Q2 2026 Market Commentary
The following market commentary provides context for the investment performance of your charitable assets.
From Cambridge Associates, investment advisor
Global equities (+14.9% for the MSCI All Country World Index) posted exceptional returns in the second quarter of 2026, their best performance in more than six years. Markets were powered by a resurgent wave of enthusiasm for artificial intelligence and an easing of geopolitical tensions in the Middle East, culminating in a memorandum of understanding between Iran and the United States that helped reduce the energy-risk premium that had burdened markets in the preceding months.
US equities (+15.2% for the S&P 500 Index) delivered strong gains for the quarter, outperforming developed markets ex US peers (+10.2% for the MSCI World ex US Index). Growth stocks (+21.9%) significantly outpaced value stocks (+8.0%). Small caps also performed well, with the Russell 2000® Index returning +21.5% for the quarter ahead of large cap stocks (+15.1%). Technology-related sectors drove the gains, as the information technology sector led the market, consistent with broad AI-driven earnings momentum across large-cap growth names, with upward earnings revisions supporting the advance.
Developed markets ex US (+10.8% for the MSCI EAFE Index) delivered solid returns, though they trailed the US for the quarter. Japan (+14.2%) was the top performer within the developed world, while Europe ex UK (+13.0%) was also among the top performers within developed markets ex US. The United Kingdom (+4.1%) and Pacific ex Japan (+3.7%) trailed the broader developed-market complex for the quarter.
Emerging market equities (+24.1% for the MSCI Emerging Markets Index) were the top-performing equity region for the second quarter. EM Asia (+30.2%) drove the advance, with Korea (+87.6%) and Taiwan (+48.9%) among the largest contributors, as semiconductor and hardware exposure amplified gains linked to the global AI investment cycle. EM Latin America (-3.6%) declined for the quarter, while EM Europe & Middle East (+4.1%) posted a modest positive return.
US fixed income (+0.7% for the Bloomberg Aggregate Bond Index) posted modest positive returns for the quarter. Investment-grade credit (+1.3% for the Bloomberg Credit Index) outperformed nominal Treasuries (+0.2% for the Bloomberg Intermediate-Term Treasury Bond Index). High-yield bonds (+2.5% for the Bloomberg US Corporate High Yield Index) led fixed income returns for the quarter. US Treasury yields rose during the quarter as the Federal Reserve, under new Chair Kevin Warsh, maintained a hawkish stance, pushing yields higher and giving the dollar some support.
The US dollar strengthened over the second quarter, gaining +1.2% against a basket of developed market peers. A hawkish Federal Reserve and elevated domestic inflation contributed to dollar strength. The euro declined modestly against the dollar (-0.8% for EUR/USD), and the yen weakened (+2.2% for USD/JPY) over the quarter.
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