Written by Amaury de Barros Conti, Partner | Vice President Investments
WHAT MOVED MARKET LAST WEEK
Markets experienced a notable divergence, as supportive macroeconomic conditions and moderating inflation were overshadowed by a sharp rotation within equities, most visibly in mega-cap technology and semiconductor stocks. Importantly, the underlying economic backdrop appears to remain supportive, with steady growth, resilient consumer activity, and continued earnings strength tied to AI-related investment. However, elevated positioning, momentum dynamics, and geopolitical developments seems to have contributed to short-term volatility, reinforcing the importance of maintaining a disciplined, long-term perspective amid an increasingly narrow and momentum-driven market environment. The S&P 500 fell 2.0% and the Nasdaq declined 4.6%, while the Dow Jones Industrial Average rose 0.6%, as per Bloomberg data.
Source: Bloomberg Finance as of June 26, 2026.
- A broad selloff in semiconductor and AI-linked names drove much of the market weakness, with several high-profile companies declining sharply despite generally strong fundamentals. Even companies reporting favorable earnings, such as Micron, saw negative price reactions, illustrating the sensitivity of investor sentiment following a period of strong performance.
- At the same time, macro signals were largely constructive. Core PCE inflation rose 0.32% month-over-month in May, in line with expectations, while economic growth remains steady, with Q1 GDP revised higher to 2.1% and Q2 tracking near 2.4%. Personal income and spending exceeded expectations, reinforcing the resilience of the U.S. consumer.
- Consumer Sentiment improved modestly in June, apparently aided by lower gasoline prices, though it remains near historically low levels. Inflation expectations have moderated slightly, while spending data continues to point to resilience, particularly among higher-income cohorts.
- Housing activity remains a soft spot, as elevated mortgage rates near 6.6% continue to weigh on affordability and demand, with recent data showing a decline in new home sales.
- From a broader perspective, the economy continues to exhibit a “steady but uneven” profile, characterized by resilient growth, moderating inflation, and pockets of sensitivity to higher rates.
LOOKING AHEAD
- Markets enter a holiday-shortened week with focus squarely on the June employment report. Current consensus estimates call for job growth of approximately 110,000 and stable unemployment at 4.3%.
- In addition, investors are expected to closely monitor early earnings signals, AI-related developments, and central bank commentary. Given current positioning and elevated momentum, the potential for continued volatility remains high, particularly within crowded segments of the market.
- Looking ahead, the upcoming Q2 earnings season may represent a critical inflection point. It is expected that sustained earnings strength will be necessary to justify current valuations and extend the market’s advance, particularly as investors begin to assess the durability of AI-driven capital spending.
Amaury de Barros Conti
Partner | Vice President Investments
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