The first half of 2026 is in the books. The S&P 500 and Nasdaq just posted their best quarter in six years. The Dow had its best first half since 2021. And the market got there despite a war that closed the Strait of Hormuz for 107 days, a spike in CPI from 3.2% to 4.2%, a new Fed chair who killed forward guidance and let nine of eighteen dots call for rate hikes, a 4% Nasdaq selloff in the last week of the month, Korea tripping circuit breakers twice, Apple raising Mac prices, OpenAI delaying its IPO, and oil going from $70 to $95 and back to $70. The Dow closed above 52,000 yesterday. It added another hundred points today. And 64% of S&P 500 stocks are now above their 50-day moving average — up from 50% a month ago. The market is wider, healthier, and less dependent on five stocks than it was in January. That's the report card. That's the setup for the second half.
The Close
Quiet close to a loud quarter. The Dow added about 100 points to close out its best first half in five years. The S&P and Nasdaq edged higher. It was the kind of low-volume, nothing-dramatic session you get when the quarter is ending and everyone is watching the clock. Nike reports after the bell tonight. The JOLTS job-openings data came out this morning. The real number — June nonfarm payrolls — arrives Thursday.
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| S&P 500 Q2 | best in 6 years | despite the war | ||
| Dow H1 2026 | best in 5 years | above 52,000 | ||
| S&P Breadth | 64% above 50-day | up from 50% | ||
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| Health Care | +3.0% | |||
| Financials | +2.5% | |||
| Industrials | +2.0% | |||
| Utilities | +1.5% | |||
| Real Estate | +1.0% | |||
| Consumer Staples | +0.5% | |||
| Materials | −0.5% | |||
| Energy | −1.5% | |||
| Consumer Disc. | −2.0% | |||
| Comm. Services | −3.5% | |||
| Info. Technology | −5.0% | |||
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Witkoff and Kushner arrived in Doha on Tuesday for talks on the Iran deal. They won't sit across from Iranian officials — Qatar is mediating, passing messages between delegations who aren't in the same room. Iran's foreign ministry said there are "no plans for meetings with the United States at any level." Then added that what's happening in Doha is a "discussion about implementing parts of the MOU, including the release of Iran's blocked assets." The deal keeps moving through the only channel it ever has: indirect, deniable, and one step at a time.
Every quarter, something happens on the last day that has nothing to do with the economy or earnings. Large portfolio managers — the people who run pension funds, mutual funds, sovereign wealth piles — go through their holdings and adjust what they own so the quarter-end report looks good. They sell the stocks that lost money and buy the stocks that made money. It makes their reports look sharper when clients read them in July. On Wall Street they call it window dressing. It happens the last two or three days of every quarter, and it can push winners a little higher and losers a little lower for reasons that have nothing to do with value. Today was June 30. Some of the calm in the tape — tech drifting higher, defensives holding — was managers cleaning up their books before the snapshot.
The rate-hike trade eased this week. The 2-year yield dropped 9 basis points from last week to 4.088%. The probability of a July hike fell from 38% to 30%. And the date when the market prices in a 100% chance of a hike got pushed from October all the way to December. Oil at $70 and falling is doing exactly what we said it would: pulling inflation expectations lower, which pulls hike expectations lower, which gives the Fed more room to hold. The dots haven't changed. The data around them has.
What The Market Is Pricing In
The quarter is done. The half is done. And the market that started 2026 with a war and ends it with a record Dow is telling you something about what the second half looks like.
Here's the scorecard. The Dow crossed 52,000 — up more than 2,000 points since the war started on February 28. The S&P 500 posted its best quarter in six years. The Nasdaq posted its best quarter since 2020 — even after losing 6% in June. Oil went round-trip: $70 before the war, $95 during, $70 now. The Fed went from cutting to hawkish: three rate cuts priced in January, nine dots wanting hikes by June. And the market absorbed all of it — the war, the inflation, the Fed pivot, the tech rotation, the Korean circuit breakers — and came out higher on the other side.
The number that tells the real story isn't the index level. It's the breadth. In May, 50% of S&P 500 stocks were above their 50-day moving average. Today it's 64%. The S&P fell 3% in June — but breadth improved. That means the index dropped because the biggest stocks fell, while the average stock got healthier. Schwab's data shows advancing stocks outnumbered declining stocks on most days in June, even as the Nasdaq posted six straight losing sessions. The broadening trade that started two weeks ago isn't a blip. It's the dominant story of the quarter's final month.
The S&P 500 posted its best quarter in six years despite a war, a hawkish Fed, and a 6% June selloff in the Nasdaq — and the market is telling you the second half will be driven by breadth, not by the same five stocks that drove the first half, and by whether oil at $70 can pull inflation down fast enough to make the hawkish dots obsolete before the September meeting. The hike probability already dropped from 38% to 30% this week. The 100% hike threshold pushed from October to December. If June and July CPI come in below 3.5% — and with oil at $70 they should — the nine dots become six by September, then three by December. The market is pricing that path. Thursday's jobs number will tell you whether the economy is cooperating.
I watched the first half of 2019. The S&P gained 17% despite a trade war, a yield curve inversion, and a 20% correction the quarter before. The wall of worry was real. The market climbed it because the economy held and the Fed pivoted. Today's wall was taller — a literal war, not just a trade dispute. The market climbed it anyway. The economy held. The question for the second half is whether the Fed pivots too. Oil is doing its part. Jobs on Thursday will tell you if the labor market agrees.
What's Next
Three things I'm watching this short week:
01 — June nonfarm payrolls Thursday July 2 at 8:30 AM
The number that decides the narrative for July. May was 172,000 — double expectations. Consensus for June is around 130,000. If it comes in strong, the "rotation into a strong economy" thesis holds and the broadening continues. If it comes in weak — below 100,000 — the story shifts from "healthy rotation" to "slowing economy" and the tech selloff spreads. This is the last major data release before the market closes for the July 4th weekend. Traders will position into the long weekend based on this number.
02 — Nike earnings tonight after the bell
Nike is near an 11-year low. Revenue expected to fall 3%. The stock has lost 24% this quarter. If Nike beats and guides above expectations — particularly on North America and China — it's a signal that the consumer is still spending even at 4.1% PCE. If it misses, the consumer story cracks and the broadening trade that depends on old-economy stocks doing well loses a pillar. BofA expects $0.11 per share. Watch the China commentary — it's been the swing factor for every Nike quarter this year.
03 — ISM Manufacturing PMI Wednesday July 1
The first real economic data of Q3. The ISM Manufacturing Index has been in contraction territory (below 50) for most of the past year. If it crosses above 50 in June — helped by falling oil and the Iran deal — it signals that the factory sector is expanding for the first time in months. That would confirm the broadening trade from a different angle: not just stock market breadth, but actual economic breadth. The threshold is 50. Above means expansion. Below means contraction. It's that simple.
The first half is done. Best quarter in six years. The Dow at a record. Breadth improving. Oil at pre-war levels. Rate-hike odds falling. And the second half starts with jobs on Thursday and a long weekend to think about what comes next. The wall of worry just got shorter. The question is whether July's data keeps it that way.
That's it for today. See you tomorrow after the close.
— Tom Hartley
Today In Perspective · Published daily, Monday–Friday, after the close
This newsletter is for informational purposes only and does not constitute investment advice. The author is not a registered investment advisor. Past performance does not guarantee future results. Consult a qualified financial professional before making investment decisions.
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