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ECONOMIC UPDATE

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July 2026 | Monthly Economic Update

Source: FactSet

The first half of 2026 tested investors with geopolitical tensions, shifting expectations for interest rates, and periods of elevated market volatility. Despite these challenges, markets proved resilient, as improving sentiment and broader market participation helped drive positive returns across most major asset classes.


Global equities rebounded strongly during the second quarter. U.S. equities gained 15.2%, bringing year-to-date returns to 10.2%. International developed markets also posted solid gains, while emerging markets were the standout performer, returning 24.1% for the quarter and 24.0% year-to-date. Much of that strength came from technology-focused markets such as Taiwan and South Korea, where demand for AI-related semiconductors drove concentrated returns.


Within the U.S., one of the most encouraging developments was the broadening of market leadership. While artificial intelligence remained a key investment theme, leadership shifted from the large technology companies investing heavily in AI to the businesses building the infrastructure needed to support it, including semiconductor manufacturers and chip equipment companies. At the same time, gains spread beyond technology, with the broader S&P 500 outperforming the Magnificent Seven year-to-date. Small-cap stocks also participated in the rally, returning 19.7% during the quarter and 23.9% year-to-date, reflecting improving investor sentiment and a stronger outlook for the U.S. economy.


Fixed income delivered mixed returns. U.S. bonds gained 0.7% during the quarter and are up 0.6% year-to-date, while international bonds remain down 0.9% for the year as a stronger U.S. dollar weighed on returns. High-yield bonds led fixed income markets, gaining 2.5% during the quarter and 2.0% year-to-date, as improving investor confidence and resilient economic conditions supported riskier corporate debt.


Gold declined 13.5% during the quarter and is down 7.4% year-to-date, as expectations for higher interest rates and a stronger U.S. dollar reduced demand for the precious metal.


Overall, a diversified Global 60/40 portfolio gained 9.3% during the quarter and is up 6.8% year-to-date. The first half of the year reinforced that market leadership can evolve quickly, underscoring the value of maintaining a diversified, long-term investment approach.

The Monthly Riddle

 I have wings but can’t fly alone. I have a tail but don’t use it to show emotions.  What am I?

LAST MONTH’S RIDDLE:

What has branches, but no fruit, trunk, or leaves?

ANSWER: A bank

Tip of The Month

Consider reviewing your digital financial accounts this summer. Updating passwords, enabling two-factor authentication, and removing unused accounts are simple steps that can strengthen your online security.

Important Information
This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. Financial advisors may seek more information by contacting AssetMark at 800-664-5345.

Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, market conditions, and tax situation.

It is not possible to invest directly in an index. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Index performance assumes the reinvestment of dividends.

Investments in equities, bonds, options, and other securities, whether held individually or through mutual funds and exchange traded funds, can decline significantly in response to adverse market conditions, company-specific events, changes in exchange rates, and domestic, international, economic, and political developments.

Bloomberg® and the referenced Bloomberg Index are service marks of Bloomberg Finance L.P. and its affiliates, (collectively, “Bloomberg”) and are used under license. Bloomberg does not approve or endorse this material, nor guarantees the accuracy or completeness of any information herein. Bloomberg and AssetMark, Inc. are separate and unaffiliated companies.

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