Weekly Market Update – June 19, 2026

Quick Takes

• U.S. stocks ended the holiday-shortened week on a positive note, buoyed by easing geopolitical tensions and renewed strength in technology. The Nasdaq led major U.S. indexes, climbing +2.4%, followed by the Russell 2000 (+1.2%) and the S&P 500 (+0.9%).
• The Federal Reserve signaled a more hawkish outlook under new Chair Kevin Warsh. While rates were left unchanged, investors were unsettled by the removal of the Fed’s easing bias and rising expectations for additional rate hikes. 
• The bond market delivered a mixed picture as investors digested the Fed’s evolving stance. The 10-year Treasury yield edged down to 4.46% from 4.48%, while the 2-year yield rose to 4.19% from 4.09%, signaling expectations for tighter policy in the near term.

Source: Bloomberg. Data as of June 18, 2026.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Markets Rally on Geopolitics—But a Hawkish Fed Keeps Investors in Check

U.S. stocks ended the holiday-shortened week on a positive note, buoyed by easing geopolitical tensions and resilience in key sectors like technology. Still, investors faced a push-and-pull dynamic between improving global sentiment and a more assertive Federal Reserve stance. Here’s what mattered most across U.S. stocks, international markets, bonds, and the broader economy.

U.S. Stocks: Gains Led by Tech as Geopolitics Calm

Most major U.S. indexes climbed, with the Nasdaq Composite leading at +2.4%, followed by the Russell 2000 at +1.2% and the S&P 500 at +0.9%. Early in the week, markets surged after a U.S.-Iran peace agreement cleared the path to reopen the Strait of Hormuz—sending oil prices sharply lower and lifting investor confidence.

However, midweek trading turned volatile after the Federal Reserve signaled a more hawkish outlook under new Chair Kevin Warsh. While rates were left unchanged, investors were unsettled by the removal of the Fed’s easing bias and rising expectations for additional rate hikes. Stocks pulled back briefly as Treasury yields climbed.

By Thursday, sentiment stabilized. Investors reassessed the Fed’s stance and shifted focus back to supportive factors like falling bond yields, progress on the geopolitical front, and strength in semiconductor stocks.

Technology remained in the spotlight, fueled by continued enthusiasm for AI-related spending, a potential Apple-Intel partnership, and strong interest in newly public SpaceX. Sector performance reflected this optimism: industrials rose +2.7%, and technology gained +3.6%, while energy dropped -6.6% amid falling oil prices, and real estate declined -3.3%.

Notably, growth stocks outperformed value, and small caps topped large caps, signaling a broadening risk-on tone.

International Stocks: Emerging Markets Surge Ahead

Global markets also posted gains, with Emerging Markets significantly outperforming Developed Markets. The MSCI Emerging Markets Index climbed +4.3%, and even more impressively, +6.2% excluding China.

Asia led the developed world, with Japan up +4.8% and Singapore up +4.5%. Japan’s rally came despite a (widely expected) rate hike from the Bank of Japan, but it was buoyed by strong export growth of +17.0% year over year, particularly in technology and autos. The country’s Nikkei 225 continued hitting all-time highs, driven by AI-related investment themes.

By contrast, Europe lagged. The MSCI Europe Index slipped -0.2%, and the U.K. fell -2.3%. Economic concerns lingered after the eurozone unexpectedly posted a trade deficit, largely due to higher energy imports. Central banks in the U.K., Switzerland, and Norway held rates steady, though Norway hinted at future tightening.

Emerging Asia stood out as a bright spot. Korea surged +12.0%, and Taiwan gained +5.2%, benefiting from renewed enthusiasm for AI-driven growth. Meanwhile, China showed signs of weakness: retail sales fell -0.6% year over year, and property investment dropped -16.2%, underscoring ongoing economic challenges.

Bonds: Mixed Yields Reflect Fed Uncertainty

The bond market delivered a mixed picture as investors digested the Fed’s evolving stance. The 10-year Treasury yield edged down to 4.46% from 4.48%, while the 2-year yield rose to 4.19% from 4.09%, signaling expectations for tighter policy in the near term.

Treasuries struggled earlier in the week, with short-term yields hitting their highest levels in over a year following the Fed meeting. Investment-grade corporate bonds underperformed Treasuries, while high-yield bonds fared better amid the broader risk-on environment.

