Market Commentary
2Q26 Strongest Quarter for Stocks Since Pandemic Rebound
by Sequoia Financial Group
by Sequoia Financial Group
The shortened trading week brought the second quarter of 2026 to a positive close. Stocks ended slightly lower for month, but closed the quarter on a nice uptick. The US and Iran resumed peace talks, helping stocks push higher. The market also got a lift from Alphabet: the newly minted Dow constituent jumped five per cent on Monday, helping the Index close over 52,000 for the first time ever. It advanced further on Tuesday and gained 12.9 per cent for the quarter. The S&P 500 and the NASDAQ fared even better, jumping 14.9 per cent and 21.4 per cent respectively, for their largest quarterly gains since the second quarter of 2020. A strong day for chip stocks helped end their quarters on a high note, as Nvidia, Advanced Micro Devices, and Intel all jumped thanks to bullish analyst notes.[1][2]
Bonds, meanwhile, delivered only modest results for the quarter. The benchmark Bloomberg US Aggregate Bond Index returned just 0.75 per cent, as the economic outlook and inflation pushed and pulled at bond yields and prices. Inflation numbers remain elevated, which could lead new Fed Chair Kevin Warsh to raise interest rates, a negative for bond prices.[3] The economy, however, has shown signs of weakness, most recently in a poor jobs report released on Thursday.[4] That weakness argues for lower interest rates, which could lift bond prices, boost economic growth, and create new jobs. Overall, the competing forces kept the Fed idle during the quarter, and kept bond yields and prices in a somewhat narrow range.
The road ahead is anything but smooth for stocks and bonds. Inflation concerns, uncertainty surrounding Iran, the possibility of an AI bubble, and elevated valuations could all dent the stock market’s healthy year-to-date returns. All those factors were present last quarter as well, but surprisingly strong first-quarter corporate earnings pushed them aside. And we could see a similar story play out this quarter. According to Factset, a record high number of S&P 500 technology companies issued positive guidance for Q2 earnings.[5] And RBC argues that banks are likely to enjoy another strong quarter thanks to positive trends in wealth management growth and interest income.[6] Bond holders won’t profit directly from corporate earnings, but could again earn positive returns if Chairman Warsh and the Fed refrain from raising interest rates at meetings in July and September.
Earnings season kicks off with results from major US banks the week of July 13. This week we’ll get updates on jobless claims and home sales, and the markets will be looking for a positive start to the third quarter.
[1] Stock market news for June 29, 2026
[2] Stock market news for June 30, 2026
[4] 2-year Treasury yield eases as light jobs report reduces Fed hike expectations
The views expressed represent the opinion of Sequoia Financial Group. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Sequoia believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sequoia’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. Past performance is not an indication of future results. Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.
2Q26 Strongest Quarter for Stocks Since Pandemic Rebound