Peak Inflation?

Key Takeaways Last Week

U.S. stocks rebounded after the prior week’s technology-led selloff as easing oil prices, improving geopolitical headlines, and stronger market breadth supported risk appetite. The S&P 500 gained +0.65%, the Dow rose +0.7%, the Nasdaq gained +0.7%, and the Russell 2000 surged +3.9%, reaching a new record high. Year-to-date, the Russell 2000 leads major indexes with an +18.6% gain, followed by the Nasdaq +11.4%, S&P 500 +8.6%, and Dow +6.5%

• Stocks recovered from the prior week’s AI and semiconductor selloff.
• SpaceX completed the largest IPO in history, rising nearly 19.2% on its first day of trading.
• Oil prices fell sharply as U.S. and Iran moved closer to an agreement that could reopen the Strait of Hormuz.
• Treasury yields stabilized despite ongoing inflation concerns.
• Market leadership broadened significantly beyond mega-cap technology.

U.S. Stock Performance – Index and Sector Moves

Financial markets improved during the week ending 6/12/26.

The S&P 500 closed at 7,431.46, the Dow Jones Industrial Average finished at 51,202, the Nasdaq Composite closed at 25,888, and the Russell 2000 ended at 2,943.

S&P 500: +0.65%

Dow Jones: +0.70%

Nasdaq: +0.70%

Russell 2000: +3.90%

Sector leadership broadened considerably, with industrials, infrastructure, aerospace, engineering, small caps, and select cyclicals outperforming. Semiconductor leadership remained intact but became less dominant than earlier in the quarter.

Source: Seeking Alpha

Sector leadership rotated away from technology and semiconductors toward health care, financials, real estate, and consumer staples.

Source: Seeking Alpha

S&P 500 Weekly Leaders and Laggards Ranked

Top Performers (WTD):

• Quanta Services (PWR) – Continued AI-related grid demand, data-center expansion, and utility spending.
• Comfort Systems USA (FIX) – AI data-center construction demand and infrastructure spending.
• Howmet Aerospace (HWM) – Aerospace demand, commercial aviation growth, and industrial outlook.
• TTM Technologies (TTMI) – Benefited from AI networking, electronics, defense, and infrastructure demand.
• Ross Stores (ROST) – Strength as investors favored consumer names with resilient spending trends.

Bottom Performers (WTD):

• Adobe (ADBE) – Fell despite strong earnings as investors focused on AI monetization and executive departures.
• Micron Technology (MU) – Declined despite favorable AI-memory fundamentals. Profit-taking concerns weighed on shares.
• Broadcom (AVGO) – Pressure following earnings-related disappointment.
• Select AI Infrastructure Names – Investors rotated into broader market participation and small caps.
• Select Software Names – Growth software remained sensitive to higher rates and AI monetization.

Breadth & Participation

Breadth improved significantly.

The equal-weight Nasdaq outperformed the traditional Nasdaq 100, signaling broader participation beyond the Magnificent Seven. Small-cap stocks strongly outperformed, with the Russell 2000 gaining nearly 4% and reaching a record high. Advance-decline data improved materially, suggesting the rally broadened beyond AI, semiconductors, and mega-cap technology. This represents one of the healthiest breadth improvements observed during 2026.

Source: Seeking Alpha

International/Global

Geopolitics remained the dominant macro driver. Markets reacted positively to reports that the United States and Iran were nearing a formal agreement that could reopen the Strait of Hormuz and reduce Middle East tensions. President Trump stated that a memorandum of understanding had been reached and a formal agreement could be signed shortly.

International equity markets responded favorably:

• South Korea: +4.6% Japan: +2.8% France: +1.8%, China remains challenged by property-sector weakness and slower economic growth.

Source: Seeking Alpha

Volatility & Risk Sentiment

Risk sentiment improved substantially.

VIX closed near 17.68, down roughly 9% on Friday alone.

Investors became more comfortable increasing risk exposure as:

• Oil prices declined
• Geopolitical tensions eased
• Small caps strengthened
• Treasury yields stabilized

Bonds, Credit & Interest Rates

 Treasury yields fell on better inflation data and Iran war concerns fading.

Economic Data, Monetary Policy & Earnings

The major economic focus remained inflation and next week’s Federal Reserve meeting.

The market expects newly appointed Fed Chair Kevin Warsh to maintain a relatively hawkish tone given inflation remains above target.

Upcoming reports include Industrial Production, Housing Starts, Building Permits, Federal Reserve Rate Decision. Corporate earnings season has largely concluded, but results continue to show strong AI-driven spending and infrastructure investment trends.

Commodities, Currencies & Macro Assets

Brent crude: ~$88/bbl
Gold: $4225
Dollar Index: 99.8
Bitcoin: ~$64000

Source: Seeking Alpha

Flows & Positioning

Positioning unwound sharply in crowded AI, software, and semiconductor trades. Money rotated toward health care, financials, real estate, and staples. The Fed’s balance sheet contracted for the second week in a row, the first time that has happened since early January.

What Matters This Week

• Federal Reserve meeting and Chairman Warsh’s first policy decision
• CPI and inflation expectations
• Industrial production data
• Housing starts and permits
• U.S.–Iran agreement developments
• Oil prices and Strait of Hormuz reopening progress
• Breadth sustainability beyond AI leadership

Bottom Line

Markets recovered well from the prior week’s sharp technology selloff. Falling oil prices, easing geopolitical tensions, improving breadth, and strong small-cap participation provided important support.

The most encouraging development was broader market participation. While AI remains the dominant long-term investment theme, leadership expanded into industrials, infrastructure, aerospace, and small caps.

If breadth continues improving while yields remain contained, the market may become less dependent on a narrow group of AI leaders and more resilient overall.

Stock Talk

Stock Market 1q26 earnings season recap – “When Good Isn’t Good Enough”, making sense of massive single stock, post earnings moves and dispersion.

Past performance is no guarantee of future results. Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. The preceding discussion is for informational purposes only. Investing involves risk and no reference to any security listed above should be considered a buy or sell recommendation. Advisory services are provided through Oak Harvest Investment Services, LLC, a registered investment adviser.