Overall, the Bloomberg U.S. Aggregate Bond Index was little changed at +0.2%, while international bonds slipped -0.2%. The divergence highlights ongoing uncertainty about global monetary policy and inflation trends.

Economics: Consumer Strength vs. Housing Softness

Economic data painted a mixed but generally resilient picture of the U.S. economy.

Consumers continued to spend at a healthy pace. Retail sales rose +0.9% in May, beating expectations, while core and control group measures also showed solid gains. The strength was broad-based, suggesting consumer demand remains a key pillar of growth.

Housing, however, told a different story. Housing starts plunged -15.4%, reflecting affordability pressures and high borrowing costs. Builder sentiment also weakened, with the NAHB Housing Market Index falling to 35. Still, there were some encouraging signs: pending home sales rose +4.8% year over year, indicating potential stabilization in demand.

Monetary Policy: A New Fed Playbook Emerges

The Federal Reserve’s June meeting marked a turning point. Chair Kevin Warsh struck a decidedly hawkish tone, emphasizing inflation control above all else. While rates stayed at 3.50%–3.75%, policymakers signaled a higher likelihood of additional tightening, with 9 of 18 officials expecting at least one rate hike ahead.

Inflation forecasts were also revised upward, with core inflation projected at 3.3% in 2026. Markets reacted by pricing in roughly 1.5 rate hikes by year-end, up sharply from earlier expectations.

Warsh also signaled a shift in strategy, moving away from forward guidance and toward a more market-driven approach. This change, along with a flatter yield curve, suggests investors will need to navigate a less predictable policy landscape.

The Bottom Line

It was a week defined by crosscurrents: easing geopolitical risks and strong technology momentum supported stocks, while a more hawkish Fed introduced new uncertainty. For now, markets appear willing to lean into optimism—but with interest rates possibly heading higher, volatility may remain part of the picture.

Chart of the Week

The Commerce Department reported that the advance reading of US Retail Sales for May increased +0.9%, above Wall Street expectations for a +0.6% rise and up from +0.4% the prior month (which was revised lower from the originally reported +0.5%). Retail sales represent about one-third of all consumer spending and offer clues on the strength of the economy. Retail Sales Ex-Autos were up +0.8%, beating expectations for a +0.6% rise, and followed a +0.7% reading the prior month (unrevised). Sales Ex-Autos and Gas were up +0.5%, better than expectations for a +0.3% rise and unchanged from the prior month’s unrevised rate. The Control Group, a figure used to calculate Gross Domestic Product (GDP), rose +0.7%, above expectations for a +0.4% rise and up from a +0.5% gain the prior month (unrevised). The key takeaway from the report is that solid spending activity was seen across most retail categories for a second straight month. The data are not adjusted for inflation, but May’s activity outpaced the CPI rate of inflation (+0.5%) for the month.

Retail Sales Jump +0.9% in May, More Than Expected

U.S. Retail Sales, % change (May 2024 – May 2026)

Source: U.S. Census Bureau, Bloomberg.

The Week Ahead

Economic activity remains quiet following the long weekend for U.S. investors (markets were closed on Friday for Juneteenth). There are no major reports for Monday and Tuesday begins slowly with the June manufacturing and services Purchasing Managers’ Indexes (PMIs) from S&P Global and the Richmond Fed Manufacturing Activity Index. On Wednesday, the weekly MBA Mortgage Applications will be reported along with the Current Account Balance and New Home Sales. Thursday is the busiest day with weekly Jobless Claims, the final report for Q1 Gross Domestic Product (GDP), Durable Goods, and the Kansas City Fed Manufacturing Index. Friday wraps up with Wholesale Inventories and Consumer Sentiment from the University of Michigan.

Did You Know?

PIZZA SALE – Yum Brands announced that the combined sale price for Pizza Hut was $2.7 billion. Yum Brands has operated the Pizza Hut brand since the late 1990s, and said the sale helps it focus on its better-growing Taco Bell and KFC brands. Private-equity firm LongRange Capital will buy the bulk of the pizza chain’s global operations, and Yum China Holdings agreed to acquire its mainland China business. (Source: The Wall Street Journal)

MADE IN CHINA – Not all China ETFs deliver the same returns — or even the same exposure. Over the past year, ASHR, which tracks mainland Chinese stocks traded in Shanghai and Shenzhen, outperformed the S&P 500 by more than +10%. Meanwhile, MCHI and FXI — which access China primarily through Hong Kong-listed equities — are down year-over-year, and the internet-focused KWEB has lost -25%. The key lesson: know what you own. ETFs with “China” in the name can draw from very different markets. (Source: Bespoke)

