June 2026 Commentary

June proved to be one of the most eventful months of 2026. Markets navigated a rapidly evolving mix of geopolitical developments, monetary policy, and shifting investor sentiment surrounding artificial intelligence. The month began with heightened uncertainty following the escalation of the conflict between Israel, Iran, and the United States, which briefly pushed oil prices to multi-month highs and renewed concerns about inflation and global economic growth. However, sentiment improved considerably after a ceasefire agreement. The reopening of the Strait of Hormuz eased fears of a prolonged disruption to global energy markets. As crude oil retreated, investors regained confidence that the energy shock would likely prove temporary rather than the beginning of a broader inflationary cycle.

The month also marked one of the most anticipated events in financial market history: the public debut of SpaceX following its merger with xAI. The record-breaking initial public offering captured significant investor attention and initially fueled strong gains across commercial space and AI-related companies. However, enthusiasm faded later in the month as investors began questioning the enormous capital requirements needed to sustain the next phase of AI infrastructure expansion. Several high-profile debt issuances, including NVIDIA's historic $25 billion bond offering and SpaceX's announcement of an additional $20 billion debt raise shortly after its IPO, shifted market attention from simply rewarding AI investment toward evaluating whether these unprecedented levels of capital spending will ultimately generate attractive long-term returns.

Against this backdrop, market leadership rotated meaningfully throughout June. Early gains in technology and communication services gave way to increased participation from industrial, financial, healthcare, and utility companies as investors favored sectors viewed as beneficiaries of improving economic conditions and lower energy prices. At the same time, elevated Treasury yields, and a more cautious Federal Reserve, following Chair Warsh's first policy meeting, placed renewed pressure on long-duration growth stocks. This led to increased volatility across many of the market's largest technology companies.

The S&P 500 declined 1.1% during June, while performance diverged sharply across major indices. The technology-heavy Nasdaq-100 fell 4.2%, as investors made profits in many of the year's strongest AI beneficiaries following an extended rally. In contrast, the Dow Jones Industrial Average advanced 2.3%, outperforming broader markets as capital rotated toward industrial, financial, and healthcare companies that tend to benefit from a more cyclical economic backdrop and higher interest rates.

Sector performance further illustrates this rotation beneath the surface of the broader market. Industrials led all sectors with a 7.2% gain, supported by continued strength in aerospace, defense, infrastructure spending, and manufacturing activity. Healthcare followed closely, rising 6.5% as investors sought more defensive areas of the market while benefiting from continued earnings resilience. Financials gained 4.2%, supported by higher long-term interest rates and expectations that the Federal Reserve would maintain a restrictive policy stance for longer than previously anticipated. Utilities also posted a solid 2.4% return, continuing to benefit from accelerating investment in electrical infrastructure and power generation tied to expanding artificial intelligence data center demand.

Conversely, the month's weakest performance came from several of the year's strongest-performing growth sectors. Communication Services fell 7.9%, weighed down by sharp declines in Alphabet following concerns over AI talent departures to Anthropic, as well as post-IPO weakness in SpaceX. Energy declined 5.1% after oil prices retreated following the Iran ceasefire and reopening of the Strait of Hormuz, erasing much of the geopolitical risk premium that had built earlier in the month. Consumer Discretionary fell 4.8%, while Technology declined 3.3%, as investors reassessed elevated valuations and the sustainability of massive AI infrastructure spending. Despite the headline weakness in technology, the underlying AI investment cycle remained firmly intact, with the month's performance reflecting a rotation in leadership and valuation resets rather than a deterioration in long-term fundamentals.

Fixed income markets experienced another volatile month in June as investors balanced easing geopolitical risks against a Federal Reserve that remained committed to keeping monetary policy restrictive until inflation showed clearer signs of moderating. Treasury yields moved sharply throughout the month as markets reacted to developments in the Middle East, the first Federal Open Market Committee (FOMC) meeting chaired by Kevin Warsh, and continued resilience in labor market and inflation data. While the ceasefire between the United States and Iran helped push energy prices lower and reduced near-term inflation concerns, the Federal Reserve emphasized that policymakers would continue relying on incoming economic data before considering any changes to interest rates.

