AE Wealth Management Quarterly Market Report for Q2 2026

Geopolitical tension, rising oil prices and a leadership change at the Fed dominated the second quarter — yet U.S. equity markets finished near all-time highs. Keeping your long-term plan in focus remains a good approach as you head into the second half of 2026.

The second quarter of 2026 will be remembered as one defined by a single, overarching theme: the U.S. conflict with Iran.¹

Even after active military operations ceased in early April, the standoff was far from over. The U.S. implemented a blockade of Iranian ports, while Iran closed the Strait of Hormuz, one of the world’s most critical oil shipping passages. Drone and rocket attacks continued across the region, and Israel pressed ahead with operations against Hezbollah in Lebanon throughout the quarter.

The on-again, off-again nature of ceasefire talks and the constant threat of renewed military escalation kept markets on edge for much of April and May. Oil prices were a major market mover, especially when they surpassed $110 per barrel due to the closure of the Strait of Hormuz.² Higher oil prices stoked inflation fears and pushed bond yields higher before dropping significantly by the end of June.

Markets Climb Through the Uncertainty

Despite the events in Iran and economic uncertainty, U.S. equities managed to advance. After giving back all of their early 2026 gains in the first quarter, markets recouped those losses and then some once it seemed the worst of the Iran crisis was past.

That turning point came late in the second quarter, when the U.S. and Iran agreed to terms that lifted the blockade and reopened the Strait of Hormuz. Markets responded positively to the news, and the S&P 500, Nasdaq and Dow Jones Industrial Average all hit record highs in the month of June.

Equity Performance as of June 30, 2026^3,4,5

Although Iran seemed to dominate the conversation, other themes moved markets during the second quarter. Corporate earnings were strong, with results continuing to exceed expectations.⁶ There was also notable rotation into and out of AI and mega-cap technology stocks throughout the quarter.

The SpaceX IPO

One highly publicized event of the quarter was the SpaceX IPO, which was completed on June 12 as the largest IPO in history. The company initially priced its shares at $135, raised approximately $75 billion and entered the public markets at a valuation of roughly $1.77 trillion.⁷ Shares surged more than 50% from the offering price in the days that followed, briefly pushing SpaceX’s market capitalization above both Amazon and Microsoft. The debut also made Elon Musk the world’s first trillionaire and minted thousands of new millionaires among early shareholders.⁸

The excitement proved short-lived. SpaceX peaked just above $211 within days of listing before pulling back sharply, and investors who bought in the open market at peak prices were sitting on losses by the end of June.⁹ The IPO also contributed to broader tech sector volatility, as investors sold existing positions to fund their SpaceX purchases and added pressure to an already choppy environment for large-cap and semiconductor stocks.

A New Era at the Fed

President Trump’s appointment of Kevin Warsh as Jerome Powell’s successor as Federal Reserve Chair took effect in May, capping off a months-long period of political pressure and uncertainty around Fed leadership. Warsh chaired his first meeting in June, and the result was telling: Rates remained unchanged, but the tone of the discussion had shifted.¹⁰

Voices calling for an outright rate hike grew louder during the quarter, driven by inflation that showed no signs of retreating even after the Iran situation began to stabilize.¹¹ Heading into the second half of 2026, traders are now pricing in better-than-even odds that the Fed will hike rates later in the year.¹²

The Economy Trudges Along

Economic growth has been slow so far in 2026. Between last year’s government shutdown, the ongoing impact of tariffs and a major geopolitical conflict, conditions have been far from normal.

U.S. gross domestic product (GDP) came in at +1.6% for the first quarter, well short of expectations set at the beginning of the year.¹³ Second-quarter data will take time to compile, but early indicators are forecasting higher growth between April and June.¹⁴

Looking Ahead

The second half of 2026 is shaping up to be every bit as eventful as the first half. The Iran situation has eased, but the broader environment remains unsettled. Inflation has yet to come down in a meaningful way, the Fed’s next move is uncertain, and midterm elections will add political noise to an already complex backdrop as the fourth quarter approaches. Markets have shown they can climb through difficult conditions, but the path ahead is unlikely to be smooth.