RECORD TRADING – “May shattered previous trading activity records in cash equities … From this peak, activity has accelerated further in June, with volumes this month tracking +9% above May’s record. Nine of the ten largest retail trading days ever observed on our platform (Citadel) have occurred in just the last month, including seven during the first half of June alone.” (Source: Citadel)

This Week in History

WHAT’S IN A NAME – On June 15, 1911, financier Charles Flint merged Tabulating Machine Co., run by U.S. Census Bureau statistician Herman Hollerith, with Computing Scale Co. of America and International Time Recording Co. to form Computing-Tabulating-Recording Co. It was the ancestor of today’s International Business Machines Corporation, which most people recognize as simply IBM. (Source: The Wall Street Journal)

Economic Review

• The Conference Board’s Leading Economic Index® (LEI) for May rose by +0.1% following a +0.2% rise the prior month (revised higher from +0.1%). That matched Wall Street expectations and marked the first back-to-back rise for the LEI since November and December of 2021. Like April, seven of the 10 indicators advanced in May. The positive contributions from Stock Market gains, narrowing Interest Rate Spreads, the ISM New Orders Index, the Leading Credit Index, New Orders for Consumer Goods, and New Orders for Nondefense Capital Goods Excluding Aircraft offset weakness from Expectations For Future Business Conditions, Jobless Claims, and Building Permits. “The Leading Index for the US increased slightly in May, fueled entirely by positive contributions from financial components, especially stock prices and the interest rate spread,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. The Conference Board Coincident Economic Index (CEI) increased by +0.2% after inching up +0.1% in April. The Conference Board Lagging Economic Index (LAG) slipped by -0.1% following a +0.5% increase in April.  
• The National Association of Realtors (NAR) reported that Pending Home Sales rose +3.8% in May, following the prior month’s +0.3% rise (after being revised sharply lower from +1.4%). That was well above Wall Street expectations for a +0.9% increase. On a non-seasonally adjusted basis, the year-over-year rate of change in sales increased +2.1%, little changed from the prior month’s +2.2% annual rate (revised lower from +3.3%). The monthly results were positive across census regions: the Northeast was up +8.7%, the Midwest rose +8.1%, the South was up +1.0%, and the West was up +0.7%. Sales increased year-over-year in the Midwest by +9.3%, +6.1% in the Northeast, +3.3% in the South and +1.2% in the West. “A late spring buyer rush—even with mortgage rates not budging—is an indication of pent-up housing demand and consumers’ acceptance of above-6% mortgage rates as the new normal,” said NAR Chief Economist Dr. Lawrence Yun.
• Homebuilder confidence slipped in June as the National Association of Home Builders (NAHB) Housing Market Index (HMI) fell -2 points to 35, versus expectations to remain at 37 where it was the prior month (unrevised). A year ago, the index was 32. The index is based on a 0-to-100 scale, where any number over 50 indicates a good reading, and below 50 is considered negative sentiment. Sentiment has been in negative territory for 25 months in a row. Two of the three subcomponents were unchanged for the month, while the Current Sales component slid -2 points to 38. The Sales Expectations in the Next Six Months component was steady at 45, and Traffic of Prospective Buyers remained at 25. For the month, 35% of builders reported cutting home prices (up +3 percentage points), the average price reduction was unchanged at 6%, and use of sales incentives was up +1 percentage point to 62%. On a regional basis, the Northeast rose +6 points to 50, the West was unchanged at 27, the Midwest was steady at 45, and the South dropped -7 points to 29.
• May Housing Starts sank -15.4% month-over-month to a seasonally adjusted annual rate of 1.177 million units, far below expectations for a -2.0% decrease to 1.430 million units. That compares to a -8.5% decrease, or 1.392 million units from the prior month (revised lower from -2.8%). Single-unit starts were down -1.9% and Multi-family plummeted -40.2%. Housing starts peaked at 1.8 million in April 2022. Regionally, new construction single-unit starts were down -5.2% in the South and -2.3% in the West, but were up +18.5% in the Northeast, and +3.7% in the Midwest. Moving to Building Permits, one of the leading indicators tracked by the Conference Board and indicator of future construction activity, they slipped -0.7% to an annualized rate of 1.413 million units. That was just below expectations for 1.418 million units and compares to the prior month’s unrevised +4.4% increase to 1.423 million units. Single-unit permits rose +0.6% while multi-family units dipped -2.8%. Regionally, single-unit permits fell -3.8% in the West and -3.6% in the Northeast but rose +3.3% in the Midwest and +1.9% in the South. The big takeaway from the report is that the weakness in starts was primarily concentrated in multi-unit properties although the single-unit starts in the South—the largest homebuilding region—were down -5.2% month-over-month as well.
