June 2026 Market Recap

Here are the latest market insights from the Goldman Sachs Wealth Management Investment Strategy Group (ISG). 

Geopolitical risk moderated in June after the US and Iran reached a ceasefire agreement. While tanker traffic remains constrained and diplomatic talks have not yet meaningfully progressed, oil prices retraced earlier conflict-driven gains, with Brent ending June at $73 per barrel, down from a March 31 peak of $118. The easing in energy prices helped improve investor sentiment despite intermittent hostilities late in the month.

Here’s a recap of what happened in the market and economy.

The markets: ups and downs

US equities finished June modestly lower, ending a two-month winning streak after reaching new highs earlier in the month. The S&P 500 decline of -1.0% was concentrated in mega-cap technology, particularly the Magnificent 7, as investors took profits amid valuation concerns and a more hawkish Fed backdrop.

Beneath the surface, market breadth was healthier: The equal-weighted S&P 500 rose for the month, reflecting rotation toward value and small-cap stocks.

Developed markets outside the US were broadly resilient. EAFE (Europe, Australasia, and the Far East) equities returned 2.4% in June, supported by lower energy costs, improved geopolitical sentiment, continued spillovers from global technology capex, and broader participation in value-oriented sectors. The index’s heavier exposure to financials, industrials, and materials also helped cushion performance.

Emerging market equities lagged, returning -1.4%. Weakness was concentrated in China, where softening domestic activity, renewed trade tensions, pressure on the global technology complex, and tighter liquidity conditions weighed on returns.

Rates were mixed. US 10-year Treasury yields were broadly unchanged over the month, while 2-year yields rose 17 basis points as markets priced in a more hawkish Fed path.

The US dollar extended its upward trend, with the DXY index rising 2.3% in June. The move was supported by widening interest rate differentials, a more hawkish Fed, and continued AI-related capital inflows into US assets.

The economy: receding headwinds

The two headwinds that had weighed most heavily on the US outlook—higher oil prices and tighter financial conditions—have receded, reducing near-term downside risks.

Economic activity remains resilient, with both ISM manufacturing and services readings above the neutral level and employment growth up.

At the same time, the economy does not appear to be overheating. Wage growth has moderated to 3.5% year over year, unemployment has held near 4.3%, and indicators such as the quits rate point to a broadly balanced labor market.

The key risk is more persistent inflation. Recent inflation releases have surprised to the upside, and core PCE inflation is expected to remain above 3% through year-end. Against this backdrop, the Fed has adopted a more hawkish tone, placing greater emphasis on upside inflation risks than downside growth risks.

Looking ahead

The latest dot plot showed that nine of 18 Federal Open Market Committee (FOMC) participants expect at least one interest rate hike in 2026, compared with prior projections that had pointed to one cut this year.

Incorporating this shift, the ISG team now expects the Fed’s policy rates to remain on hold through the end of 2027, with the balance of near-term risks tilted toward a hike.

Want more market insights?

In the latest Quarterly Market Update, Mariam Kamshad, head of portfolio strategy and investments for Goldman Sachs Wealth Services, discusses key macroeconomic factors that could impact the market in the months ahead:

• US economic resilience
• Elevated inflation
• Geopolitical risks