As we move into the second half of the year there are a variety of areas steering the economy and markets. LPL Research published their Midyear Outlook: Policy, Buildouts, & Bottlenecks to provide investors with their data-driven forecasts.
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FOUR KEY THEMES TO WATCH:
We see four themes shaping markets in the second half. First, U.S. midterms could shift congressional control and policy direction. Second, rising resource nationalism is steering capital toward commodities and real assets and shifting the geopolitical landscape. Third, AI is maturing, and focus is likely to move from buildout to beneficiaries and return on investment. Finally, a leadership change at the Fed adds uncertainty; with inflation elevated and geopolitics tense, the new chair will have little margin for error.
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Here are some key highlights included in the report:
ECONOMY:
We expect economic growth to moderate but remain positive through the balance of 2026, as strong business investment — anchored by AI — will help offset weakness in housing and other rate-sensitive sectors of the economy.
STOCKS:
An improving but still challenging macro backdrop and AI-driven earnings strength will continue to be the key pillars of support that will help the broader equity advance continue through year-end.
BONDS & CASH:
Sticky inflation and resilient growth are likely to keep the Fed on an extended pause, leaving Treasury yields range-bound, with the 10-year expected to finish the year between 4.00% and 4.50%.
PORTFOLIOS:
The overall investment environment remains susceptible to rapid change but is likely to grow more supportive of risk-taking.
>> Read the full report at LPL Research.
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Market Recap
June 2026 was a bumpy month for the major indices yet Q2 finished as the strongest quarterly performance for the market in years.
- The S&P 500 was down -1.06% for the month and ended a two-month winning streak.
- The Nasdaq Composite Index posted a decline of -2.81% for June.
- The Dow Jones Industrial Average (DJIA) rose 2.52% over the course of the month and outperformed the other major indices.
As always, if you have questions about how the economy may impact your investments, please don’t hesitate to reach out to us.
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Sources:
https://www.morningstar.com/indexes/spi/spx/performance
https://www.morningstar.com/indexes/dji/!dji/performance
https://www.morningstar.com/indexes/xnas/@cco/performance
https://www.lpl.com/research/lpl-research-midyear-outlook.html