MIDYEAR OUTLOOK – Executive Summary – July 2026
We’re halfway through the year, and our newly released Midyear Outlook 2026: Policy, Buildouts, & Bottlenecks helps you cut through the noise and understand what’s shaping the economic and market landscape right now…
Click the link above to read the full Executive Summary.
July 7, 2026
Dear Valued Investor,
LPL Research is pleased to present Midyear Outlook 2026: Policy, Buildouts, & Bottlenecks. Their semi-annual update offers a comprehensive analysis of the economic and market environment, highlighting potential implications for you. I’m pleased to bring you a few key highlights today.
In the 2026 Outlook: The Policy Engine, considerable time was spent discussing how policy is increasingly a driver of capital markets. The disruptions from the Iran conflict certainly served as another example of how policy, geopolitical or otherwise, should be top of mind for investors.
So, what now? The simple answer is that the team expects more of the same. Policy again will be front and center as attention turns to U.S. midterm elections and the uncertainty surrounding Kevin Warsh as the new chair of the Federal Reserve. Mr. Warsh’s ability to influence his colleagues and questions around congressional balance of power will help shape the second half of 2026.
LPL Research continues to focus on AI and corporate earnings. As a matter of fact, strength in earnings is a key reason they’ve raised their 2026 stock market return expectations. While some frothiness around AI expectations and market concentration are concerning, the earnings wave adds conviction to their forecast.
Internationally, they are less sanguine, as European economies have again fallen behind, and emerging markets may continue to be hit-and-miss in aggregate. Simply stated, while the bias for U.S. equity exposure remains, the variance between the U.S. and the rest of the world may be less pronounced.
All these items should be major variables of focus for the balance of the year. But the key question is: How should investors position themselves to optimize investment opportunities? The answer is grounded in the belief that equity markets should be constructive in the second half, but keep in mind that midterm election years have historically made for a bumpy investment ride.
To that end, they believe bonds should remain a steadfast allocation, while market conditions persistently point to use cases for alternative exposure, in their view. Being well-balanced is key, but it is perhaps most important when policy shifts can cause the market to turn on a dime.
These are just some of the insights you’ll find in Midyear Outlook 2026: Policy, Buildouts, & Bottlenecks. To get more, including considerations we can discuss, visit go.lpl.com/midyearoutlook.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of July 7, 2026.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
| Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations |
May Lose Value |
RES-0007080-0526 | For Public Use | Tracking #1128680 | #1128683 (Exp. 07/2027)
July 1, 2026
Dear Valued Investor,
Get your grills and beach chairs ready America because July 4th — and America’s 250th birthday — is fast approaching. As the weather heated up last month, the stock market cooled a bit, and investors took profits on some of their technology winners. Market watchers blamed a variety of factors for the decline, but a 12-week rally in the Philadelphia Semiconductor Index of 92.5% pointed to an AI trade that went too far too fast. Gains in healthcare, industrials, and financial services stocks helped offset declines in the big tech stocks and limited the magnitude of the decline.
Stock market volatility has increased in recent weeks amid the push-and-pull between AI-driven optimism and concerns about high valuations. While major indexes have pulled back some, particularly large cap technology names, broader market participation has helped limit downside and maintain a constructive backdrop. The revitalized market for initial public offerings (IPOs), highlighted by the recent SpaceX IPO, offered a sign of healthy market conditions. Overall, equities remain supported by AI-driven earnings strength and improving breadth, but near-term gains may be tempered as markets consolidate earlier advances and navigate ongoing geopolitical uncertainty.
Meanwhile, the bond market has shown signs of stabilization. Earlier in June, rising Treasury yields reflected stronger economic data, bubbling inflation concerns, and rate hike fears. More recently, however, falling oil prices and evolving central bank expectations have helped ease pressure on yields, supporting bond market performance.
The economic backdrop remained resilient in June, supported by AI infrastructure investment, productivity gains, and lower oil prices. Inflation remains in focus, with policymakers balancing persistent price pressures against improving global supply conditions. Geopolitical developments continue to introduce uncertainty, while AI investment serves as a longer-term growth driver. This combination suggests an economy that is neither overheating nor contracting — but one that continues to expand at a moderate pace.
These economic and financial market crosscurrents reinforce the importance of staying disciplined and diversified in a volatile, policy-sensitive environment. While stocks may still need to digest earlier gains in the near term, bonds are regaining diversification value, and the economy remains on stable footing. In the second half, several key themes will shape the investment landscape, including the AI buildout, the leadership change at the Federal Reserve, and midterm elections.
As always, please reach out to me with questions. Thank you for your continued trust.
Warmest Regards,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
LPL Financial does not offer access to or purchase of initial public offerings (IPOs).
This material is intended for informational and educational purposes only and does not constitute investment research, a research report, or a recommendation regarding any specific security or issuer.
The PHLX Semiconductor Sector Index (SOX) is a modified market capitalization-weighted index composed of companies primarily involved in the design, distribution, manufacture, and sale of semiconductors.
All data is provided as of July 1, 2026.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
| Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations |
May Lose Value |
RES-0007124-0526 | For Public Use | Tracking #1132973 | #1132980 (Exp. 07/2026)
June 3, 2026
Dear Valued Investor,
Equity markets have continued their advance in recent weeks, with the S&P 500 near a record high following a rare nine-week winning streak on strong AI-driven earnings and prospects for an Iran agreement. While the macro backdrop remains mostly constructive, valuations are elevated by most traditional metrics, and oil remains near $100 with the Strait of Hormuz still closed. Is the stock market pricing in too much good news?
To answer this question, we suggest not putting much emphasis on valuation. Valuation metrics such as the price-to-earnings ratio (P/E) are helpful in assessing long-term return potential and downside risk, but they are historically poor market timing tools. The S&P 500’s P/E near 21 can be justified by solid earnings growth and a resilient U.S. economy, although further expansion will require continued cooperation from key drivers such as inflation (oil prices) and interest rates. Unless these macro inputs improve, returns in the second half of the year are likely to be modest, potentially with some bumps along the way.
Against this backdrop, the role of AI remains central. Technology companies, particularly the mega cap hyperscalers, have continued to deliver compelling earnings growth, even as skepticism around the magnitude of investment and timing of eventual returns persists. Results have continued to point to accelerating investment and demand for computing resources. Some big moves in semiconductor and IT hardware companies over the past week suggest the market has not quite caught up to the magnitude of these investments – expected to exceed $750 billion this year and up about 50% since 2026 began.
While valuations appear elevated at the index level and speculation in certain market segments may have gone too far, parts of the technology sector may actually be undervalued relative to their growth potential. Skepticism about the productivity gains AI will bring remains widespread, leaving room for potential upside surprises. At the same time, heavy AI-related capital expenditures have depressed free cash flow, which introduces risk if anticipated productivity gains fail to materialize.
Looking ahead, the market narrative will continue to hinge on the intersection of valuations and AI-driven earnings growth. Elevated multiples and sticky inflation suggest more limited upside from higher valuations, placing greater importance on earnings to come through. AI remains a powerful tailwind for both economic activity and corporate profits, supporting the case for staying invested. The promise of what AI can bring is exciting, but the optimism may be getting ahead of what the technology can deliver. As a result, maintaining discipline around diversification and risk management takes on greater importance.
Warmest regards,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of June 1, 2026.
The P/E ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower P/E ratio.
Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio.
All index data from FactSet.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
|
Not Insured by FDIC/NCUA or Any Other Government Agency |
Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations |
May Lose Value |
RES-0007124-0526 | For Public Use | Tracking #1118667 | #1118668 (Exp. 06/2027)