• Stocks fall amid Middle East tension - Geopolitics were back in the spotlight today after President Trump declared the ceasefire between the U.S. and Iran over, raising the prospect of an end to peace talks and the potential for renewed fighting between the two countries. The U.S. launched a fresh wave of strikes and revoked Iranian oil waivers, while Iran retaliated by striking military bases in Kuwait and Bahrain. In response, oil prices jumped 4.8% to about $74 per barrel, up from $68.5 at the start of the week, but still well below the $120 level seen at the start of the conflict in March. Stocks finished lower, though the pullback was contained, with the Dow lagging but the Nasdaq ending largely unchanged. Treasury yields rose as the jump in oil prices risks reigniting inflation concerns.
   
• Similar risks, different reaction? - The spike in oil prices and higher bond yields drove a near 10% correction in the first half of the year, but they also underscored the economy’s resilience to these shocks. Renewed geopolitical risks may fuel some near-term risk-off sentiment, but we do not expect investors to react to this round of uncertainty in the same way, for several reasons. First, neither the U.S. nor Iran appears inclined toward a prolonged conflict, in our view, and investors have already seen how reacting to fast-moving headlines can lead to suboptimal portfolio outcomes. Second, we think it would likely take a much larger and sustained rise in oil prices to materially alter the outlook for the economy and corporate earnings. Finally, oil supplies have begun to recover, providing a renewed buffer for energy markets, while the improving labor market helps support household incomes—even as the tailwind from higher tax refunds fades.
   
• Tech rotation adds to risk-offsentiment - After the semiconductor index posted its best quarter on record, the group has turned more volatile, and investors are increasingly questioning the pace and payoff of AI-related capex. Today, semiconductor stocks rebounded, helping the Nasdaq, even as the high-flying Korea equity index closed overnight 20% off its June peak. We are seeing signs of fatigue, with end-user demand for AI becoming more price sensitive and the market starting to penalize companies that ramp spending too aggressively. That said, there are still no clear signs of a meaningful slowdown in demand or investment. The tech sector is expected to deliver the highest revenue growth of all 11 S&P 500 sectors in the second quarter, along with the second-highest earnings growth rate at 63%. However, given the parabolic moves, elevated concentration risk, and the outsized weight of technology in the index, we think investors should complement their exposure with more differentiated sources of return.
  
  Our preferred approach is a barbell strategy: maintain exposure to tech, but balance it with cyclicals. For cyclical exposure, we favor U.S. mid-caps and the industrials sector, which should benefit from infrastructure spending, onshoring trends, and continued adoption of artificial intelligence, automation, and robotics, in our view. For AI exposure outside traditional tech, we favor Communication Services. We think the sector offers meaningful participation in AI beneficiaries, but with less stretched valuations relative to history and still-robust earnings growth. In our view, this provides a more balanced way to express the AI theme without relying solely on the most crowded areas of the market.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data: Bloomberg.} 

• Stocks edge lower amid tech weakness and renewed geopolitical tension – U.S. equity markets traded lower on Tuesday, as weakness in technology shares weighed on the broader indices. Semiconductors were a notable laggard within technology, with the PHLX Semiconductor Index falling more than 4% on the day. The decline followed preliminary second-quarter results from Samsung Electronics, which reported a record quarter; however, the strong results were overshadowed by concerns about whether the robust pace of spending on components needed to build out AI infrastructure can continue at the same rate. Outside of technology, defensive sectors such as health care, consumer staples, and utilities fared better, with each gaining more than 0.9%. The energy sector also outperformed, benefiting from a near 5% rise in oil prices as geopolitical tensions between the U.S. and Iran resurfaced following a military flare-up in the Strait of Hormuz. Higher oil prices also flowed through to Treasury yields, with the 10-year yield climbing to 4.55% on the day and the 2-year yield rising to 4.18%.
   
• Second-quarter earnings season on the horizon – After a strong first half of 2026, investor attention will shift to second-quarter earnings season, which begins next week with several large U.S. financial institutions scheduled to report results. Expectations are for the robust profit growth seen in the first quarter to continue, with consensus estimates calling for S&P 500 earnings growth of nearly 22% year-over-year in the second quarter. At the sector level, information technology and energy are expected to drive much of the growth. Technology-sector earnings are projected to increase by more than 60%, supported by continued investment in AI infrastructure and related technologies. Meanwhile, energy-sector profits are expected to more than double from a year ago, benefiting from higher oil prices during the second quarter. For the full year, S&P 500 earnings are forecast to grow 24% year-over-year. If realized, this would mark the strongest annual profit growth since 2014, excluding the post-pandemic recovery period. We continue to believe the economic backdrop remains supportive for equities, underpinned by stable labor-market conditions and improving manufacturing activity. These factors should support healthy earnings growth in the quarters ahead and provide a favorable environment for equity markets, in our view.
   
