June 2026 Market Update

Mid-month featured the announcement of a U.S.-Iran deal to reopen the Strait of Hormuz, triggering a broad equity relief rally. Energy prices collapsed, with WTI crude oil falling 25 percent during the month to close below $70 per barrel after reaching $115 per barrel earlier in the year.

June 2026

Macroeconomics

Federal Reserve Chair Kevin Warsh held his first FOMC press conference after the committee held interest rates at 3.50–3.75 percent this month. The Consumer Price Index (CPI) rose at an annualized rate of 4.2 percent in May, driven by energy prices. The Fed’s preferred measure of core Personal Consumption Expenditures (PCE), which excludes food and energy, rose at an annualized rate of 3.4 percent in May. The May BLS jobs report was stronger than anticipated, with payrolls increasing by 172,000, while prior months were revised higher by a combined 93,000 jobs and the unemployment rate held at 4.3 percent.

The Conference Board Consumer Confidence Index edged higher in June to 91.2. The ISM U.S. Manufacturing Purchasing Managers’ Index (PMI) decreased in June to 53.3, marking the sixth straight month of expansion despite mixed results in the underlying components, which showed the overall economy growing at a slower pace. The U.S. Dollar Index increased 2.3 percent for the month and served as a headwind for international asset returns.

Equity markets

Markets were volatile in June as the S&P 500 declined 1.0 percent to close at 7,499, but posted a strong second-quarter return of 15.2 percent and was up 10.2 percent for the first half of the calendar year. Sector performance varied widely this month, with Industrials (+7.3 percent) and Healthcare (+6.6 percent) leading, while several sectors were negative, with Communication Services (-7.8 percent) and Energy (-5.1 percent) trailing. Small- and mid-cap stocks were positive and led large-cap stocks on a relative basis. Value outperformed growth on a relative basis, while the S&P 500 equal‑weighted index outperformed the cap‑weighted index.

International equity markets were also volatile this month, with developed markets (EAFE) barely positive at +0.1 percent and ahead of emerging markets (EM), which were in negative territory at -1.4 percent. EAFE performance on a relative basis by region had Europe (+1.0 percent) ahead of Pacific (-1.1 percent). EM performance on a relative basis by region had Asia (-1.1 percent) ahead of Eastern Europe (-1.5 percent) and Latin America (-2.4 percent). The Netherlands (+11.8 percent) led major developed market countries, while Colombia (+12.4 percent) led emerging market countries.

Fixed income markets

Fixed income markets were volatile again, as the month started with concerns about elevated inflation that moderated in the closing weeks, with the Bloomberg U.S. Aggregate Index up +0.2 percent. The U.S. Treasury yield curve flattened further as yields rose across the front and middle portions amid concerns about elevated inflation and new Fed leadership, while the long end declined amid concerns about growth and the fiscal outlook. Investment-grade (IG) corporate and high-yield spreads remained stable amid resilient fundamentals and increased issuance, while mortgage-backed securities benefited from lower prepayment risks as rates remained elevated, enhancing cash flow stability.

Looking ahead

Markets are fluctuating between familiar geopolitical headlines and the impact of AI. The reduction in energy prices is helpful from a near-term inflation perspective, but energy should remain a critical focus as the midterm election cycle ramps up. Investors should remain vigilant about concentrated exposure to mega-cap technology companies as the AI build-out continues to meaningfully affect market valuations and performance. Markets will continue to closely watch new Fed Chair Warsh’s public comments for insight into the degree of forward guidance he may provide about upcoming rate decisions. Recently, he acknowledged that while inflation remains too elevated, risks have abated somewhat, but he also resisted providing clues about possible future monetary policy moves.