Weekly Market Update – June 26, 2026

Quick Takes

• U.S. and global markets faced a choppy week, with technology stocks under pressure, bond yields drifting lower, and economic data painting a mixed—but resilient—picture of the U.S. economy.
• For the week, the Nasdaq Composite slumped -4.6%, the S&P 500 was down -2.0%, while the Russell 2000 advanced +1.0%. Bond markets offered a measure of stability as U.S. Treasury prices rose and yields declined across most maturities. 
• The U.S. economy was stronger than previously estimated in the first quarter. The third and final estimate of real Gross Domestic Product (GDP) for Q1 2026 was revised higher to +2.1% from the previous estimate of +1.6%.

Source: Bloomberg. Data as of June 26, 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.

Stocks Slip on Tech Weakness While Bonds Rally as Rates Ease

U.S. and global markets faced a choppy week, with technology stocks under pressure, bond yields drifting lower, and economic data painting a mixed—but resilient—picture of the U.S. economy. Here’s what mattered most across U.S. stocks, international markets, bonds, and the broader economy.

U.S. Stocks: Tech Stumbles, Small Caps Shine

Major U.S. indexes ended the week on a softer note, driven largely by renewed weakness in large-cap technology and AI-related names. The Nasdaq Composite and S&P 500 Index both declined, while the small-cap Russell 2000 Index posted gains, offering a rare bright spot.

Investors are increasingly focused on a familiar trio of risks: higher interest rates, stretched valuations, and uncertainty around returns on massive AI investments. A new wrinkle emerged as well—memory chip shortages are beginning to push up consumer prices. Apple’s decision to raise prices by +20% on several products rattled sentiment, sparking fears that demand could weaken and sending shares of component makers lower late in the week.

Market leadership also shifted. Large-cap value stocks outperformed growth stocks by a wide +3.7 percentage points, while the equal-weighted S&P 500 beat its traditional market cap-weighted counterpart, signaling broader participation beyond mega-cap tech. For the week, the Nasdaq Composite slumped -4.6%, the S&P 500 was down -2.0%, while the Russell 2000 advanced +1.0%.

International Stocks: Global Markets Slide Amid AI Sell-Off

Outside the U.S., equities also struggled. Developed markets, as measured by the MSCI EAFE Index, fell -1.8%, reversing the prior week’s +1.2% gain.

Asian markets were particularly weak. Japan dropped -3.3%, although it remains near record highs, while Hong Kong fell -2.0%. The late-week global sell-off in technology and AI-related stocks triggered profit-taking across the region. Currency moves added pressure, with the U.S. dollar hitting a nearly 40-year high against the Japanese yen.

At the same time, Japan unveiled a bold long-term growth strategy, targeting $2.3 trillion in public-private investment across sectors like AI, semiconductors, and healthcare—underscoring the global race to build future industries.

There were pockets of strength in Europe. The United Kingdom rose +0.9%, Switzerland gained +2.2%, and the Netherlands surged +6.0%, bucking the broader downtrend.

Emerging markets fared worse. The MSCI Emerging Markets Index sank -4.7%, erasing the prior week’s +4.3% gain. China dropped -6.0%, while South Korea and Taiwan each fell more than -5%, hit hard by AI-related volatility. In South Korea, trading halts were triggered twice, highlighting how leveraged ETFs and elevated retail margin activity amplified market swings.

Bonds: Yields Fall, Boosting Returns

Bond markets offered a measure of stability as U.S. Treasury prices rose and yields declined across most maturities. The 10-year Treasury yield fell -8 basis points to 4.37%, dipping below 4.40% for the first time in over a month, while the 2-year yield also declined -8 basis points to 4.09%.

Lower oil prices and inflation data that came in roughly in line with expectations helped support bonds. As yields fell, the Bloomberg U.S. Aggregate Bond Index gained +0.5%, marking its fourth consecutive weekly advance.

