Second Quarter Market Update 2026- The Bounce and The Noise
Wow, it has been a wild year.
I wrote earlier this year that I expected the markets to take a deep breath after three years of double-digit growth, but that the war in Iran was unexpected. The Iran conflict certainly shook markets in Q1, but they have since rallied back!
Between the Iranian conflict and an announcement of new reciprocal tariffs, the market was staring at what looked like a deep breath indeed. In fact, the S&P 500 finished Q1 down over 7%.
This wasn’t necessarily a concern for us or our portfolios, as our more diversified approach across multiple markets (international, emerging markets, small-cap, bonds, etc.) showed great resilience during this period.
Then April happened.
Tariffs were delayed.
Peace talks began.
And the markets surged.
Despite exceptional overall results across many indexes, there have been numerous market swings over the past few months.
Oil surging and crashing repeatedly.
Gold was down.
Silver was down.
The AI trade flip flopping between boom and bust weekly.
Bitcoin was up and down (mostly down).
In the face of all these different headlines, markets have endured and delivered really nice gains.
Source: Y-charts
As you can see across the board (let's not talk about bonds), markets have performed exceptionally well. Emerging markets lead the herd at the moment, but that is a little bit of a misdirection depending on which emerging markets index you look at. South Korea has the world's best-performing market this year (driven by SK Hynix and Samsung). This is essentially an AI trade that has blown up! Some indexes consider South Korea a developed country, others see it as an emerging market. But that is a conversation for a different day.
Ultimately, it's been a good start to the year, and our diversified approach is participating in those gains, all while keeping our eye on the risks that may present themselves, as I tell our new employees as they come on board. “Our clients are often in the 4th quarter of their investment lifetime, and they often have a lead. One of our jobs is to protect that lead and not run up the score”.
As always, thank you for putting your trust in FSG, and if you have any questions, please do not hesitate to reach out to your advisor.
Written by: Brice Carter
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