EXECUTIVE SUMMARY
- U.S. Equity Markets performed well in the quarter. The S&P 500 crossed 7,600 fueled by Artificial Intelligence capex but pulled back in June. Broader market components (such as non -AI stocks, value stocks, smaller stocks) outperformed the lagging, over-concentrated Magnificent 7 giants as profit-taking intensified.
- International equities performed unevenly; emerging Asia gained from AI hardware supply chains, while European manufacturing languished under severe localized industrial power costs stemming from Middle East conflicts.
- In Fixed Income Markets, yields ticked up and long-term bonds sold off. However, cash and shorter duration bonds helped diversified bond portfolios eke out a gain.
- U.S. economic growth remained resilient, supported by a stable employment and consumer spending. Capital expenditures expanded past technology into the physical economy, lifting core orders for primary metals and machinery.
- Corporate earnings anchored equity strength, delivering 28.6% growth in Q1 with record margins of 15.6%. Q2 projections expect growth exceeding 20%.
- The S&P 500 settled at a trailing P/E multiple of 20.1 times earnings. While historically elevated, this multiple reflects a marketplace supported by actual, tangible corporate profit expansion rather than speculative hype.
- Portfolio Construction: Successful investing balances financial science with planning art. Good financial planning ensures portfolios survive behavioral impulses and shifting market environments.