Current Outlook & Portfolio Strategy
Posted on June 29, 2026
Q2 2026 will go down as one of the best quarters in history for U.S. equities. Market participants entered the quarter facing a long list of concerns: geopolitical tensions; monetary policy uncertainty; elevated valuations, and doubts about the durability of economic growth. Yet despite these challenges, corporate America once again demonstrated remarkable resilience, and equity markets responded accordingly.
One of the most significant developments during the quarter was the dramatic reversal in energy markets. West Texas Intermediate (WTI) crude oil, which had surged to highs near $117 per barrel amid escalating tensions in the Middle East, ultimately plummeted to approximately $74 as hopes for de-escalation emerged. The decline in energy prices provided a meaningful tailwind for both consumers and businesses, easing inflationary pressures and supporting broader economic activity.
At the same time, earnings season proved to be one of the strongest on record. Across sectors, companies exceeded expectations at an impressive rate. Revenue growth remained healthy, margins proved more durable than many anticipated, and management teams generally expressed confidence about future demand. While certain industries such as healthcare, software and private credit face ongoing challenges, the overall picture painted by corporate earnings was one of strength rather than fragility.
From a policy perspective, both monetary and fiscal conditions remain broadly accommodative. While interest rates remain above the ultra-low levels that prevailed post-2020, financial conditions continue to support economic growth and corporate investment. Fiscal spending remains constructive, particularly in areas tied to infrastructure modernization, advanced manufacturing, energy security, and technological development.
That said, investors are carefully monitoring the transition at the Federal Reserve. The arrival of new Fed Chair, Kevin Warsh, introduces a degree of uncertainty regarding the future direction of monetary policy. Markets are still evaluating his views on inflation, labor markets, financial stability, and the appropriate path for interest rates over the coming months and years. Target rate probabilities are now pricing in one to two 0.25% hikes in the coming 12 months. However, our view is that rates should be somewhat range-bound and won’t drift far from current levels. Expect near-term flat and long-term lower.
Perhaps the most compelling investment theme today is the continued emergence of what we believe is a new industrial, technological, and artificial intelligence revolution. The rapid advancement of AI capabilities, combined with significant investments in data infrastructure, automation, robotics, semiconductors, and energy systems, is beginning to reshape the global economy. Similar to prior transformational periods, the full impact will likely unfold over many years rather than quarters. We believe we remain in the early to middle innings of this cycle, with substantial opportunities still ahead.
Of course, no economic expansion or market advance occurs in a straight line. There will undoubtedly be volatility ahead. There will be periods when headlines drive fear, when economic data disappoints, or when geopolitical events temporarily unsettle markets. There will also be winners and losers as industries adapt to new technologies and changing competitive dynamics. Not every company will benefit equally from these powerful secular trends, which is why we believe security selection is more important than ever.
For long-term investors, however, volatility should be viewed as a feature of investing rather than a flaw. Market corrections and periods of uncertainty often create opportunities for disciplined investors to deploy capital into high-quality businesses positioned to benefit from long-term structural growth.
While we remain mindful of risks and continue to approach markets with appropriate caution, our outlook remains constructive. Strong corporate earnings, accommodative policy conditions, easing energy prices, and the ongoing technological transformation of the economy provide a solid foundation for continued expansion.
As always, we encourage investors to focus on long-term objectives rather than short-term headlines. If you’d like to learn more about our current market outlook or explore additional investment insights, visit our Investment Services page for the latest commentary and resources.
Logan S. Webb, CFA, CFP®
Chief Investment Officer
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