The FOMC voted unanimously to leave the federal funds target range unchanged at 4.50% to 4.75%, marking another meeting in which policymakers opted to wait for additional evidence that inflation was moving sustainably toward its 2% target. Chair Warsh acknowledged that the recent spike in inflation was largely attributed to higher energy prices resulting from the Iran conflict but cautioned that the Committee wanted confirmation those pressures would prove temporary before easing monetary policy. The Fed's updated projections also reflected a slower pace of expected rate cuts than markets had anticipated earlier in the year, reinforcing the "higher-for-longer" interest rate narrative.

Treasury yields moved higher across much of the curve during June as investors reduced expectations for near-term policy easing. The 2-year Treasury yield, which is highly sensitive to Federal Reserve policy expectations, rose modestly as markets pushed back the expected timing of the first rate cut. The 10-year Treasury yield climbed toward its highest level in over a year as strong economic data, elevated Treasury issuance, and persistent fiscal deficits continued to place upward pressure on long-term borrowing costs. The result was a modest steepening of the yield curve, reflecting investor expectations that policy rates may remain elevated even as long-run economic growth moderates.

Credit markets, however, remained remarkably resilient. Investment-grade and high-yield corporate bond spreads stayed relatively tight despite increased market volatility. This indicates that investors continue to view corporate balance sheets as fundamentally healthy. One of the month's defining themes was the surge in corporate debt issuance to finance AI infrastructure. NVIDIA completed a record $25 billion bond offering that was reportedly more than three times oversubscribed. SpaceX announced plans to issue approximately $20 billion in bonds shortly after completing its historic IPO. Rather than signaling financial distress, these transactions highlighted the enormous capital requirements associated with building AI data centers, networking infrastructure, semiconductor manufacturing capacity, satellite constellations, and next-generation computing platforms. Institutional demand for both offerings remained exceptionally strong, demonstrating that credit markets remain willing to finance long-duration investments tied to AI despite higher interest rates.

Municipal bonds posted modestly positive returns during the month as stable credit fundamentals and attractive tax-equivalent yields continued to support demand from income-oriented investors. Meanwhile, mortgage-backed securities remained under pressure as higher Treasury yields weighed on valuations and refinancing activity remained subdued.

Overall, June reinforced that fixed income markets remain caught between two competing forces. On one hand, moderating energy prices and easing geopolitical tensions reduced some of the inflation risks that emerged earlier in the month. On the other, resilient economic growth, a strong labor market, elevated government borrowing, and unprecedented capital spending on AI infrastructure continue to support higher long-term interest rates. While short-term volatility is likely to persist as markets reassess the timing of future Federal Reserve policy changes, today's higher yields continue to provide investors with the most attractive income opportunities in high-quality fixed income markets seen in well over a decade.

For much of the artificial intelligence revolution, investor attention has centered on graphics processing units (GPUs), with companies like NVIDIA dominating headlines as the primary beneficiaries of accelerating AI investment. However, beneath the surface, another critical component has quietly emerged as one of the industry's largest constraints: High-Bandwidth Memory (HBM). As AI models continue to grow in size and complexity, memory bandwidth—not raw computing power—is increasingly becoming the limiting factor for training and deploying next-generation AI systems. Every AI accelerator, from NVIDIA and AMD to hyperscaler-designed custom chips, relies on multiple stacks of HBM positioned next to the processor to rapidly feed data into the chip. Without sufficient HBM, even the world's fastest AI processors sit idle waiting for data.

This dramatic shift has fundamentally transformed the competitive landscape for memory manufacturers, particularly Micron Technology. Historically, the memory industry has been one of the most cyclical sectors in semiconductors, characterized by periods of oversupply, collapsing prices, and razor-thin margins, followed by shortages and rapid recoveries. Manufacturers typically build new fabrication facilities based on internal demand forecasts, assuming the risk that customer demand might not materialize by the time production comes online. Today's AI market looks entirely different.

Perhaps the clearest illustration of this change is Micron's recent disclosure that several customers are now providing advance payments and capacity reservation deposits to secure future HBM supply. Rather than simply signing long-term purchase agreements, hyperscalers and AI accelerator manufacturers are effectively helping finance Micron's manufacturing expansion years before production begins. These agreements provide Micron with upfront capital that can be used to expand fabrication capacity, purchase advanced manufacturing equipment, and accelerate construction of new packaging facilities necessary to produce next-generation HBM.

A simple analogy helps illustrate the significance of this shift. Imagine you operate one of the only lemonade stands in your neighborhood. Under normal conditions, a glass of lemonade sells for $1, but a severe drought makes lemons extremely scarce, allowing you to raise prices to $60 per glass. Despite the high price, customers continue lining up every day because demand far exceeds your ability to supply them. Eventually, your most loyal customers approach you with a unique proposal: they will provide the funding necessary for you to purchase an orchard, install irrigation systems, and build the infrastructure required to dramatically expand production. In exchange, they want the assurance that when your lemon trees mature years later, they will have priority access to your lemonade.