Corporate bonds also performed well. Investment-grade bonds posted gains, and demand remained strong, with new issues oversubscribed on average. Notably, issuance reached $175 billion in June—a record for the month and about 60% higher than June 2025—as companies raced to fund AI-related infrastructure.

However, riskier segments lagged. High-yield bonds struggled, weighed down by concerns about monetary policy, heavy issuance, slowing fund inflows, and a broader risk-off tone in markets.

International bonds continued to underperform, with the Bloomberg Global Aggregate Bond ex U.S. Index falling -0.5%, following a -0.2% decline the previous week.

Economics: Resilient Consumer Meets Mixed Signals

Economic data pointed to steady but uneven momentum in the U.S. economy.

Inflation remained stable but elevated, with the Personal Consumption Expenditures (PCE) price index rising +0.4% in May, matching April. Core PCE, which excludes food and energy, increased +0.3%, also unchanged.

Encouragingly, consumers continue to hold up. Personal income and spending both rose +0.7%, beating expectations and signaling ongoing resilience despite higher prices.

Growth data also improved. First-quarter GDP was revised up to +2.1% from 1.6%, and core capital goods orders jumped +1.6% in May, reversing April’s decline and pointing to solid business investment.

Still, there are pockets of weakness. New home sales fell -7.3% in May, highlighting ongoing strain in the housing market.

On the positive side, recession fears eased. Goldman Sachs cut the probability of a U.S. recession to 15% from 25%, helped by declining energy prices following a geopolitical agreement between the U.S. and Iran.

Business activity is also stabilizing. S&P Global’s June PMI showed expansion continuing for a third straight month, with the manufacturing index rising to 55.7, its highest level since May 2022—though overall growth remains more modest than earlier in the year.

The Bottom Line

Markets are navigating a push-pull environment:

• Technology and AI stocks face valuation and demand concerns
• Bonds are benefiting from easing yields
• Consumers remain strong, even as housing softens

For investors, the key takeaway is balance—diversification across sectors and asset classes is proving critical as markets adjust to shifting expectations around growth, inflation, and the future payoff from AI.

Chart of the Week

The U.S. economy was stronger than previously estimated in the first quarter. The third and final estimate of real Gross Domestic Product (GDP) for Q1 2026 was revised higher to +2.1% from the previous estimate of +1.6% on May 28, and the initial estimate of +2.0% on April 30. Wall Street was expecting it to remain at the prior estimate of +1.6%. Gross private domestic investment was up +7.9% versus up +7.0% in the second estimate. Gross private domestic investment contributed +1.35 percentage points to growth in the quarter. A key metric for demand called Real Final Sales to Private Domestic Purchasers was revised down to +1.7% from +2.4% in the prior estimate and compares to +1.8% in Q4. Consumer spending, measured by Personal Consumption Expenditures (PCE), is the main engine of the economy, and it increased +0.5%, down from +1.4% in the previous estimate, and versus +1.9% in Q4. The PCE component contributed +0.37 percentage points to real GDP growth, down from 0.95 percentage points in the second estimate. Net exports subtracted -0.37 percentage points to growth in Q1, as imports jumped +11.8% (revised down from 21.1% in the prior estimate) while exports increased +10.9% (revised lower from +13.0% in the prior estimate). Government Spending increased +4.4%, unchanged from the prior estimate. As a result, government spending added +0.74 percentage points to growth in Q1. The Personal Saving Rate fell to +4.2% from +5.3% in the prior quarter. The GDP Price Index (GDP Price Deflator) was revised higher to +3.6% from +3.5% in the second estimate. The bottom line from the report is that the US economy showed better growth in the first quarter than previously estimated, but personal consumption was the weakest in four years.

First-quarter GDP Revised Higher, but Consumer Spending was Downgraded

Real Gross Domestic Product (GDP), year-over-year % change

Source: U.S. Bureau of Economic Analysis, Briefing.com.

