The second quarter delivered an exceptionally strong rebound for equity markets, with U.S. stocks posting their best quarterly gains since 2020. While large-cap technology companies once again played a significant role in driving returns, market leadership broadened considerably.
Small-cap stocks enjoyed one of their strongest quarters in years, while software companies recovered much of their first-quarter weakness. Strength also extended to several industrial and cyclical areas of the market. In contrast, energy, chemicals, utilities, and several consumer-oriented sectors lagged.
Artificial intelligence remained the dominant investment theme throughout the quarter, with little evidence that the unprecedented pace of capital spending is slowing. Corporate earnings reports from many of the largest technology companies continued to highlight robust demand for computing power, semiconductors, memory, and data center infrastructure, reinforcing expectations that the AI buildout remains in its early stages. The market also continued to reward companies supplying the “picks and shovels” of the AI ecosystem, including businesses involved in power generation, cooling systems, networking equipment, and data center construction.
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Summer 2026 Investment Commentary
The second quarter delivered an exceptionally strong rebound for equity markets, with U.S. stocks posting their best quarterly gains since 2020. While large-cap technology companies once again played a significant role in driving returns, market leadership broadened considerably. Small-cap stocks enjoyed one of their strongest quarters in years, while software companies recovered much of their first-quarter weakness. Strength also extended to several industrial and cyclical areas of the market. In contrast, energy, chemicals, utilities, and several consumer-oriented sectors lagged.