The themes that defined the first half of 2026 haven’t resolved but have simply evolved. How they unfold over the coming months will go a long way toward determining whether the record highs set in June represent a foundation for future gains or a ceiling that proves difficult to break through.

This is a good moment to revisit your financial plan and confirm your portfolio still reflects your goals, time horizon and risk tolerance. The first half of 2026 was unpredictable in almost every way. The second half may well be, too. Discipline, diversification and staying connected with your financial advisor are the best tools at your disposal.

¹ Rebecca Schneid. Time. June 22, 2026. “From Overnight Airstrikes to Peace Talks: A Timeline of the U.S.-Iran War.” https://time.com/article/2026/06/22/how-did-we-get-here-a-timeline-of-the-u-s–iran-war/. Accessed June 24, 2026.

² Yahoo! Finance. “Oil prices soar past $110 a barrel again after Iran says Strait of Hormuz is closed.” https://finance.yahoo.com/sectors/energy/articles/oil-prices-soar-past-110-103948081.html. Accessed June 26, 2026.

³ Morningstar. “S&P 500 PR.” https://www.morningstar.com/indexes/spi/spx/quote. Accessed July 1, 2026.

⁴ Morningstar. “NASDAQ Composite PR USD.” https://www.morningstar.com/indexes/xnas/@cco/quote. Accessed July 1, 2026.

⁵ Morningstar. “DJ Industrial Average PR USD.” https://www.morningstar.com/indexes/dji/!dji/quote. Accessed July 1, 2026.

⁶ John Butters. FactSet. June 18, 2026. “Earnings Insight.” https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_061826.pdf. Accessed June 24, 2026.

⁷ Ryan Vanzo. Yahoo! Finance. June 22, 2026. “The SpaceX IPO Is Over. History Says Investors Should Do This Next.” https://finance.yahoo.com/markets/stocks/articles/spacex-ipo-over-history-says-182000112.html. Accessed June 24, 2026.

⁸ Manya Saini and Niket Nishant. Reuters. June 11, 2026. “SpaceX IPO makes Elon Musk the world’s first trillionaire.” https://www.reuters.com/business/media-telecom/spacex-ipo-makes-elon-musk-worlds-first-trillionaire-2026-06-11/. Accessed June 24, 2026.

⁹ Yahoo! Finance. “Space Exploration Technologies Corp. (SPCX).” https://finance.yahoo.com/quote/SPCX/. Accessed June 24, 2026.

¹⁰ Steve Kopack, et al. NBC News. June 17, 2026. “Federal Reserve holds interest rates steady as Trump’s new chairman faces fresh inflation woes.” https://www.nbcnews.com/business/economy/inflation-kevin-warsh-fed-fomc-meeting-rcna350411. Accessed June 24, 2026.

¹¹ U.S. Bureau of Labor Statistics. June 10, 2026. “Consumer Price Index Summary.” https://www.bls.gov/news.release/cpi.nr0.htm. Accessed June 24, 2026.

¹² CME Group. “FedWatch.” https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html. Accessed June 24, 2026.

¹³ Bureau of Economic Analysis. May 28, 2026. “GDP (Second Estimate) and Corporate Profits, 1^st Quarter 2026.” https://www.bea.gov/news/2026/gdp-second-estimate-and-corporate-profits-1st-quarter-2026. Accessed June 24, 2026.

¹⁴ Federal Reserve Bank of Atlanta. “GDPNow.” https://www.atlantafed.org/research-and-data/data/gdpnow. Accessed June 24, 2026.

AE Wealth Management, LLC (AEWM) is an SEC Registered Investment Adviser (RIA) located in Topeka, Kansas. Registration does not denote any level of skill or qualification. The advisory firm providing you this report is an independent financial services firm and is not an affiliate company of AE Wealth Management, LLC. AEWM works with a variety of independent advisors. Some of the advisors are Investment Adviser Representatives (IAR) who provide investment advisory services through AEWM. Some of the advisors are Registered Investment Advisers providing investment advisory services that incorporate some of the products available through AEWM.

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The information and opinions contained herein, provided by third parties, have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management.

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