The Week Ahead

It will be another holiday-shortened week with U.S. markets closed Friday for the Independence Day holiday. The headline economic report comes Thursday with the June nonfarm payrolls report from the Bureau of Labor Statistics (BLS). The report will be closely watched after the Federal Reserve signaled a more hawkish stance at its June meeting. Economists forecast a 110,000 increase in nonfarm payrolls after a 172,000 gain in May. The unemployment rate is expected to remain unchanged at 4.3%. The BLS will also release its JOLTS Job Openings report on Tuesday. The Institute for Supply Management and S&P Global release their respective Manufacturing Purchasing Managers’ Indexes on Wednesday. Some housing data is also due, with the S&P Case Shiller Home Price Index released Tuesday, and Construction Spending and MBA Mortgage Applications reporting Wednesday.

Markets will also get a few earnings reports during the week with Nike and Constellation Brands reporting results Tuesday and General Mills on Wednesday. Other headline-potential events include Amazon’s AWS Summit in Washington and comments from Fed Chairman Kevin Warsh at the European Central Bank’s annual Sintra forum.

Did You Know?

SMALL STOCKS, BIG YEAR – While the mega-caps garner the bulk of attention in financial circles, small-cap stocks are doing the best in 2026 with mid-year approaching. Through June 17, the S&P 100 (100 largest stocks in the S&P 500) was up just +6.3% year to date versus the small-cap Russell 2000’s gain of +17.6%. (Source: The Wall Street Journal)

MORTGAGE MISTAKES – The avoidable mortgage costs that people who bought homes since 2022 pay annually because they didn’t shop around for the best mortgage is about $65 billion, according to Bankrate. People with higher incomes and who are older are often the ones paying the steepest price. For the typical borrower, this can mean more than $78,000 over the life of a 30-year loan. (Source: The Wall Street Journal)

SHORT AND SWEET – Economists monitor the Fed’s statement on monetary policy closely after each of the Fed’s eight FOMC meetings each year. New Chair Kevin Warsh’s first FOMC statement was just 162 words, the shortest for a regular meeting since 2007 and less than half the length of previous Chair Powell’s average statement of 397 words. (Sources: Federal Reserve, Bespoke)

This Week in History

SELL THE NEWS – On June 26, 2000, Celera Genomics Group, the National Institutes of Health, and the U.S. Department of Energy jointly announced that they had completed the sequencing of the human genome, which could ultimately unlock the mysteries of human health. Celera’s stock promptly lost -11% of its value. Wall Street had bought on the rumor and decided to sell on the news . (Source: The Wall Street Journal)

