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Summary
• Large-cap U.S. equities returned +15.2% in the 2nd Quarter of 2026 (2Q26), and small-cap U.S. equities returned +21.5% in 2Q26. Foreign developed and emerging markets equities returned +10.8% and +24.0%, respectively, in 2Q26.
• S&P 500 earnings growth rate consensus estimates are +33.4% in 2026, and +13.4% in 2027.
• S&P 500 revenues growth rate consensus estimates are +11.1% in 2026, and +8.3% in 2027.
• Unemployment rates should remain at 4.3%, near historic low levels, throughout 2026 and 2027.
• The economy is running hot with a $1.9 trillion deficit, and a Fed funds rate hike is in play in September. Fed funds rate cuts are not plausible with corporate earnings growth this strong.
• The biggest risks to stock and bond markets would be interest rates moving too high and too fast.
