On Tuesday, stocks wrapped up their strongest quarter in years, as traders overlooked worries about the AI bubble and held out hope for a peace agreement with Iran. Still, this year might bring more ups and downs.
The Dow Jones Industrial Average climbed 0.3%, or 136.46 points, reaching a record close of $52,319.20. Meanwhile, the S&P 500 and Nasdaq increased by 0.8% and 1.5%, respectively.
After a few weeks of fluctuating tech stocks, shares in chipmakers surged on Tuesday, with Nvidia, Advanced Micro Devices, and Intel rising 2.6%, 7.7%, and 6%, respectively. The VanEck Semiconductor ETF also gained over 3% and is up 82% year-to-date.
Tuesday marked the end of the first half of 2026, with the Dow achieving its best six-month performance since 2021, while the S&P 500 and Nasdaq saw their largest quarterly gains since the pandemic hit.
Oil price trends linked to the Iran conflict and worries about AI stock valuations heavily influenced the market, but other factors could also play a role in the stock prices during the third quarter.
“Next quarter will depend on the developments in the Iran conflict, November election expectations, SpaceX’s performance, and potential signs around the Anthropic IPO,” said SMI Group CEO Kenin Spivak.
He added that a return to hostilities in Iran could reverse recent market gains and potentially lower prices if there’s an expectation that Democrats could take control of Congress, which might hinder the Trump administration.
Ken Mahoney, CEO of Mahoney Asset Management, believes the bull market could continue, although he advises investors to brace for volatility in both directions.
“Historically, July tends to be positive, but the interim third quarter looks weaker and may be volatile,” he mentioned.
He also pointed out that markets will begin paying attention to the midterm elections and their potential effects. September, unfortunately, has a reputation for being tough historically, so perhaps some market dips might be expected this year.
Investors are keeping a lookout for insights from the Federal Reserve and its new chairman, Kevin Warsh, regarding future interest rates. So far, the market seems to be following the trajectory outlined after Warsh’s unexpectedly hawkish speech on June 17.
The Dow recorded an 8.9% increase in the first half of 2026, marking its best half-year performance since 2021, when it saw a 12.7% rise. During this time, the S&P 500 and Nasdaq climbed 9.6% and 12%, respectively.
The small-cap index Russell 2000 jumped over 21% in the first half of this year, showcasing its strongest results since the early days of 1991.
While the first quarter of 2026 was relatively solid, the second quarter exceeded expectations despite volatility driven by high oil prices and concerns that tech companies might overspend on AI initiatives.
The S&P 500 and Nasdaq experienced increases of 14.9% and 21.4%, respectively, in the second quarter, marking their largest quarterly gains since Q2 of 2020. The Dow also surged 12.9% during this period, representing its strongest quarter since late 2022.
