June 2026 Market Outlook

Markets closed out May at all-time highs, and they did it against a backdrop that, if you only watched the news, would have you bracing for the worst — higher interest rates, a recent uptick in inflation, elevated oil prices, and ongoing tension in the Middle East. Stocks climbed anyway. Here’s what stood out this month and how we’re thinking about the summer ahead.

A Strong First Five Months

The S&P 500 is up roughly 10% through May, with the Nasdaq up close to 20% on the year. May itself was a standout — the S&P added about 6% in a month where, seasonally, we’d have been content with flat.

That strong start is worth putting in context. The table below shows every year since 1975 in which the S&P was up more than 9% through May — 16 in all. In every single one, the full year finished positive, averaging about +23%. The second half of the year was positive in 13 of the 16, with an average second-half gain of roughly 8.5%. The three exceptions — 1975, 1986, and 1987 — are all decades old. None of this guarantees anything; it’s history, not a forecast. But it’s a data point that leans constructive rather than cautionary.

We also watch market “breadth” — essentially, how many stocks are participating in the rally rather than just the big tech names. Breadth has been strongly positive this year, and the equal-weight S&P 500 (which treats every company the same regardless of size) recently made a new high. When the average stock is participating, that’s the sign of a healthier, more durable market — and it’s something we’ve been waiting to see.

Earnings Did the Heavy Lifting

The first quarter of 2026 delivered some of the best corporate earnings we’ve seen since the post-COVID period. Earnings per share grew meaningfully quarter-over-quarter, all 11 sectors of the S&P showed improvement, and sales rose double digits year-over-year. The takeaway: despite the constant talk of a stretched consumer, people are still spending, and company fundamentals — particularly in technology — are supporting prices rather than running purely on hype.

The Fed, Rates, and Oil

The next Federal Reserve meeting lands mid-June, and it’s the new chair’s first — which tends to invite extra scrutiny. With the federal funds rate now sitting a bit below the 2-year Treasury yield, there’s room for the Fed to simply pause rather than rush to act. We’d view a steady, patient Fed as a fine outcome.

On inflation and oil: the recent inflation reading ticked up to a multi-year high, and oil has been elevated for a couple of months, which has pressured interest rates. Our view is that these are shorter-term pressures rather than a permanent regime. We also remain in the middle of a historically large Treasury refinancing cycle, which can keep upward pressure on yields through much of the year before easing as we approach year-end.

The Big IPOs are Coming

The most talked-about story for the second half of 2026 is a wave of marquee IPOs — SpaceX, OpenAI, and Anthropic are all expected to come to market. Combined, they could be worth on the order of $3 trillion — roughly ten times the combined size of the three largest IPOs in U.S. history (Alibaba, Facebook, and Uber). That’s a significant amount of new market value arriving in a short window.

A few measured thoughts for anyone tempted to chase them:

• New issues this size can create short-term headwinds for related sectors (think tech), as investors sometimes sell existing winners to fund new positions.

• History is full of cautionary tales. GoPro opened around $30, ran to roughly $90, and has spent the years since drifting down to a few dollars. Facebook opened near $45 and fell to the high $20s within its first month — before going on to become a great long-term holding.

• Insiders typically can’t sell for about six months (the “lockup” period), and shares often drift lower as that date approaches. Patience usually beats paying the highest price on day one.

  
  

If you can’t get an allocation directly, there are funds that may hold some of these names — worth a look, but the manager and the costs matter. As always, we’re happy to talk through whether any of this fits your specific situation.

Our Outlook for June

We’re cautiously bullish. Strength tends to lead to more strength, and the underlying earnings picture supports the move. That said, we’re carrying a little extra cash and short-term Treasuries in our models, because some of our internal data suggests the market may need to pause and digest for a while. June in midterm-election years is historically one of the softer months, and that mid-month Fed meeting has a habit of stirring things up. A flat-to-quiet month wouldn’t surprise us — and after a run like this, a breather would be healthy.

We’ll be back next month to see how it played out.