Market Commentary 6/30/26
The last few months reinforced the lesson of discipline over prediction. Investors who didn’t panic in the teeth of war saw the benefit weeks later. The payoff rarely happens so fast, but discipline remains a timeless advantage. The S&P 500 Total Return Index gained 15.2% in the second quarter, bringing its year-to-date return to +10.2%. It was the best quarter for the index in six years, climbing a wall of worry and hyperventilating headlines. The Bloomberg US Aggregate Bond Index was up 0.7% on the quarter for a 0.6% return on the year.
The equity market disruption from the Iran conflict lasted about a month even as the geopolitical uncertainty lingers. While negotiations are still ongoing, the Strait of Hormuz remains open with traffic running at below-normal levels. After the initial ceasefire, equity markets rebounded despite the start-and-stop nature of the diplomatic talks. Gold dropped from $5,200/oz at the beginning of the conflict to a hair over $4,000 at the end of the quarter, a reminder that gold’s reputation as a crisis hedge is overstated. The runup in gold’s price was driven largely by central bank buying according to money managers we’ve spoken with. When the buying slowed earlier this year, price followed it down. Oil prices have nearly round-tripped back to pre-conflict levels, but the prices at the pump normally lag crude by one to two months.
The SpaceX IPO ushered in a new trillion dollar market cap company along with the world’s first trillionaire (we are open to new clients, Elon). A less flashy milestone may matter more to investors: the Vanguard 500 Index (VOO) became the first $1 trillion AUM ETF. VOO’s two biggest competitors, IVV and SPY are within striking distance of $1 trillion themselves.
New Era for the Fed
Kevin Warsh is the new Federal Reserve Chairman and he’s already changing how the Fed communicates. His vision is for a Fed that communicates only when it has something to say. He also aims to eliminate forward guidance so markets react to data directly, not reacting to what they think the Fed’s reaction to the data will be. Warsh launched task forces for items including balance sheet and data quality. For now, it looks like he’s picking and choosing battles, not trying to change everything at once.
Jay Powell’s 8 years as Fed Chairman are over. His legacy is more nuanced than talking heads will admit. Including dividends, the S&P 500 was up over 200% during his 8-year tenure, an annualized return of over 15%. It wasn’t smooth sailing, with the index experiencing multiple corrections, the Pandemic bear market in 2020, and a perfect storm bear market in 2022. The index also came within a whisker of a 20% drawdown on two other occasions. Powell may be remembered most for presiding over the death of the four-decade secular bond bull market, an era of steadily declining yields followed by “lower for longer” which was broken by the Fed raising rates to fight “transitory” inflation during the Pandemic.
Happy birthday, America
Sports are providing a much needed respite for social media doomscrollers. A month ago, soccer teams from around the world started arriving in America for the World Cup and they brought their fans. They marveled at the sheer size of the place and the fact that infrastructure for an event as massive as the World Cup didn’t need to be built from scratch. Wonders such as ranch dressing, Bass Pro Shops, and grocery stores (with two different sections for cheese!) left them in shock. A common theme was that stopping at a gas station or seeing a yellow school bus felt like being in a Hollywood movie. We sometimes find ourselves standing too close to this great country of ours, probing for faults. How fitting is it, then, that outsiders can help us step back to take in the full majesty of the United States of America as we celebrate 250 years. This is still the greatest country on the planet and I can’t wait to don the red, white, and blue, grill out, take in a baseball game with my family, watch fireworks, and maybe partake in a frosty beverage or two on the Fourth.
Fairway has been busy beyond the investment markets. This summer we are hosting Sydney King from Miami University as part of our intern program. Welcome Sydney! We are in the process of upgrading our portfolio reporting system and will roll this out soon. Take a look at the new videos on our website’s home and about pages. You may have also seen Fairway names quoted in articles from AdvisorEngine and CNN Business. Additionally, Mark and Dina were listed on AdvisorHub’s 2026 Advisors to Watch. Dina also recently celebrated 10 years at Fairway. Congrats, Dina! We’ll continue sharing firm updates, advisor insights, and investor resources on LinkedIn and Facebook.
Matthew M. Garrott, CIMA®
Director, Investment Research
