The U.S. employment showed more strength than expected in April
Employment rose in April while unemployment held steady at 4.3%, pointing to labor market resilience and the Fed leaving interest rates unchanged.
U.S. equities have seen their share of peaks and valleys in the first six months of 2026, plunging in March as President Donald Trump launched a war against Iran, and then soaring to new heights through the spring-powered by a historic run in chip stocks.
On March 30, the S&P 500 Index was down more than 7% for the year as oil prices soared and the conflict around the Strait of Hormuz widened. But since then it has completely reversed direction and is now up more than 7% for 2026 as resilient growth and enthusiasm for artificial intelligence spur investors’ optimism. The Philadelphia Stock Exchange Semiconductor Index has soared 74% in the second quarter, putting it on pace for its best quarter ever by far.
Now, as the calendar flips to the second half of 2026, Wall Street is grappling with a series of risks, from the durability of the AI trade, to the threat of rising interest rates as inflation keeps a stubborn grip on the economy, to the midterm elections in November that could change which party controls one or both houses of Congress.
“Everyone is so consumed with chipmakers, but will all of this massive AI spending pay off? Will we see rate hikes? Inflation spikes? That’s all created nervousness,” said Eric Beiley, executive managing director of wealth management at Steward Partners. His firm is trimming exposure to some chipmakers and buying defensive health care and consumer shares. “Chips have been the stars. Now we need to see broader participation across the board.”
A strong first half for stocks has historically been a good sign for the rest of the year in the market. Whether that holds again is the question in light of all the wild cards on the horizon. Here are five charts that show just how wild the U.S. stock market’s first six months were — and what history says may be in store for the second half of 2026:
The stock market’s resurgence has defied skeptics, coming in the face of war, an oil supply shock and economic forecasts warning of slowing growth. Since bottoming three months ago, the S&P 500 has staged one of the swiftest rebounds this century, gaining 20% from its March 30 low to its June 2 peak — something it has done just three other times since 2000, according to data compiled by Bloomberg.
This quarter marks the benchmark’s second-best April to June stretch since 2009, when U.S. equities bottomed in the aftermath of the global financial crisis. Meanwhile, the technology-heavy Nasdaq 100 Index has gained 23% in the second quarter, putting it on pace for its second-best quarterly performance since 2001, topped only by the second quarter of 2020.
High-flying chip stocks are easily the S&P 500’s best-performing group in 2026, soaring 37% on the strength of heavy spending on AI infrastructure, notably memory, processing and storage. Those gains have the Philadelphia semiconductor index on pace to trounce the S&P 500 by a whopping 86 percentage points since early January, which would be its best outperformance ever in the first six months of the year relative to the broader benchmark, according to data compiled by Bloomberg going back three decades.
A good example is Micron Technology Inc., the largest U.S. manufacturer of memory chips, which has leaped 297% this year and is the biggest point gainer in the S&P 500, accounting for roughly 22% of the index’s rise. Sandisk Corp., which makes flash memory semiconductors, is the best overall performer in the benchmark, soaring 781%. Yet, AI chip giant Nvidia Corp., the world’s most valuable company, is up just 3.2% in 2026, making it the worst performer in the semiconductor index and falling short of the S&P 500’s gain.
Energy shares have gone in the opposite direction of the overall market, jumping 37% in the first quarter thanks to a surge in oil prices, making them the best group in the S&P 500, and then losing 13% in the second quarter, the worst performance in the broad equities benchmark. The shift in sentiment is based on expectations that crude prices will fall if the U.S. and Iran reach a peace deal.
Utilities, consumer staples and materials are also among the biggest laggards since early April, each rising less than 3%. For the year, the weakest sectors are real estate management, which has plunged 30%, and software and services companies, which have lost 21%. Business software maker Intuit Inc. is the worst-performing S&P 500 stock this year, sliding 60%, followed by Costar Group Inc., down 55%.
With all the swinging, the S&P 500 is up just 7.4% for 2026, meaning it has a ways to go to catch up to recent years. The index rose 16% in 2025 and more than 20% in 2023 and 2024, something it hasn’t done since the late 1990s.
As a result, global stocks are beating the United States. The S&P 500 is trailing the MSCI All Country World Index excluding the US Index by 3.8 percentage points in 2026. It that holds through Tuesday, it would mark the first time since the aftermath of the global financial crisis that U.S. equities have underperformed their global peers in the first half of two consecutive years, data compiled by Bloomberg show.
Divining exactly which direction stocks will go from here with so much uncertainty swirling around the economy is a dicey proposition. But what history does clearly suggest is investors should anticipate more volatility.
This is the fourth year of the bull market, and in the United States that suggests a bumpy ride. While the S&P 500 has averaged a gain of 13% in year four since World War II, it frequently experiences higher volatility and larger peak-to-trough drawdowns during the summer and fall.
This is particularly true in midterm years due to uncertainty surrounding the vote and the potential for policy changes. On average, midterm years see a maximum peak-to-trough correction of 17.5%, per Carson Investment Research. But stocks typically post a strong rally at year-end, and the index averages a gain of 32% over the ensuing 12 months after the trough.
For investors, this is where the bet lies. On one side, the wager is that there’s a rally coming because the worst of the selling already happened at the start of the year. On the other side, the belief is that more pain is coming after a furious second-quarter rebound left positioning, technicals and valuations stretched to the point of breaking.