Current market environment performance of dynamic, risk-managed investment solutions.
Market rebounds as optimism returns
The second quarter of 2026 saw a strong reversal from the market weakness of the first quarter. Markets rebounded, supported by robust earnings among S&P 500 companies and renewed optimism for AI-driven growth opportunities. Geopolitical tensions eased during the quarter, and Kevin Warsh began his tenure as Federal Reserve chair in May, succeeding Jerome Powell. Against this backdrop, markets reached new highs.
Information Technology led the markets higher, returning more than twice as much as the second-best-performing sector. Energy and Utilities were the only sectors to post negative returns for the quarter. Domestic equities outperformed international equities.
Both the broader bond market and longer-dated bonds rose during the quarter. A decline in oil prices helped ease concerns about a resurgence in inflation. The Federal Reserve held rates, even after the leadership transition.
Gold posted its first quarterly loss since Q4 2024. Even so, gold finished the quarter substantially higher than it was a year ago. Many of our strategies invest in gold to capitalize on its positive periods, which can occur when stocks or bonds are under pressure.
Our equity, core, and alternative strategies remained mostly aggressive in their positioning, while a larger percentage of our bond strategies were aggressively positioned compared with last quarter. At quarter-end, among our QFC, ETF, and Axos platform strategies:
• 74% of our equity strategies were over 90% invested in non-defensive assets
• 47% of our bond strategies had over 50% in non-defensive asset exposures
• 92% of our core strategies held over 50% in non-defensive assets
• 86% of our alternative strategies had over 50% in non-defensive asset exposures
The second quarter’s sharp contrast with the first is a reminder that market leadership can shift quickly. Markets are dynamic, and we believe investor portfolios should be too. That is why our strategies continually examine market trends and adjust accordingly, updating investor portfolios as the tides change.