In this example, Micron is the lemonade stand, while AI chip designers and hyperscalers, such as NVIDIA and Broadcom, represent the thirsty customers. These companies are not simply purchasing memory; they are helping finance the expansion of the supply chain itself because access to HBM has become so strategically important that waiting for additional capacity to appear is no longer an acceptable risk.

The reason is straightforward: demand has dramatically outpaced supply. Micron has repeatedly stated that its HBM production for calendar years 2026 and 2027 is essentially sold out, with much of its future capacity already committed under long-term agreements. AI customers have concluded that securing memory supply is becoming just as important as securing GPUs themselves. Without guaranteed access to HBM, companies risk delaying multi-billion-dollar AI infrastructure projects and losing competitive ground in an increasingly crowded market.

This type of customer financing is exceptionally rare in the semiconductor industry. Traditionally, semiconductor manufacturers have borne nearly all the capital expenditure risk themselves, investing billions of dollars in fabrication plants with little certainty regarding future demand. While long-term supply agreements have existed for decades, particularly in the automotive industry following the COVID-era semiconductor shortages, customers rarely committed meaningful capital years in advance to simply reserve manufacturing capacity. Instead, manufacturers relied on their own balance sheets or debt markets to fund expansion while accepting the risk of future pricing cycles.

There are only a handful of historical examples that resemble today's AI memory market. During the early days of the personal computer revolution in the 1980s, several large computer manufacturers signed multi-year supply agreements for dynamic random-access memory (DRAM), but few provided significant upfront financing. More recently, companies such as Apple have occasionally prepaid suppliers like TSMC and display manufacturers to secure production capacity for new iPhone launches. Likewise, during the COVID-19 pandemic, automakers began entering longer-term semiconductor agreements after experiencing severe chip shortages. However, those arrangements were generally designed to improve supply visibility rather than directly finance manufacturing expansion on the scale now occurring within AI.

The closest historical comparison may be found in the energy sector rather than semiconductors. During the U.S. shale boom, pipeline operators frequently received long-term "take-or-pay" commitments from energy producers before constructing multi-billion-dollar pipeline systems. These contracts effectively guaranteed future cash flows, allowing companies to confidently invest in large-scale infrastructure. Micron's HBM agreements reflect a remarkably similar dynamic. AI customers are signaling that future memory demand is sufficiently certain that they are willing to commit capital years before receiving the finished product.

These developments may represent an important shift in how investors evaluate the memory industry and companies such as Micron. Historically, memory manufacturers have often traded at discounted valuation multiples because earnings were highly cyclical and heavily dependent on unpredictable pricing environments. AI-driven demand and the growing strategic importance of advanced memory could improve the industry’s long-term economics if demand remains strong and capacity expansion remains disciplined.

However, the memory industry remains inherently cyclical. Current supply constraints and strong customer commitments do not eliminate the risks of future overcapacity, technological change, customer concentration, pricing pressure, margin compression, or execution challenges associated with large-scale capital investment. In addition, substantial capacity expansion across the industry could eventually reduce current supply constraints. Customer prepayments and long-term agreements provide greater demand visibility, but they should not be viewed as guarantees of future profitability or investment returns.

More broadly, these agreements illustrate the evolving nature of the artificial intelligence investment cycle. The first phase of AI investment focused primarily on companies designing and manufacturing AI processors. As infrastructure investment has expanded, investor attention has broadened to include power generation, networking, cooling, data centers, advanced memory, and other critical components. Companies operating in supply-constrained areas may benefit from this investment cycle, although outcomes will vary significantly based on competition, technological change, capital allocation, execution, and valuation. The development of the HBM market provides an important example of how infrastructure bottlenecks can influence both industry economics and investment opportunities, while also creating risks as producers invest substantial capital to meet projected future demand.

The May inflation data, released in June, reflected the upward price pressures created by the conflict in Iran and the resulting disruption to global energy markets. The Consumer Price Index (CPI) increased 0.5% month-over-month in May, following April's 0.6% increase. On a year-over-year basis, headline inflation accelerated to 4.2%. As discussed in previous market commentaries, the recent acceleration in inflation has been driven primarily by higher energy prices rather than broad-based price increases across the economy. In fact, the energy component accounted for more than 60% of May's monthly increase in the CPI.

