We hope you and your family are enjoying a wonderful start to summer and had a great Fourth of July weekend.
With the first half of 2026 now complete, equity markets have exceeded even our most optimistic forecast and already surpassed our year-end 10% return target.
As of market close this afternoon (Friday, July 10th) the Dow, S&P 500 and the Nasdaq Indices have returned a positive 9.48%,10.49% and 12.96% respectively, year to date. Of course, this has not been without its fair share of stress inducing episodes.
The first half of the year delivered three challenging dynamics, all in quick succession: a new Federal Reserve chair, the continued conflict in Iran, renewed concerns about overspending within Ai infrastructure, skepticism on the potential return of those investments and concerns regarding lofty valuations within the space.
Despite these obstacles, stocks kept climbing and the underlying economy continued to grow. Economic resiliency has been the story for the first half of the year and we see more of the same for the balance of the year.
Next week, second quarter corporate earnings season kicks off with many of our most important individual equity holdings reporting such as JP Morgan, Goldman Sachs, Morgan Stanley and Taiwan Semiconductor. The following week we get results from Alphabet and Tesla and the last week of July, will be Microsoft, Apple, Amazon and Meta. Earnings will continue to be reported weekly into the last week of August.
You may (or may not) be asking yourself why do we place so much focus on earnings? As we have mentioned in previous notes, the true driver of long-term stock appreciation is consistent revenue growth, EPS growth, and margin expansion.
Stocks move in the short term based upon bullish or bearish sentiment, unsubstantiated rumors, fear mongering and skepticism. Then, every three months is where the rubber meets the road with earnings proof along with earnings forward guidance. This information is at the core of our decision making on whether we buy/sell, add or trim our individual stock positions.
Consensus estimates currently put S&P 500 earnings growth at about 23.3% year over year for the second quarter of 2026, according to FactSet and LSEG. These are exceptional figures. If final results remain close to consensus, they will largely justify current equity valuations and provide additional support at these levels.
Looking ahead and depending on the forward guidance provided by many CEOs, we are raising our year-end S&P 500 target to 7,800. This implies a 3% gain from current levels and a year-end total return of just over 13% for the index.
The second half of the year appears constructive but remains complex. We expect four key themes to shape markets: the approaching midterm elections, a maturing AI cycle, rising global resource nationalism, and a Federal Reserve navigating a leadership transition. Each present both opportunity and uncertainty. While much could change between now and year-end, this is our best-informed outlook at this time.
We are concerned about extreme crowding in momentum factors and speculative growth segments which has caused much of the push-and-pull between AI-driven optimism and concerns about high valuations. However, optimism is backed up by earnings growth not just buyside multiple expansion. Midterm elections will absolutely cause increased volatility and is something we should expect.
We plan for this, we rebalance and we have plenty of cash in portfolios ready to be put to work in the coming months as opportunities present themselves.
As always, we wish you and your family a great Friday evening, and a wonderful weekend!
Please reach out to us with any questions or comments you may have regarding your specific situation.
Jaran C. Day, Chief Investment Officer
Griffin Dalrymple, CFP®, Chief Strategy Officer
Past performance is not indicative of future performance.
The views expressed represent the opinion of Opinicus and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Opinicus’s view as of the time of these statements. Market performance cited is not indicative of portfolio performance experienced by portfolios Opinicus manages. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.