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Financial markets experienced another meaningful shift in July, highlighting the rapidly changing investment landscape that has characterized much of 2026. Following significant rotations in March and April, July marked another change in market leadership as investors reassessed several of the year’s strongest-performing themes.

May was a month of records. The S&P 500, Nasdaq, Dow, and Russell 2000 all set new all-time highs, but the gains were powered almost entirely by technology and semiconductor stocks. These gains came despite an interest rate scare, as back-to-back hot inflation readings increased the probability of a Federal Reserve rate hike and sent long-term Treasury yields rising. Meanwhile, a sharp drop in oil prices somewhat eased the inflation concerns. Corporate earnings growth remained strong with record profit margins, though the strength was concentrated in a handful of large companies and AI-related stocks.

The S&P 500 Index gained more than 10% in April, recovering its March decline and setting a new high. Nine of eleven sectors traded higher as stocks recovered from the March selloff, but eight sectors underperformed the index as mega-cap stocks represented a majority of the gains. Bonds traded lower in April as Treasury yields increased. However, corporate bonds outperformed Treasury bonds as credit spreads tightened.

In this commentary, we recap the fourth quarter’s defining themes and events, review performance across key market areas, and look ahead to 2026.