Under normal seasonal conditions, gasoline prices typically moderate during the summer season as refinery production increases and inventories build. This year, however, the conflict in the Middle East and temporary disruptions to shipping through the Strait of Hormuz significantly offset those seasonal trends, pushing gasoline and diesel prices higher nationwide. While higher energy prices continue to pressure household budgets, particularly for lower and middle-income consumers, the concentration of inflation within a single category suggests the recent increase is more geopolitical rather than structural in nature.

Encouragingly, Core CPI, which excludes the more volatile food and energy components and is closely monitored by the Federal Reserve, increased just 0.2% month-over-month, half the pace of April's 0.4% gain. On an annual basis, Core CPI remained relatively stable at 2.9%, indicating that underlying inflationary pressures remain well contained despite elevated headline inflation. The divergence between headline and core inflation reinforces the view that the recent acceleration is largely attributable to temporary energy-related price shocks rather than a broad reacceleration in consumer prices.

Looking ahead, the trajectory of inflation will likely depend heavily on developments in global energy markets. With a ceasefire now in place and shipping activity through the Strait of Hormuz gradually normalizing, energy prices could begin easing over the coming months, allowing headline inflation to move closer to core inflation. For now, the inflation data suggests that while geopolitical events have temporarily interrupted the disinflationary trend, the underlying fundamentals remain considerably more encouraging than the headline CPI figures alone would imply.

The final University of Michigan Consumer Sentiment Index for June 2026 rebounded to 49.5, up from a preliminary reading of 48.9 and the 44.8 recorded in May. This 10.5% month-over-month improvement was primarily driven by moderating gas prices, although overall sentiment remains historically depressed. The increase in sentiment was seen across income, wealth, and political affiliation. Expected business conditions over the next five years surged 16% as consumers’ worries over long-term consequences of the Iran conflict appear to be easing. Still, sentiment remains in unfavorable territory at 13% below the February 2026 reading prior to the start of the Iran conflict, and nearly 20% less than a year ago. The cost of living remains at the forefront of consumers’ minds. For the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances.

The U.S. labor market continued to demonstrate resilience in May, extending a string of solid employment reports despite elevated interest rates and growing economic uncertainty. Nonfarm payrolls increased by 172,000 jobs, while April's payroll growth was revised to 148,000 from the initially reported 179,000. Although hiring moderated slightly from earlier estimates, the unemployment rate remained unchanged at 4.3%, indicating that labor demand continues to outpace any meaningful deterioration in employment conditions.

Job growth broadened across several sectors during the month. Leisure and hospitality led all industries, adding 70,000 jobs, far exceeding its 12-month average monthly gain of 14,000. The surge likely reflects seasonal hiring ahead of the 2026 FIFA World Cup, which is expected to drive increased travel, tourism, and hospitality demand throughout the United States. Local government added 55,000 positions, while health care continued its steady expansion with 35,000 new jobs, broadly in line with its long-term average. Social assistance contributed an additional 12,000 jobs, reinforcing the continued strength of service-oriented employment.

Average hourly earnings, a closely watched measure of wage growth and inflationary pressure, remained healthy. Wages increased 0.3% month-over-month, exceeding consensus expectations of 0.2%, while annual wage growth measured 3.4%, slightly below expectations of 3.6%. Importantly, wage growth continues to outpace underlying inflation, supporting household purchasing power without signaling a wage-price spiral that would concern Federal Reserve policymakers.

From a monetary policy perspective, the report reinforced the view that the Federal Reserve can afford to remain patient. A resilient labor market, coupled with elevated headline inflation driven primarily by energy prices, reduces the urgency for policymakers to begin lowering interest rates. While financial markets have largely abandoned expectations of additional rate hikes this year, the Federal Reserve has consistently emphasized that it will require greater confidence that inflation is returning sustainably toward its 2% target before shifting toward a more accommodative policy stance. As long as employment remains strong and wage growth continues at a healthy pace, policymakers have little incentive to ease monetary policy prematurely.

