The market and economy

• Major U.S. equity market indexes saw mixed performance during the week ending June 26. There was a selloff in the technology sector, particularly chipmakers, amid investors’ concerns about the durability of the rally in artificial intelligence (AI)-related companies. Both the broad-market S&P 500 Index and the tech-heavy Nasdaq Composite Index ended the week in negative territory. Conversely, the Dow Jones Industrial Average, which has relatively smaller exposure to the tech sector, posted a modest gain.
• The U.S.-Iran memorandum of understanding (MOU) continued to shape Mideast diplomacy this week, though implementation risk remained elevated. On Thursday, the Gulf Cooperation Council (GCC) welcomed the agreement and backed U.S. objectives to prevent Iran from acquiring a nuclear weapon, address Iran’s ballistic missiles, and preserve free and unrestricted navigation through the Strait of Hormuz. However, Iranian authorities reportedly warned vessels transiting the strait without identification signals or Iranian permission, leading at least three oil tankers and two other ships to reverse course. The episode highlighted the gap between the diplomatic framework and conditions on the water. The MOU has reduced near-term escalation risk, but freedom of navigation through the Strait remains contested.
• Energy markets reflected the fragile nature of the de-escalation. Oil prices had moved lower in recent sessions as investors priced in the U.S.-Iran MOU, sanctions relief, and a gradual recovery in shipping through the Strait. However, West Texas Intermediate (WTI) and Brent crude oil futures later rose sharply after the vessel reversals renewed concerns over safe transit. The agreement has eased immediate energy-market pressure, but the path back to normalized oil flows remains vulnerable to shipping disruptions, enforcement disputes, and renewed geopolitical risk.
• There was notable economic news during the week. According to the third estimate from the Department of Commerce, U.S. gross domestic product (GDP) grew at an annual rate of 2.1% for the first quarter of 2026, exceeding expectations and up from the previous estimate of 1.6% and the 0.5% rise in the fourth quarter of 2025. The increase in GDP for the first quarter was attributable to growth in investment, exports, government spending, and consumer spending, while the upward revision from the second estimate primarily reflected a downward revision to imports, which are a subtraction in the calculation of GDP.
• The Department of Commerce also reported that the personal-consumption expenditures (PCE) price index rose 0.4% in May, matching the increase in April. The index advanced 4.1% over the previous 12-month period, up from the 3.8% annual increase in the prior month and in line with expectations—remaining well above the Federal Reserve’s 2.0% target. The core PCE price index, which excludes volatile food and energy prices, rose 0.3% in May, unchanged from the increase in April. The index posted a year-over-year upturn of 3.4% in May following a 3.3% annual increase in the previous month. The PCE price index is widely considered the Fed’s preferred measure of inflation as it tracks the prices that consumers pay for goods and services to reveal underlying inflation trends.
• According to the Department of Labor, initial unemployment insurance claims, another barometer of the health of the labor market, decreased by 12,000 to 215,000 for the week ending June 20 and were down 21,000 compared to the same week in 2025. The four-week moving average of initial claims edged up 750 week-over-week to 224,250 and remained well below the four-week average of 245,000 reported for the comparable week in 2025.
• The University of Michigan’s final Index of Consumer Sentiment for June rose 4.7 points (+10.5%) to 49.5, buoyed by moderating gasoline prices. However, the index declined 11.2 points (-18.5%) year-over-year. Consumers’ expectations for inflation over the next 12 months dipped 0.2 percentage point to 4.6% in June, while long-run inflation expectations fell 0.6 percentage point to 3.3%. In a statement announcing the survey results, University of Michigan Surveys of Consumers Director Joanne Hsu commented, “The cost of living remains at the forefront of consumers’ minds; for the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances.”

Stocks

• Global equities lost ground during the week. Developed markets outperformed emerging markets.
• U.S. equities ended the week mixed. Healthcare and real estate were the top-performing sectors, while communication services and information technology were the primary market laggards.
• Value stocks outperformed growth stocks, while small caps surpassed large caps.

Bonds

• The 10-year U.S. Treasury note yield declined to 4.37% during the week.
• The U.S. bond market recorded a positive return for the week.
• Government bonds led the market, followed by corporate bonds and high-yield bonds.

IMPORTANT INFORMATION

Index returns are for illustrative purposes only and do not represent actual investment performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged, and one cannot invest directly in an index. Past performance does not guarantee future results. 

This material is provided by SEI Investments Management Corporation (SIMC) for educational purposes only and is not meant to be investment advice. The reader should consult with his/her financial advisor for more information. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. There are risks involved with investing, including possible loss of principal. SIMC is a wholly owned subsidiary of SEI Investments Company.

The information contained herein is for general and educational information purposes only and is not intended to constitute legal, tax, accounting, securities, research or investment advice regarding the strategies or any security in particular, nor an opinion regarding the appropriateness of any investment. This information should not be construed as a recommendation to purchase or sell a security, derivative or futures contract. You should not act or rely on the information contained herein without obtaining specific legal, tax, accounting and investment advice from an investment professional. Information in the U.S. is provided by SEI Investments Management Corporation (SIMC), a wholly owned subsidiary of SEI Investments Company (SEI).