July 6, 2026

This June served as a reminder that bull markets rarely move in a straight line. April and May both have posted strong performances across asset classes, which had the second quarter of this year off to a nice start. Unfortunately, June did not continue the trend. Equities started the month on shaky footing and then carried that volatility right through the end of the month. The geopolitical scene in the Middle East has remained top of mind as it continues to influence equity market volatility, both domestically and internationally. Naturally debt markets were spared much of this volatility, but bonds continue to grapple with an uncertain rate environment.

The dispersion between the S&P 500 Index and the NASDAQ Composite Index is only growing as each returned -1.16% and -3.39% for the month respectively. Right now, this dispersion comes down to leadership and exposure to technology sectors. While the S&P 500 Index does have significant technology exposure, it is considerably more diversified than NASDAQ Composite Index in its exposure to other sectors. NASDAQ Composite Index is measurably heavier in technology and AI, with modest exposure to other sectors. If leadership broadens beyond the ‘magnificent seven’ then the gap between the two major indices could close some. This conversation around index composition becomes increasingly relevant as companies like SpaceX continue to grow in scale and attract speculation in the public market.

With SpaceX recently issuing public shares, its influence on public equity markets is becoming increasingly difficult to ignore. Given SpaceX's size and growth opportunity, its inclusion in some indexes and exclusion from others could create meaningful performance dispersion across portfolios. Much like the ‘Magnificent Seven’ have driven returns in recent years, investors benchmarked to indexes that include SpaceX could experience materially different outcomes than those invested in portfolios that are benchmarked to indexes that do not. All said, dispersion has hardly been confined to domestic equity benchmarks, as international markets also experienced meaningful differences in performance across regions this month.

International equities didn’t really present a more encouraging picture than domestic equities in June. As tracked by the MSCI EAFE Index, developed international markets returned -0.38%. Emerging markets closed the month returning -1.40% as tracked by the MSCI Emerging Markets Index. With some dispersion due to currency effects, exposure to China is also quite influential. EAFE has no exposure to China, and the Emerging Markets Index has more than 20% exposure.^1,2 While it hasn’t always been the case, this exposure to China contributed to Emerging Markets underperforming against EAFE this month.

Debt markets returned +0.05% for the month as tracked by the Bloomberg U.S. Aggregate Total Return Value Unhedged Index. The macroeconomic backdrop in June continued to be defined largely by monetary policy uncertainty. The Federal Reserve held rates steady at its June meeting, as broadly anticipated, but Fed communications have left the door open to further adjustments should economic conditions warrant.³

As markets transition into the second half of the year, key questions remain around whether domestic equity leadership can broaden, whether international momentum can be sustained, and how the Federal Reserve will navigate the complex policy landscape. The answers to each of these questions will likely shape the tenor of what is to come.

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