• Midyear performance check-in – Global equity markets have started 2026 on a strong footing, with the S&P 500 gaining nearly 11%, including dividends, through yesterday's close. These healthy year-to-date returns have come despite an oil price shock and heightened geopolitical uncertainty during the second quarter, as strong corporate earnings growth and resilient economic activity have continued to support investor sentiment. Gains have also been broad-based beyond U.S. large-cap stocks. U.S. mid- and small-cap equities have outperformed, with the Russell Midcap Index up more than 15% and the Russell 2000 rising over 20% through yesterday's close. International markets have also delivered solid returns, with developed-market equities advancing more than 11% and emerging-market stocks rallying 24%, with performance in emerging markets supported by technology-heavy regions such as Taiwan and South Korea, which have benefited from robust AI-related spending trends. Given resilient economic activity and strong corporate earnings growth, we believe the backdrop for equities remains favorable. In our opportunistic asset allocation guidance, we recommend investors maintain an overweight allocation to equities relative to bonds, with a preference for U.S. large- and mid-cap stocks as well as emerging-market equities.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.} 

• Markets start the week higher as tech stocks rebound - Equity markets closed higher on Monday, with the Dow Jones Industrial Average reaching a record high. Bond yields moved lower, with the 10-year U.S. Treasury yield near 4.47%. In international markets, Asia finished mixed overnight, while Europe was broadly lower. In energy markets, WTI oil prices were little changed, remaining below $70 per barrel, following the OPEC+ decision to increase output. Meanwhile, the U.S. dollar strengthened modestly against major currencies.
   
• Services activity remains in expansion territory: The final S&P U.S. Services Purchasing Managers' Index (PMI) rose to 51.2 in June from 50.7 in May, supported by an increase in new business. While the reading narrowly missed estimates, it remained above the key 50.0 threshold signaling expansion for a third consecutive month. Price pressures eased but remained elevated, reflecting the impact of tariffs and higher fuel costs. The Institute for Supply Management (ISM) Services PMI slowed to 54.0 in June, as expected, from 54.5 in May. The moderation was driven by slower growth in business activity, new orders and supplier deliveries, partly mitigated by an improvement in employment, which returned to expansion. Overall, we view these readings positively. Continued expansion in services — the largest segment of the economy — should help support broader growth and labor-market stability.
   
• Bond yields edge lower – Bond yields moved lower, with the 10-year Treasury yield at 4.47%. Today's move marked a modest reversal of the recent trend higher, as markets have priced in expectations that the Fed's next move could be a rate hike. The Fed's preferred inflation gauge has risen in recent months, partly reflecting higher energy prices. The headline figure moved above 4% in May, while core inflation increased more moderately. With both measures meaningfully above the 2% target, the Fed likely has little room to ease policy, in our view. We also believe the resilient labor market gives policymakers more room to prioritize inflation risks. The unemployment rate remains contained at 4.2%, in line with the Fed's long-run projection, which is widely viewed as its estimate of full employment. While markets reflect some likelihood of a rate hike, we believe a prolonged pause is the most likely outcome. The Fed is unlikely to ease while inflation is moving higher, but there is not yet consensus for tightening among policymakers. Even if the Fed delivers a single rate hike, we believe markets would likely view it as a mid-cycle adjustment, rather than the start of a renewed tightening cycle, provided inflation expectations remain contained.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.} 

Holiday: There was no Daily Snapshot on Friday, July 3, 2026, in observance of the Independence Day holiday.

• Stocks finish mixed following June employment data – Equity markets were mixed on Thursday following the June payrolls report, which showed nonfarm employment rose by 57,000, below expectations for a gain of more than 100,000, while the unemployment rate ticked down to 4.2%. From a leadership perspective, growth sectors such as technology and communication services were among the laggards, weighing on the tech-heavy Nasdaq which declined 0.8% on the day. Contrarily, the Dow fared better, gaining over 1%, aided by strong gains in Apple and Microsoft. Additionally, defensive sectors such as utilities, health care and consumer staples outperformed, each rising by over 2%. Overseas, markets in Asia were mostly lower overnight, with Korea’s KOSPI falling nearly 8% amid weakness in semiconductor shares. European markets, however, closed firmly higher after the eurozone unemployment rate fell to 6.2%, tying a record low. In bond markets, short-term Treasury yields were modestly lower following the below-consensus job gains, while longer-term Treasury yields were little changed.
   
• Job growth slows, but labor-market conditions remain stable – Nonfarm payrolls rose by 57,000 in June, falling short of economists’ expectations for a gain of more than 100,000. The unemployment rate ticked down to 4.2%, though the decline was primarily driven by a smaller labor force. On the payroll side, private employment accounted for most of the increase, rising by 49,000, while government employment added 8,000 jobs. At the industry level, health care and social assistance continued their recent streak of strong job growth; however, a surprising 61,000 decline in leisure and hospitality employment weighed on overall services-sector job creation. In addition, payroll growth for the prior two months was revised lower by a combined 74,000, suggesting a slower but still healthy pace of hiring. Over the past three months, payroll gains have averaged 111,000 per month. Overall, we would characterize today’s employment report as evidence of ongoing stability in labor-market conditions, which should continue to support economic activity through year-end.
   
• A strong first half has historically been followed by further gains for stocks – U.S. stocks posted solid gains in the first half of 2026, with the S&P 500 returning 10.2%, including dividends. This marks the third time in the past four years that the index has gained more than 10% in the first six months of the year. Historically, a strong first half has often been followed by additional gains in the second half. Since 1980, there have been 19 years, including 2026, in which the S&P 500 returned more than 10% during the first half.* Excluding 2026, second-half returns were positive in 16 of those 18 years, or 89% of the time, with an average return of 8.2%.* Looking at the 10 most recent instances of first-half returns above 10%, second-half returns were positive every time, with an average gain of 11%.* While there is no guarantee that history will repeat itself in 2026, we believe the fundamental backdrop for equity markets remains supportive, underpinned by strong corporate earnings growth, stable labor-market conditions, and resurgent manufacturing activity.

Brock Weimer, CFA
Investment Strategy

^{Source for all data not cited: FactSet. 
Source for data cited: *Morningstar Direct, S&P 500 Total Return, Edward Jones}