Market Update 6/22/26

By Will Hubbard

Market snapshot

•  Equities: Stocks finished the week higher. The S&P 500 gained 0.96%, the Dow Jones Industrial Average rose 0.75%, the small-cap Russell 2000 added 1.24%, and the NASDAQ Composite climbed 2.44%.

•  Fixed income: Treasury yields were volatile. The Fed held rates steady but updated projections to show at least one rate increase this year. The benchmark 10-year Treasury yield dipped slightly to 4.46% for the week.

•  Gold and commodities: Gold fell 0.22% for the week as the U.S. dollar strengthened. Oil declined on hopes for improvement in the U.S.-Iran conflict.

•  Market indicators and outlook: Our strategies were active, looking to establish or continue long or levered positions. Market regime indicators show the market is in a Normal economic environment, which is historically positive for stocks, bonds, and gold, though gold has also experienced meaningful drawdowns in this environment. Normal is one of the best stages for stocks, with limited downside. Volatility is High and Rising, which favors stocks over gold and then bonds.

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Equities

Stocks finished higher last week, benefiting from easing geopolitical pressure, a sharp drop in oil prices, and renewed leadership from technology and semiconductor-related names. At the same time, investors had to digest a more complicated interest-rate backdrop after the Federal Reserve’s June meeting.

The Russell 2000 reached a new record closing high. Small caps have often struggled when rates rise or credit conditions tighten. Their strength suggests that investors were willing to look beyond mega-cap technology and take on more cyclical exposure.

Technology remained a major source of leadership. Semiconductor stocks rallied sharply late in the week, helped by optimism around domestic chip production and continued confidence in AI-related capital spending.

The Federal Reserve held rates steady, but its message around future policy became less friendly. Updated projections showed that nearly half of Fed officials now see at least one rate increase in 2026. That is a meaningful shift from the rate-cut expectations that dominated earlier in the year. Strong retail sales and a still-resilient labor market give the Fed more room to stay focused on inflation, especially after oil-driven price pressure created another complication for policymakers.

The result is a market that continues to act well but is not without risk. Investors are balancing falling oil prices and strong earnings momentum against a Fed that may not be finished tightening. For now, price action still favors equities, growth, and momentum. But this remains an environment where discipline matters. A rules-based process does not need to predict the next Fed statement, geopolitical headline, or AI earnings surprise. It simply needs to recognize when the market is rewarding risk and when that condition begins to change.

Fixed income

Treasurys had a choppy week as investors weighed two competing ideas. On one hand, lower oil prices helped ease some inflation concerns. On the other, the Federal Reserve’s updated projections made it clear that policymakers are not ready to declare victory over inflation. As a result, the 10-year Treasury yield dipped slightly from 4.48% to 4.46%.

The Fed left its benchmark policy rate unchanged in the 3.50% to 3.75% range. But the important part of the meeting was the change in tone. The updated projections showed that nearly half of policymakers now expect at least one rate hike before year-end. The policy statement also moved away from language that had previously pointed toward potential cuts. That was a reminder that the bond market still has to factor in inflation risk, even as economic growth remains resilient.

Economic data added to that tension. May retail sales increased more than expected, helped by auto purchases and higher gasoline sales. Core retail sales also rose, suggesting the consumer is not yet breaking. For the Fed, that type of data can be a double-edged sword. It supports the soft-landing argument, but it also gives policymakers less urgency to ease policy if inflation remains above target.

For investors, the message is similar to what we have seen for much of this cycle. Bonds still have an important role in portfolios, especially now that yields provide more income than they did during the zero-rate period. But fixed income should not be viewed as a guaranteed shock absorber in every environment. When inflation expectations rise or the Fed turns more hawkish, bonds can become a source of volatility rather than a simple offset to equity risk.

That does not mean investors should abandon fixed income. It means duration, credit exposure, and overall portfolio construction should remain intentional. The opportunity in bonds is better than it was several years ago, but the risk still needs to be managed.

Gold and commodities

Commodities remained central to the market narrative last week. Oil prices moved sharply lower as investors responded to progress around U.S.-Iran negotiations and the possibility of improved oil flow through the Strait of Hormuz. Brent crude remained sensitive to each new headline, but the direction mattered: Lower oil prices helped ease some inflation pressure and supported risk assets.

That was one reason equities moved higher despite a more hawkish Fed. Falling oil prices can act like a tax cut for consumers and businesses by reducing pressure at the gas pump, helping transportation-related industries, and softening inflation expectations. But investors should be careful about treating geopolitical relief as permanent. Energy markets can reprice quickly when supply routes, production, or diplomacy change.

Gold moved lower for the week as the U.S. dollar strengthened and rate expectations rose. That is the other side of the same macro story. Gold can benefit from uncertainty, but it can struggle when real rates rise or when investors believe the Fed will keep policy tighter for longer. Last week was a reminder that gold is not a one-direction hedge. It can help diversify portfolios, but it is still affected by rates, currency moves, and investor positioning.

From our perspective, gold remains a sensible diversifier. But, like every asset class, gold is most useful when evaluated as part of a broader portfolio process, not as a stand-alone bet on a single market outcome. It can respond well to stress and uncertainty, but it can also face pressure when monetary policy and the dollar move against it.

FPI is the subadviser to the only U.S. gold mutual fund, the Quantified Gold Futures Tracking Fund (QGLDX). Launched in 2013, the fund is designed to track the daily price changes in the precious metal in a more tax-efficient manner than its ETF counterpart, GLD.

The indicators

The QFC S&P Pattern Recognition strategy started the week 80% long, decreased exposure to 70% long on Monday, and then jumped to 110% long on Thursday to close the week. Our QFC Political Seasonality Index remained in a risk-off posture this week. (The QFC Political Seasonality Index—with all of its daily signals—is available post-login in our Weekly Performance Report section under the Domestic Tactical Equity category.)

Our intermediate-term tactical strategies have been varied in their degree of defensive positioning. The key advantage these strategies offer investors is their ability to adapt to changing market environments by participating during uptrends and moving to a defensive posture during downtrends.

The Volatility Adjusted NASDAQ strategy started the week 20% long, moved to cash on Tuesday’s close, and then moved back to 20% long on Thursday’s close to end the week. The Systematic Advantage strategy remained 90% long throughout the week. Our QFC Self-Adjusting Trend Following strategy started the week at 200% exposure and shifted to 0% exposure on Thursday. These strategies can employ leverage, so their exposure may exceed 100% at times.

Our Classic model was fully risk-on all week. Most Classic accounts follow a signal that can change exposure within a week, though a few remain on platforms requiring up to a month to adjust to new signals.

FPI’s Growth and Inflation measure, one of our Market Regime Indicators, shows that we are in a Normal economic environment stage (meaning a positive monthly change in prices and a positive monthly change in GDP). Historically, a Normal environment has occurred 75% of the time since 2003 and has been a positive regime state for stocks, bonds, and gold. Stocks have the highest rate of return in Normal periods. Gold has the second-highest return but has also experienced high drawdowns in these environments.

Our S&P volatility regime is registering a High and Rising reading, which favors stocks over gold and then bonds from an annualized return standpoint. The combination has occurred 28% of the time since 2003.