Our June Perspective
What’s New
June delivered two of the most widely anticipated market events of 2026: the IPO of SpaceX and Kevin Warsh’s first Federal Open Market Committee (FOMC) meeting as chair of the Federal Reserve.
SpaceX’s first three trading days drew strong enthusiasm from individual investors who briefly pushed the stock far above its IPO price. It has since fallen back near where it began trading publicly. This pullback came as investors expressed concerns about the sustainability of the breakneck pace of AI-related spending.
Warsh, meanwhile, made clear that price stability remains central to the Fed’s job. This eased concerns that he would cave to political pressure to prematurely lower interest rates. The bond market took the message as a more aggressive stance than anticipated, and investors now expect the Fed could raise rates by year end.
Our Perspective
The largest technology companies and other key players in AI are investing at a pace that is becoming difficult to fund out of their own profits. Increasingly, these companies (SpaceX included) are having to raise money from outside investors, by borrowing or selling shares, to pay for their AI ambitions. This growing reliance on outside funding introduces a new source of potential volatility for these stocks. Since a handful of these giant companies now make up so much of major indexes like the S&P 500, that risk extends to the broader market as well.
The change in leadership at the Fed adds another wrinkle. Unlike his recent predecessors, Warsh has expressed a reluctance to signal where Fed policy may be headed. Pulling back on those signals should let the Fed respond more nimbly as conditions change, but it may also add volatility, since its next move won't be as clearly telegraphed as markets have grown used to.
Our View
Stock Market
The S&P 500 took a breather after two months of strong gains, ending June in the red at -0.95%.
Bond Market
Yields on Treasuries maturing in the next two years rose broadly in June, while yields on longer-dated bonds declined. This split reflects expectations of tighter policy in the near term pushing up short-term yields, while signaling slower inflation or growth further out.
In Focus: Gold
Gold has declined around 25% since reaching its all-time high in late January. It is widely regarded as an inflation hedge and a store of value. Less appreciated is that gold can be highly volatile from year to year. Investors owning gold must weigh its potential long-term benefits against the sharp swings along the way.
Themes Driving Markets
Energy Bottlenecks
Conflict around key shipping chokepoints keeps unsettling oil markets. Even after tensions ease, prices historically take longer than expected to normalize.
Bottom line: Slow normalization could sustain inflation pressure and keep the Fed leaning hawkish.
AI Spending
Spending on AI infrastructure has scaled to rival the largest capital investment cycles in US history.
Bottom line: The size of the bet raises the stakes for the companies funding it and the markets riding its momentum.
Market Sentiment
Investor risk appetite has climbed back toward levels last seen near prior market peaks, with signs of froth building beneath the surface.
Bottom line: A surge in IPO activity and rising margin debt point to a more speculative, later-cycle mood.
Giving Got a Rewrite This Year… Plan Before December
If charitable giving is part of your yearly planning, it's important to note that the rules changed in 2026. A little planning now can help to avoid December scramble. There's good news for most people: even if you take the standard deduction, you can now deduct up to $1,000 (or $2,000 for couples) in charitable gifts, something that wasn't available last year.
For those who itemize, the picture is more nuanced. A new floor means a small slice of your giving no longer counts toward a deduction, and the benefit is slightly trimmed at the highest tax brackets. The practical takeaway is timing: "bunching" several years of gifts into one, often through a donor-advised fund, can clear that floor decisively, capture the full deduction, and still let you support your favorite causes on your usual schedule. Highly appreciated stock is a great source for these donations.
And if you're over 70½, giving straight from an IRA remains one of the cleanest moves there is; it never hits your income at all and can satisfy all or a portion of your Required Minimum Distribution for the year. Summer is the right time to review these rules and map out next steps.
Source: Morningstar.
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