Taking Stock: Executive Summary June 30, 2026

Once again, the market proved that it doesn’t have to be smooth to be profitable. In spite of continued uncertainty and the resulting volatility (on-going Iran conflict, persistent inflation, a new Fed Chairman, concerns over elevated valuations, etc.), stocks basically hit it out of the park again.

Volatility. It seems to be a “four-letter-word” for investors, when in fact it’s just a normal part of investing. “Volatility is the price of admission. …You have to pay the price to get the returns” (financial commentator, Morgan Housel). And so it was in the second quarter: a rocky ride, but one of the strongest periods for U.S. stocks since 2020. Robust earnings seemingly trumped the headwinds, driving double-digit market returns for the quarter. 

We expect strong earnings growth to continue during the second half of the year. Far more companies are reporting upward revisions to earnings estimates than not. But for how long? Could surging costs materially pressure profit margins? Maybe. How much capital spending is related to the AI boom, and can it continue? No one knows. When’s the next rate cut? Probably not this year. Again, lots of uncertainty and lots of “noise,” as Jim Spencer would say.  Nuveen CIO, Saira Malik, put it like this, “Geopolitical gyrations, volatile short-term economic data and the incessant thrum of prediction markets all contribute to the cacophony.” We maintain our belief that a long-term perspective helps lower the volume. As stated in our Q1 2026 summary, “We remain committed to maintaining a disciplined approach, mitigating downside risk by concentrating on fundamentals and investing in quality companies in a diversified portfolio -- to staying the course.”

Recent economic data reflects a resilient and overall healthy economy, despite the plethora of negative news so often broadcasted:

Q2 Economic Data:

Gross Domestic Product (GDP). The GDPNow model estimate for real GDP growth in Q2 2026 is a modest 1.4% (seasonally adjusted annual rate), with continued growth amid on-going inflation and affordability risk. In Q1 2026, estimated real GDP increased at an adjusted annual rate of 2.1%, up from 0.5% in Q4 2025. (A growth rate between 2% and 3% is commonly considered “normal.”)  

Unemployment. The U.S. employment market remains stable, with total nonfarm unemployment increasing +57k in June and the unemployment rate little changed at 4.2%.

Consumer Confidence. The Conference Board Consumer Confidence Index, an indication of consumer attitudes and buying intentions, increased 0.6% in June to 91.2.  The index remains below the baseline of 100, amid continued inflation concerns and geopolitical uncertainty.   

Consumer Price Index (CPI). The CPI for All Urban Consumers (CPI-U), a measure of inflation which shows “cost of living” fluctuations, increased 0.6% in May on a seasonally adjusted basis, with the energy index accounting for more than 60% of the all-items index increase. Over the past 12 months, the all-items index increased 4.2% before seasonal adjustments, well above the Fed’s 2% inflation target.

Earnings. For Q2 2026, the estimated (year-over-year) earnings growth rate for the S&P 500 is 23.6%, significantly higher than estimated at the onset of 2026. And it’s fueling U.S. markets to new heights. If this is the actual growth for the quarter, it will mark the 2nd straight quarter of earnings growth above 20% for the index, with the adjusted earnings growth for Q1 at 28.8%.   

Housing. Persistently high costs and elevated mortgage rates continue to dampen Builders’ perceptions, with the NAHB/Wells Fargo Housing Market Index (HMI) showing Builders’ sentiment falling to 35 in June (50 being the breakeven between good and poor).  This represents a 14-month run of readings under 40 for the index, a streak not seen since the 2011-2012 foreclosure crisis. Private housing starts in May 2026 were at a seasonally adjusted rate of 1,177,000, 15.4% below the revised April estimate and 8.7% below the May 2025 rate of 1,289,000.

Looking Ahead:

Look for continued volatility in the second half of 2026, as markets face persistent headwinds (and potential new ones with the approaching U.S. mid-term elections). Yes, investors are facing risks as we begin Q3 … it’s the nature of the beast and why we continually tout the importance of a well-diversified, quality portfolio. But we anticipate strong earnings growth to overshadow challenges into the third quarter and beyond, and most strategists agree.  According to Binky Chadha, Chief U.S. Equity Strategist at Deutsche Bank, “Excluding special factors like favorable base effects and corporate tax cuts, earnings growth is arguably the strongest in two decades.” We expect earnings growth, a resilient economic environment and favorable fiscal and monetary policies to send markets higher, making a bullish case for U.S. equities into the second half of the year. 

We hope you are making summer memories with family and friends and that you had the opportunity to celebrate the historic 250th anniversary of our great nation. Wishing you all the best in your continued pursuit of happiness.  

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator, with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.                                                                                                                                    – The Declaration of Independence, 1776

We are committed to providing you with the highest standard of care in keeping with our corporate mission of 

Building Relationships … Enhancing Lives.

Executive Summary Sources:

https://x.com/morganhousel/status/688045224006926336

https://www.msn.com/en-us/money/markets/stock-funds-rallied-171-in-a-quarter-that-made-investors-heads-spin/ar-AA27dnYi

https://www.atlantafed.org/research-and-data/data/gdpnow/current-and-past-gdpnow-commentaries

https://www.bea.gov/news/2026/gdp-third-estimate-industries-corporate-profits-state-gdp-and-state-personal-income-1st

https://www.bls.gov/news.release/pdf/empsit.pdf

https://www.conference-board.org/topics/consumer-confidence/

https://www.bls.gov/news.release/pdf/cpi.pdf

https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_070226.pdf

https://www.census.gov/construction/nrc/pdf/newresconst.pdf

https://www.nahb.org/news-and-economics/press-releases/2026/06/builder-sentiment-remains-weak-amid-affordability-concerns

https://money.usnews.com/investing/news/articles/2026-05-06/analysis-stunning-us-profit-strength-ignites-stocks-charge-to-record-peaks

https://www.morningstar.com/indexes/dji/!dji/performance

https://www.morningstar.com/indexes/xnas/@cco/performance

https://www.morningstar.com/indexes/spi/spx/performance

https://finance.yahoo.com/quote/%5EDJI/history?p=%5EDJI

https://finance.yahoo.com/quote/%5EIXIC/history?p=%5EIXIC

https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC

Past performance is not indicative of future results.

The views expressed represent the opinion of Asset Management Financial Solutions, Inc. (“AMFS”) and 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. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and AMFS’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.