Overall, the employment report suggests the U.S. economy continues to exhibit underlying strength despite higher borrowing costs, elevated energy prices, and persistent geopolitical uncertainty. While layoffs remain near historically low levels, the labor market is gradually rebalancing through slower hiring rather than widespread job losses—a much healthier adjustment than previous economic slowdowns. At the same time, forward-looking indicators warrant continued attention. Business sentiment surveys across both manufacturing and services sectors point to more cautious hiring intentions, suggesting labor demand may continue to moderate over the coming months. For now, though, the hard economic data continues to paint a more constructive picture than softer confidence measures, reinforcing the view that the labor market remains one of the economy's strongest pillars.

The U.S. Leading Economic Index (LEI) increased modestly by 0.1% in April 2026 to 97.4, following a 0.6% decline in March. While the monthly improvement provided some stabilization, the broader trend remains subdued. Over the six-month period from October 2025 through April 2026, the LEI declined by 0.7%, continuing to signal a fragile and uneven economic outlook.

The report highlighted the growing divergence between business investment activity and consumer fundamentals. Strong capital expenditures tied to artificial intelligence infrastructure, hyperscale data centers, and domestic energy production continue supporting economic growth and business spending. However, these investment trends are only partially offsetting growing weakness on the consumer side of the economy. Elevated gasoline and energy costs, combined with slower hiring activity and deteriorating consumer sentiment, are expected to place increasing pressure on household purchasing power in the months ahead, particularly among lower and middle-income consumers.

April’s modest improvement in the LEI was driven primarily by the strong rebound in equity markets and a notable increase in private housing building permits. Building permits are considered an important leading indicator for construction activity and broader economic momentum, as they reflect future residential development plans. The housing market remains highly cyclical, with activity typically accelerating during the warmer spring and summer months. Despite elevated energy and material costs, which remain meaningful headwinds for home construction, the strong increase in building permits during April was significant enough to push the six-month trend in permits back into positive territory.

The improvement in housing-related indicators suggests that underlying demand for residential development remains relatively resilient despite high financing costs and affordability challenges. At the same time, the broader LEI data continues reinforcing the view that economic growth is becoming increasingly dependent on concentrated areas of business investment, particularly those tied to AI infrastructure and industrial expansion, while consumer-driven areas of the economy continue to show signs of strain.

July marks the beginning of the third quarter and the second half of the fiscal year. Despite the S&P 500 rallying 15% during the second quarter, its strongest quarterly advance since the post-pandemic rebound in 2020, recent market performance has increasingly reflected stronger earnings expectations rather than multiple expansion alone. Analysts have continued raising corporate earnings estimates, which has moderated forward price-to-earnings multiples even as equity prices advanced. Continued earnings growth could provide fundamental support for equity markets during the second half of the year. Conversely, weaker-than-expected earnings, declining profit margins, higher interest rates, renewed inflationary pressures, or geopolitical developments could challenge current valuations and increase market volatility.

Wall Street's outlook has become increasingly constructive in recent weeks, with several major investment banks raising their year-end targets for the S&P 500. During the final trading days of June, RBC Capital Markets increased its year-end target to 8,150, up from 7,900, representing an 11% upward revision and implying an additional 8.7% upside from current levels. The revision followed similar target increases from JPMorgan Chase, Barclays, and Stifel the previous week. The consensus year-end target among major Wall Street firms now sits just below 7,700, implying approximately 2.7% upside through year-end. Should the S&P 500 finish 2026 near the consensus target, the index would post its fourth consecutive year of double-digit returns, following gains of 26.29% in 2023, 25.02% in 2024, 17.88% in 2025, and an expected 12.5% in 2026.

Corporate earnings remain the market's most important catalyst. Current estimates call for second-quarter earnings growth between 22.7% and 25.6% year-over-year, accompanied by approximately 12% revenue growth. If realized, this would mark the seventh consecutive quarter of double-digit earnings growth, significantly exceeding both the five-year average of 16.4% and the ten-year average of 10.3%. Such sustained earnings expansion continues to support the broader bull market and reinforces the view that corporate fundamentals, not speculative enthusiasm, remain the primary driver of equity performance.

Beyond earnings, investors will closely monitor whether June's rotation away from high-multiple artificial intelligence leaders and toward more cyclical sectors proves temporary or signals a broader shift in market leadership. The recent pullback across many AI-related companies reflected less of a deterioration in business fundamentals and more of a reassessment of the extraordinary capital expenditures required to build next-generation AI infrastructure. In June, companies including NVIDIA and SpaceX announced record debt offerings to finance investments in data centers, semiconductor manufacturing, networking infrastructure, and advanced computing platforms. As second-quarter earnings season begins, investors will focus not only on reported financial results but also on management commentary regarding AI capital expenditures, customer demand, and expected returns on those investments.

