Welcome to the monthly market update from Midland Wealth Management. I’m Denise Melton, Portfolio Manager. Today, I’ll share the Investment Team’s latest market and economic views.

Market Recap – June 2026

June brought a shift in tone from the spring’s steady rally in equities, as volatility rose amid concerns around the AI buildout, economic policy, and international affairs. Meanwhile, consumers and the US economy persevered through elevated prices, especially in energy, with hope for improved conditions heading into the latter half of the summer.

Equity Rotations and IPO

As investors digested the strong first-quarter rally, market leadership began to broaden. In the US and abroad, capital rotated away from mega-cap technology names, weighing on the S&P 500 and contributing to several sharp sell-offs. Concerns around elevated valuations and rising AI infrastructure costs were key pressure points, especially regarding the memory chips required for data center build-out. The costly cards saw price increases of nearly 80% year-to-date. These price increases have helped to drive the shares of producers, such as Micron, higher at the expense of the hyperscaler firms, collectively driving their share prices down 7.7%.

The AI story also became more selective. Enthusiasm has cooled, but the build-out continues, with several companies still raising capital through debt and equity to fund expansion. This includes Amazon and Nvidia, who issued debt, as well as Google, who instead elected to issue more equity. Simultaneously, SpaceX offered shares publicly for the first time, with prices initially jumping nearly 20% before falling below their opening price—a potential sign of the added scrutiny now facing the Technology sector.

But money did not leave the market entirely. It simply moved into small- and mid-cap stocks. The Russell 2000 Index gained 3.74%, where Energy, Healthcare, Industrials, and Banks attracted renewed interest. Those gains helped offset some of the weaknesses from large-cap technology.

Geopolitical Seesaw

Geopolitically, the spotlight remained on the Strait of Hormuz closure. Peace talks, which began early in the month, were repeatedly hampered by skirmishes or strikes, especially in Lebanon. Later into the month, negotiations in Switzerland moderated by Pakistan and Qatar helped set a “good foundation” for a lasting treaty, according to Vice President JD Vance. This progress contributed to a reopening of the Strait and a subsequent slide in oil prices, as contracts fell to $71 a barrel, on par with pre-war levels.

FOMC & Economics

This backdrop could complicate the inflation outlook, with price growth moving back above 4% and drawing renewed attention from the Federal Reserve. At Chair Kevin Warsh’s first meeting in June, the Fed held rates steady at 3.5 to 3.75%, but the tone shifted. A resilient labor market and concerns over energy-driven inflation tied to the conflict in Iran pushed officials away from an easing bias. Markets read Warsh’s press conference as more hawkish than expected and culminated with investors beginning to price in the possibility of a rate hike before year-end.

Warsh also signaled a broader reset at the Fed, announcing the establishment of task forces focused on Fed communication, data, the balance sheet, productivity and employment, and inflation framework.

Outlook

Looking ahead, our team remains focused on inflation, trade negotiations, energy markets, and the durability of the ceasefire in Iran. We additionally remain cautious on equity market concentrations, especially in domestic large-cap and emerging markets indices. A macroeconomic backdrop of cooling inflation and freer trade should provide a tailwind to equity prices in the second half of the year.

As always, we remain focused on constructing diversified, high-quality portfolios that can capture long-term opportunities while managing through periods of market uncertainty.

Thank you for joining us for this month’s market update. If you would like to discuss what these developments mean for your portfolio, please reach out to your financial advisor or relationship manager.