By Logan Gilland, CFP®
My wife and I joined the YMCA last week. Unfortunately our New Year’s goal to get in better shape had a flat tire about three weeks into January. However, I’ve found the halfway point of the year is a great time to check back into all of those goals and get back on track. I am currently in the process of going through the 5 goal-setting areas or my 5 Fs: Faith, Fitness, Family, Finances, and Friends. You cannot push forward with any of them without first being honest about what worked in the first six months and what didn’t.
I wanted to do the same thing for the market. Here are the three themes that I think have driven 2026 so far, grading on what worked and what didn’t, with an eye on what could be coming in the second half.
Theme One: Geopolitics
What worked
Trade tensions actually cooled a bit this year. The EU implemented its trade deal with the US on July 1st, dropping duties on our industrial exports in exchange for a flat rate on their goods coming here. China and the US are also working on rolling back tariffs on agricultural products. None of that made headlines the way tariffs did in past years, and that is the point. Quiet can be good news for markets.
What didn’t work
The war between the US, Israel, and Iran has been the single biggest geopolitical story of the year, and it is still not resolved. It started at the end of February, and by June a memorandum of understanding was signed to work toward ending it. Since then it has been a back and forth with headlines that feel like it may be a long time before we get resolution. There was even news this week that another ship was hit in the Strait of Hormuz.
What’s next
For markets, the war has felt like a white noise machine. It has always on in the background, and every so often a headline about a new warning near the strait or a stalled round of talks turns the volume up for a day or two before it fades again (obviously an important headline for the world but it has been less so for markets recently). I expect that pattern to hold into the second half. That said, I think the market’s real attention has already shifted somewhere else. Kevin Warsh was sworn in as the new Fed Chair in May, and he held his first meeting as chair in June. He has signaled a shift away from the Fed’s recent forward guidance and forecasting style toward a more data dependent, hold close to the vest style reminiscent of the Fed’s history. I believe that means jobs numbers, inflation prints, and GDP readings are going to be in focus through the rest of the year. Get ready to hear Warsh’s name a lot.
Theme Two: Technology and Earnings
What worked
Earnings were about as good as it gets through two quarters of 2026. S&P 500 index companies are on pace to grow earnings per share nearly 28 percent year over year. Despite the market sitting near record highs, stocks are actually cheaper today on a relative basis than they were in January, because earnings have grown faster than prices have.
What didn’t work
For most of the first half, almost all of that growth was concentrated in one corner of the market. Technology, and specifically the AI and semiconductor names inside the sector, did the heavy lifting. That is a fine strategy when it is working, but it makes the whole market feel like a basketball team that lives and dies by the three point shot. We saw exactly that in June, when a soft guidance number from Broadcom and a sharp selloff in South Korea’s biggest chipmakers knocked the wind out of the AI trade for about two weeks.Then Micron reported blowout earnings and the same stocks ripped right back. Live by the three, die by the three, then live by it again a week later.
What’s next
The good news is the roster is seemingly getting deeper. Since early June we have started to see real strength in industrials, healthcare, financials, and consumer staples, sectors that had been sitting on the bench while tech carried the scoring load. Last week we saw some selloff in the technology areas but some growth in these other areas. I expect that broadening to continue into the second half. The only concern is that if the tech area does struggle, we may not see the strength of the other stocks show up in the in broad market since tech makes up such a big portion of the broad indexes.
Theme Three: SpaceX and the AI IPO Wave
What worked
Whether SpaceX’s IPO was a success depends entirely on what you expected going in. Investors expectations ranged from under $100 a share to well above $200 before it ever traded. SpaceX ultimately priced at $135, raised $75 billion, and opened at $150, making it the largest IPO in history at a valuation of roughly $1.7 trillion. The stock price popped over $200 a share in the days that followed before pulling back into the $150s, which is a wild ride but still well above where it started. However, from a SpaceX perspective it did exactly what an IPO is supposed to do. It proved that capital markets are still willing to fund the AI infrastructure buildout at a massive scale while giving everyday investors a seat at a table.
What didn’t work
That volatility looks to have spooked the two companies expected to follow SpaceX into the public markets. OpenAI has reportedly begun leaning toward pushing its IPO into 2027, in part because SpaceX’s swings have likely made investors and bankers more cautious about mega cap AI listings. Anthropic, the company behind the Claude chatbot, has filed the paperwork for an IPO and is still reportedly targeting a debut later this year, but has not announced a firm timeline either.
What’s next
I think of these IPOs like a really rich dessert. You can only have so much before it potentially becomes too much of a “good” thing. Most rational investors only have so large a slice of their portfolio they are comfortable putting into higher volatility names, and I don’t think many of them can fully participate in three of the biggest IPOs in history all in the same year. That is likely part of what drove the tech selloff we saw in June. To free up cash for something like SpaceX, investors might have to sell something else first, and some of that selling likely came out of the same high flying names, Micron, Sandisk, and Nvidia among them, that had carried the market for months. I expect that same dynamic to play out again if and when Anthropic and OpenAI actually come to market.
Where That Leaves Us at the Half
Despite what has felt like chaos in the markets at times this year, in our assessment, it has been a strong first half. The team that lived by the three has mostly carried us, the rest of the roster is starting to perform, and every time the market got knocked down this year, it got back up before the next possession. We believe the positives have outweighed the negatives so far.
We are anticipating a continued bumpy ride through the rest of the year. But we let the data and the numbers be our guide, not the headlines. Earnings season kicks into full gear next week, and we will be watching closely as the third quarter gets underway.
If you want to talk through how any of this affects your own plan, or just want to compare 5 F’s lists, reach out to our team HERE.
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