• Imports Prices were up +1.9% in May, above expectation for a +1.0% increase, and down slightly from a +2.0% increase the prior month (revised higher from +1.9%). Import Prices ex Petroleum were up +0.8%, above expectations to come in at +0.5%, and down from +0.5% the prior month (after being revised lower from +0.7%). Year-over-year, the cost of imports rose +6.7%, above expectations for a +5.7% annual rate, and up from the prior month’s +4.7% annual rate (unrevised). Meanwhile, Export Prices were up +1.3%, above expectations for +0.9% and down from the prior month’s +3.5% increase after being revised higher from +3.3%. Export prices accelerated to +11.2% over the past year, more than the expected +10.2% rise, and up from last month’s +9.1% annual rate (revised higher from +8.8%).
• US Industrial Production rose +0.1% in May, below expectations for +0.3% and down from +0.7% the prior month (revised lower from +0.9%). Manufacturing Production, which represents about three-quarters of total Industrial Production, was flat (0.0%) versus expectations for a +0.3% increase and down from +0.7% the prior month (revised higher from +0.6%). Year-over-Year, Industrial Production was up +1.7%, following the prior month’s +1.4% annual pace. Capacity Utilization ticked up to 76.2%, up from 76.1% the prior month (unrevised). Capacity Utilization reflects how much a manufacturing plant is being used to produce things. The key takeaway from the report is that manufacturing output was flat in May, reflecting a cooling down after some solid activity in April.
• The New York Fed’s Empire State Manufacturing Index, a gauge of manufacturing activity in the state, slumped to +5.7 in June, after hitting its highest level in more than four years the prior month (+19.6). Wall Street expected it to be +13.7. Despite the fall, it was the first time the index has posted three consecutive months of growth since early 2022. New Orders sank -19.2 points to +3.5, its slowest rate of the year after its highest level in more than four years the previous month. Shipments fell -10.2 points to +8.6. The Employment index edged up +1.3 points to +9.6, while the Average Workweek index fell -6.4 points to +5.1. Both inflation gauges eased, with the Prices Paid index slipping -1.6 points to +61.0 and the Prices Received index ticked down -0.4 to +31.4. The outlook slid as well, with the Six Months Ahead General Business Conditions index down -3.4 points to +30.1.
• The Philly Fed Manufacturing Business Outlook Survey jumped to +10.3 in June from an unrevised -0.4 in May, reversing four consecutive increases. That was sharply lower than Wall Street forecasts for a decrease to +17.8. Readings above zero indicate economic expansion and below zero signal economic contraction. The index for New Orders soared to +27.3 from -1.7 the prior month, which was the lowest reading since April 2025. The Shipments index jumped to +14.9 from +4.9. Delivery Times improved to -2.6 from -12.1. The Number of Employees index rose to +9.2 from -2.8, while the Average Workweek index slid to -6.5 from +1.2. Prices Paid elevated to +53.2 from +47.9, while Prices Received decreased to +20.3 from +26.3. Future activity expectations improved, with the Future General Activity index declining -3 points to +50.2, off of its highest reading since June 2021.
• Weekly MBA Mortgage Applications fell -3.8% for the week ending June 12, following a +10.8% jump the prior week. The Purchase Index was down -3.4% after rising +7.3% the prior week. The Refinance Index fell -4.5% after surging +15.3% the prior week. The average 30-Year Mortgage Rate was unchanged at 6.60%.
• Weekly Initial Jobless Claims fell by -4,000 to 226,000 for the week ending June 12, which was worse than expectations for 225,000. The prior week was revised higher by 1,000 to 230,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose by +24,000 to 1,810,000 for the week ending June 5, which was worse than expectations for 1,789,000. The prior week’s reading was revised lower by -9,000.

Asset Class Performance

The Importance of Diversification. Diversification mitigates the risk of relying on any single investment and offers a host of long-term benefits, such as lowering portfolio volatility, improving risk-adjusted returns, and helping investments to compound more effectively.

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% U.S. Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.