Economic Review

• The preliminary “flash” S&P Global U.S. Purchasing Managers Index (PMI) showed overall gains in June. The overall S&P Global U.S. Composite PMI rose to 52.2 from 51.5, indicating improved growth. That was a tick above Wall Street expectations for a 52.1 reading but marks 41 consecutive months in expansion territory (results above 50 signal economic expansion). The Manufacturing PMI improved to 55.7 from 55.1 the prior month, beating expectations for a decline to 54.6, and marking the best level since mid-2022. Meanwhile, the Services PMI inched up to 51.3 from 50.7 the prior month and beat expectations to improve to 51.1. Manufacturing Output was the fastest since July 2021, supported in part by inventory rebuilding and stockpiling. New Orders rose at the strongest pace since April 2022. Growth was partly driven by stockpiling as firms aggressively built inventories to protect against supply disruptions and cost uncertainty and supplier delivery times lengthened, reflecting ongoing supply-chain frictions. Regarding Employment, manufacturing jobs fell sharply, with job cuts representing the largest decline since May 2020 and among the worst outside the pandemic since 2009. In contrast, Service sector PMI activity remains subdued as activity remained sluggish relative to earlier in the year. Services weakness reflects consumer resistance to high prices and low confidence levels. Employment weakness wasn’t as bad in the service sector as the manufacturing sector, but service providers still reduced staffing, contributing to broader labor market softening. On the inflation front, Input Prices remained historically high but showed some signs of easing. Output Prices remained elevated and near recent highs. But overall, disinflation is emerging at the margin but remains inconsistent. The bottom line is that the June 2026 flash PMI report indicates a U.S. economy that is still expanding but increasingly uneven. Strong manufacturing output and new orders growth contrast with weak services sector growth. Business sentiment improved but occurred with broad-based employment declines. Some early signs of easing cost pressures emerged, but inflation remains elevated. Overall, the report shows an economy growing modestly but with imbalances. Manufacturing strength is offset by services weakness and labor market softening.
• The cost of goods and services rose +0.4% in May, a tick below expectations to be +0.5% and matching the prior month’s unrevised level. For the year, the Personal Consumption Expenditure (PCE) Deflator (aka PCE Price Index) was up +4.1%, matching expectations and up from +3.8% the prior month (unrevised). The Core PCE Price Index, which excludes food and energy and is the Fed’s preferred inflation gauge, was up +0.3% for the month, matching expectations and the prior month after it was revised higher from +0.2%. Year-over-year, the Core-PCE Price Index was up +3.4%, in line with expectations and up from +3.3% (unrevised) the prior month. The PCE Index for Goods was up +0.4% after increasing +0.7% the prior month, and year-over-year it was up +4.8% versus +4.4% the previous month. The PCE Price Index for Services was up +0.5% following a +0.3% rise the prior month and up +3.8% year-over-year following the prior month’s +3.5%. The key takeaway from the report is that the Core PCE Price Index, the Fed’s preferred inflation gauge, didn’t have any surprises with results in line with expectations and likely to decline going forward with the sharp decline in oil prices. 
• Personal Income increased +0.7% in May, beating expectations to rise +0.4% and up from the unrevised 0.0% reading the prior month. Real Disposable Income was up +0.3% month-over-month, after dropping -0.5% the prior month. Personal Spending rose +0.7% in May, beating expectations to come in at +0.6% and up from +0.4% the prior month (after it was revised down from +0.5%). After adjusting for inflation, Real Personal Spending was +0.3% for the month, beating expectations for +0.2% and up from 0.0% the prior month after being revised lower from +0.1%. The Personal Savings Rate, as a percentage of disposable personal income, held steady at +3.0%. The key takeaway was that real personal spending was positive, demonstrating that spending was driven by increased demand and not just higher prices. 
• The final reading of the June University of Michigan Consumer Sentiment Index rose to 49.5 from the preliminary reading of 48.9 and is down from 49.8 April. That is well below expectations to come in at 48.0. In the same period a year ago, the index stood at 60.7. The Current Economic Conditions component dipped to 47.7 from the preliminary reading of 48.4 and is up from the final reading of 45.8 the prior month. The Consumer Expectations component rose to 50.7 from the preliminary reading of 49.3 and is up from 44.1 the prior month. One-year inflation expectations held steady at 4.6% from the preliminary and are down from 4.8% the prior month. The five-year inflation expectations dipped to 3.3% from the preliminary 3.4% and are down from 3.9% the prior month. The bottom line is that June consumer sentiment improved following the moderation in gas prices and the prospect of an end to the U.S.-Iran conflict.
