OVERVIEW
Markets continued to grind higher last week, with gains spreading across most major asset classes. The S&P 500 advanced 0.65%, while the NASDAQ added 0.70% and the Dow Jones Industrials gained 0.66%. The S&P 500 is now up 8.56% year to date, while the NASDAQ has gained 11.39%, reflecting continued strength in technology and growth-oriented areas of the market.
Beneath the surface, leadership broadened considerably. The Russell 3000 rose 0.90%, but the real story was the strong performance from value stocks and smaller companies. The Russell 3000 Value Index surged 2.57% for the week, compared to a 0.73% decline for the Russell 3000 Growth Index. Mid-cap stocks gained 2.78%, while small caps led all major domestic equity categories with a 4.29% advance. Small caps remain one of the strongest-performing segments of the market in 2026, with the S&P 600 Small Cap Index now up 18.87% year to date. Value stocks continue to impress as well, with the Russell 3000 Value Index up 15.95% this year.
International markets delivered mixed results. Developed international stocks gained 0.95%, while emerging markets were essentially flat, declining just 0.08%. Even after pausing last week, emerging markets remain one of the top-performing asset classes globally, up an impressive 22.19% year to date.
Fixed income markets enjoyed a solid week as bond prices moved higher across most categories. Short-term Treasuries gained 0.08%, while intermediate- and long-term Treasuries rose 0.44% and 0.76%, respectively. Investment-grade bonds added 0.55%, and high-yield bonds gained 0.45%.
Real assets also participated in the rally. Real estate climbed 1.78% and is now up 12.52% year to date. Commodities, however, pulled back 2.41%, led lower by a 5.71% decline in oil prices. Despite the setback, oil remains one of the best-performing assets of 2026, up more than 81% year to date. Gold also struggled, falling 2.90% and remaining down 2.36% for the year. Corn posted a modest gain of 0.32% but remains lower by 4.43% year to date.
One of the more notable developments last week was a sharp decline in market volatility. The VIX fell 17.81%, suggesting investors became more comfortable with the market outlook after several weeks of uncertainty. The U.S. dollar slipped 0.25% but remains up 3.40% for the year. Overall, last week’s action reflected a healthy broadening of market participation, with value stocks, small caps, real estate, and international equities all contributing to the advance.
KEY CONSIDERATIONS
The Heavy Lifting – There are a lot of reasons investors give for why stocks are climbing. AI. Interest rates. Sentiment. Pick your favorite.
But if I could only point to one thing, it would be earnings.
The chart above shows why. Since 2000, the S&P 500 has closely tracked the growth in corporate earnings. Sure, over shorter periods, stock prices can sometimes get ahead of (or behind) earnings. But over time, earnings are what clearly matter the most. You could say they do the heavy lifting.
And right now, earnings are looking strong.
What’s especially impressive is that profit growth hasn’t been limited to just a handful of mega-cap technology companies. While the AI spending boom has certainly helped, we’ve also seen strong earnings from areas like Financials, Health Care, Industrials, and Communication Services.
A lot of that has to do with the economic backdrop, which is helping too.
Our second chart shows the ISM Composite Index, which combines data from both the manufacturing and services sectors. Historically, when the ISM Composite is above 53.8, the S&P 500 has produced annualized returns of 9.4%. When it falls below 50.8, returns have averaged just 4.5%.
Today, the ISM Composite sits at 54.3, putting it firmly in the stronger-growth zone. In other words, the economy is still expanding, businesses are still generating profits, and investors are continuing to reward that growth.
Could we see pullbacks along the way? Sure, of course. We expect them. Markets never move in a straight line.
But as long as earnings keep growing and economic activity remains healthy, it’s hard to build a convincing bearish case.
Bottom line: The stock market’s gains are being driven by optimism (AI, in particular). But they’re also being supported by something much more important: rising profits and a growing economy. That’s still a pretty good combination for investors.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.
The S&P 500 Index, or Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The Nasdaq 100 Index is a basket of the 100 largest, most actively traded U.S. companies listed on the Nasdaq stock exchange. The index includes companies from various industries except for the financial industry, like commercial and investment banks. The Russell 3000 Index is a capitalization-weighted stock market index that seeks to be a benchmark of the entire U.S. stock market. The S&P MidCap 400 is designed to measure the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment. S&P 600 Index measures the small-cap segment of the U.S. equity market. The index is designed to track companies that meet specific inclusion criteria to ensure that they are liquid and financially viable. The S&P 100 index is a capitalization-weighted index based on 100 highly capitalized stocks for which options are listed on the CBOE (Chicago Board of Exchange). The MSCI EAFE Index is an equity index which captures large and mid cap representation across 21 Developed Markets countries* around the world, excluding the US and Canada.
The Bloomberg U.S. Corporate Bond Index measures the investment grade, fixed-rate, taxable corporate bond market. The Bloomberg U.S. Corporate High Yield Index is comprised of domestic and corporate bonds rated Ba and below with a minimum outstanding amount of $150 million. The Bloomberg U.S. Municipal Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and prerefunded bonds.