Economic data will also remain firmly in focus. July brings key releases on employment, inflation, manufacturing, and services activity that will shape expectations for Federal Reserve policy during the second half of the year. While easing energy prices following the Iran ceasefire have helped moderate near-term inflation concerns, policymakers have repeatedly emphasized that they need additional evidence that inflation is moving sustainably toward the Federal Reserve's target before considering interest rate cuts. Consequently, each major economic report will be scrutinized for its implications on the timing and magnitude of future monetary policy decisions.

Despite several near-term uncertainties, the broader investment backdrop remains constructive. Corporate earnings continue to grow well above historical averages. Despite elevated interest rates, the U.S. economy has demonstrated remarkable resilience. Long-term structural investment themes—including artificial intelligence infrastructure, electrification, aerospace, and industrial modernization—continue to attract substantial capital. While periods of consolidation following the market's exceptional second-quarter rally would be both healthy and expected, history demonstrates that sustained bull markets are ultimately driven by earnings growth rather than sentiment alone. As the second half of 2026 begins, the market's ability to sustain its advance will depend less on further valuation expansion and more on corporate America's ability to translate record investment levels into durable earnings growth, stronger free cash flow, and consistently attractive returns on invested capital.

Although equity markets have reached new highs, improving earnings expectations have helped moderate valuation pressures relative to earlier in the year. Rather than relying exclusively on multiple expansion, recent market gains have been accompanied by upward revisions to corporate earnings estimates. This distinction is important because earnings growth can provide fundamental support for equity valuations. However, current valuations continue to incorporate expectations for sustained earnings growth, and markets could be vulnerable if corporate results, economic growth, or monetary policy developments fall short of those expectations.

Seasonally, the third quarter has historically experienced greater volatility than the first half of the year. Trading volumes often decline during the summer months as institutional participation slows, which can amplify the market impact of individual news events and economic releases. For long-term investors, periods of volatility may create opportunities to reassess portfolio positioning, rebalance allocations, or selectively deploy capital where appropriate based on an investor’s objectives, time horizon, risk tolerance, and overall financial circumstances.

One of the most important themes we will be monitoring during the second half of the year is the market's evolving assessment of artificial intelligence capital expenditures. Over the past year, investors have largely rewarded companies that announced increasingly ambitious AI investments. More recently, however, the conversation has begun to shift toward execution and returns. Record debt offerings by companies such as NVIDIA and SpaceX underscore the enormous capital required to build next-generation AI infrastructure. Customer prepayments to memory manufacturers, such as Micron, illustrates how constrained critical components have become. We believe this represents a healthy evolution in the investment narrative. Rather than questioning whether AI demand exists, investors are increasingly evaluating which companies possess sustainable competitive advantages, pricing power, and the ability to convert unprecedented investment into long-term shareholder value.

At the same time, the AI investment cycle extends beyond the largest technology companies and semiconductor designers. Increased investment in digital infrastructure is creating potential opportunities across electrical equipment, power generation, cooling systems, networking infrastructure, advanced memory, aerospace, industrial automation, and specialized manufacturing. As hyperscalers, governments, and private industries continue investing substantial capital in digital infrastructure, companies supplying critical components and services may participate in this growth. However, investment outcomes will vary significantly, and investors should consider company-specific fundamentals, competitive positioning, capital requirements, valuation, and execution risk rather than assuming all companies exposed to AI-related spending will benefit equally.

We also believe the market's improving breadth is encouraging. Leadership has gradually expanded beyond a handful of mega-cap technology companies, with industrials, financials, healthcare, utilities, and select cyclical sectors increasingly contributing to market performance. Broader participation has historically been characteristic of healthier and more sustainable bull markets, reducing concentration risk while creating a wider opportunity set for active investors.

Looking ahead, our investment approach remains focused on companies with durable competitive advantages, strong balance sheets, consistent free cash flow generation, and exposure to long-term secular growth themes. Rather than attempting to time short-term market fluctuations or react to seasonal narratives, we remain focused on disciplined portfolio construction, prudent risk management, diversification, and selectively deploying capital when market conditions and individual portfolio circumstances warrant. While resilient economic growth, corporate earnings expansion, and continued technological investment provide reasons for long-term optimism, risks remain, including elevated valuations, persistent inflation, higher interest rates, geopolitical uncertainty, and the possibility that anticipated returns on substantial AI-related capital investment may not materialize as expected.