Summary of US Equities Market Analysis
Published on June 21, 2026 by Tony Sycamore, Market Analyst
Overview
The article discusses the current state of US equities as they transition into the third quarter (Q3) of 2026. Following a strong performance in the second quarter (Q2), there are signs of deceleration in market momentum due to various economic and geopolitical factors.
Q2 Performance Recap
As of June 2026, US equity markets have shown impressive gains in Q2, with the Nasdaq up 28% quarter-to-date (QTD), the S&P 500 up 14.89% QTD, and the Dow Jones gaining 11.28% QTD. However, June has seen a slowdown, with the Nasdaq only up 0.24% month-to-date (MTD) and the S&P 500 down 1.05% MTD.
Key Risks Ahead
The article identifies three main risks that could impact the performance of US equities in Q3:
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A More Hawkish Federal Reserve:
The recent Federal Open Market Committee (FOMC) meeting indicated a hawkish shift under new Chair Kevin Warsh, with expectations of at least one rate hike by the end of 2026. This has led to market pricing in a 25 basis point hike by September and two hikes by March 2027.
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Ongoing Fragility in the Middle East:
High-level talks between the US and Iran have shown some progress, but the situation remains fragile, particularly regarding hostilities between Israel and Hezbollah. The effectiveness of these diplomatic efforts is still uncertain.
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A Higher Bar for Technology Stocks:
While technology stocks have performed well, their valuations are now stretched. Concerns about capital expenditure and returns on AI investments are prevalent, with major tech companies like Amazon and Nvidia trading below their recent peaks.
Upcoming Economic Indicators
The core personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge, is set to be released on June 25, 2026. The annual rate is expected to rise to 3.4%, which could reinforce the Fed's hawkish stance if the data comes in hotter than expected.
Technical Analysis
Nasdaq 100
The Nasdaq 100 has seen a significant rally, reaching a record high of 30,762 in early June. However, a pullback to 28,196 has raised concerns about sustainability. Support at around 28,000 is crucial for maintaining upward momentum.
Dow Jones
The Dow Jones has also performed well, reaching a new all-time high of 52,286. However, signs of bearish divergence in the relative strength index (RSI) suggest that the current uptrend may be losing steam, indicating increased risk for investors.