June Review 2026

After two incredibly strong months of returns in April and May, the S&P 500 gave back some of its gains for the quarter in June, losing nearly 1%. However, June wasn’t all bad as small and mid cap stocks both returned more than 3% in June and value and dividend-oriented stocks also made gains during the month. Overall, seven of eleven S&P 500 sectors advanced in June, but there was significant dispersion. The Industrials and Healthcare sectors returned 7.3% and 6.6% respectively in June, while Communication Services and Energy lost 7.8% and 5.1% respectively. The risk-on sentiment was rewarded with SpaceX, which went public on June 12th at $135 per share and rose to nearly $220 on its third trading day, before declining to end the month at just over $153.

International Returns were more muted in June with International developed markets (MSCI EAFE) gaining only 0.1% and emerging market equities (MSCI EM) losing 1.4%. These returns faced the headwind of a stronger U.S. dollar, which reduced returns for US-based investors. EM equity returns were dragged down by weakness in China and several Latin American countries (MSCI LatAm -2.4%). Chinese stocks sold off due to signs of a weakening domestic economy as well as a rotation away from many tech stocks in June. Several Latin American countries declined in June as falling oil and commodity prices could weigh on their exports in the second half of 2026.

The US Treasury (UST) yield curve flattened in June, with 2-year yields increasing 28 basis points (bps) to 4.18% from 3.90%, while at the long-end of the curve 30-year yields increased by a mere 2 bps to 4.95%. The move at the short end was in response to the hawkish Fed statement, increasing the likelihood of an increase in the Fed Funds rate. Corporate spreads modestly widened from historically low levels, thus being a slight drag on Aggregate performance. Investors are increasingly aware of corporate-specific issues such as heavy supply, increasing M&A risks, and weakness among lower income consumers, but show no signs yet of giving up the extra income earned for the perceived safety of Treasury securities.

Hedged strategies delivered positive performance in June despite choppy intramonth equity market volatility. Equity hedge strategies were the strongest performers, driven by solid stock selection across fundamental growth and value strategies, as well as gains in mean-reverting, factor-based approaches. Event-driven strategies also posted solid gains, supported by special situations and company-specific catalysts. Relative value strategies generated modest positive returns, helped by relatively stable rates that supported multi-strategy and convertible arbitrage positioning. Macro strategies were the only laggard, as systematic trend-followers were whipsawed by trend reversals, a stronger U.S. dollar, and rocky commodity performance.

June was a rough month for commodities as the US Dollar strengthened on a hawkish tone from the Fed and mixed equity markets. Industrial and precious metals declined sharply as a result, with the price of gold falling below $4,000/oz and sending YTD performance into negative territory. Oil prices eased towards the end of the month as the US and Iran reached a ceasefire agreement and aimed to reopen the Strait of Hormuz. REITs saw another solid month, driven by resilient fundamentals and strong performance in the lodging and resorts sector as summer travel demand picks up. Bitcoin was notably weak, as US-listed ETFs saw $4.5 billion of outflows, signaling a shift in risk appetite and cryptocurrency sentiment.