• The Federal Reserve Bank of Chicago reported that US economic activity fell in May, with its Chicago Fed National Activity Index (CFNAI) falling to -0.11 from +0.19 the prior month (revised up from +0.14). That was much worse than Wall Street expectations for a reading of +0.15 (readings below zero indicate below-trend-growth in the national economic activity). Two of the four broad categories of indicators used to construct the index fell from the previous month, one was unchanged and one was positive. The Production and Income category fell to -0.4 from +0.23 the prior month. The Employment, Unemployment, and Hours category contributed -0.04, a decrease from +0.05 the prior month. The Personal Consumption and Housing category was unchanged at -0.04. The Sales, Orders, and Inventories category contribution was +0.02, up from -0.04 the prior month.  Overall breadth of the index declined with 35 of the 85 individual indicators making positive contributions, versus 47 the prior month, while 50 made negative contributions, up from 38. Improvements in the individual indicators were modest, with 42 indicators improving, while 41 indicators deteriorated and two were unchanged. The CFNAI three-month moving average decreased to -0.03 from +0.07 the prior month. During the last 20 years, there has been a 91% correlation between the three-month index level and the quarterly change in real GDP.
• The Census Bureau reported preliminary Durable Goods Orders for long-lasting items (such as televisions, appliances, and transportation equipment) decreased -4.5% in May, following an upwardly revised +8.5% rise (from +8.0%) the prior month. That was above Wall Street expectations to fall to -5.0%. Durable Goods Orders Excluding Transportation were up +1.3%, above expectations for a +0.6% reading and down from +1.4% the prior month after it was revised higher from +1.1%. The important Core Capital Goods Orders (capital goods excluding volatile sectors like transportation and defense), a proxy for business spending, rose +1.6%, beating expectations for +0.6% gain and up sharply from the upwardly revised -0.7% reading the month before (originally -1.0%). Core Capital Goods Shipments, which are factored into GDP, increased +0.3%, below expectations of +0.5% which is where they were the prior month after being upwardly revised from +0.4%. The bottom line is that May saw a healthy pick up in business spending and new orders excluding aircraft.
• The Richmond Fed Manufacturing Survey fell to +4 in June from an unrevised +13 the prior month, below expectations to come in at +8. All three component indexes fell for the month: New Orders to +9 from +17, Shipments to +3 from +16, and Employment to -1 from +3. Meanwhile, the price pressures increased, with the average growth rate of Prices Paid rising to +6.99% from +5.96%, and the average growth in Prices Received increased to +4.57% from +4.21%. The Richmond Fed Service Sector Survey decreased as well, down to -9 from an unrevised 0.0 reading the prior month, much worse than expectations to fall to +2.
• The Kansas City Fed Manufacturing Survey increased to +11 in June from an unrevised +8 reading the prior month. The composite index is an average of the Production, New Orders, Employment, Supplier Delivery Time, and Raw Materials Inventory indexes. The Production index ticked popped to +19 from +9, month-over-month, while New Orders were unchanged at +13. The Number of Employees index improved to +10 from -4, but the Average Employee Workweek index edged lower to +2 from +6. The Prices Paid index rose to +68 from +63, the highest level since last June, while the Prices Received index increased to +33 from +29. The Kansas City Fed Service Sector Outlook Survey declined to +5 from +10, below expectations to come in at +8.
• The Commerce Department reported New Home Sales for May fell -7.3% month-over-month to a seasonally adjusted annual rate of 580,000 units versus a -5.7% decrease of 626,000 units the prior month (revised higher from -6.2% and 622,000 units). The data series tends to be volatile month-over-month and are often revised. Wall Street was expecting a +3.2% decline to 640,000 units. New Home Sales remain far below the recent peak of over 1 million units in August 2020 but are running above the pre-pandemic average of 600,000. Year-over-year, sales of new homes were down -6.8% following a -11.3% annual rate the prior month. The months of supply at the current rate of sales was 10.3, up from 9.3 the prior month and 9.7 months a year ago. By region, for the month sales fell -4.1% in the South and -26.9% in the West but rose +3.0% in the Northeast and +16.2% in the Midwest. The Median New Home Price was flat at $424,900 from the prior year.
• Weekly MBA Mortgage Applications inched up +1.0% for the week ending June 19 following a -3.8% decline the prior week. The Purchase Index was down -0.6% after falling -3.4% the prior week. The Refinance Index rose 3.0% after falling -4.5% the prior week. The average 30-Year Mortgage Rate was down a tick to 6.59% from 6.60% the week before.
• Weekly Initial Jobless Claims fell by -12,000 to 215,000 for the week ending June 19, which was better than expectations for 220,000. The prior week was revised higher by 1,000 to 227,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose by +21,000 to 1,821,000 for the week ending June 13, which was worse than expectations for 1,812,500. The prior week’s reading was revised lower by -10,000.

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.