified, stay patient, and stay invested.

As always, keep us posted on any changes in your plan, or if you are planning to make substantial withdrawals or have new funds to invest, let us know so we can review appropriate options.

Finally, as we celebrate our nation’s 250th anniversary, may we honor the generations who came before us by making thoughtful, values‑based decisions for the generations yet to come. Enjoy your 4th of July celebrations.

This letter is a general communication being provided for informational purposes only. It is educational in nature and not designed to be a recommendation for any specific investment product, strategy, plan feature or other purpose. Any examples used are generic, hypothetical and for illustration purposes only. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor's own situation. 

Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. 

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