Sean McDermott, CFP, Brian Carlson, CFP, Scott Caskey, CFP, and Russell Rogers, CFP, presented Summit Investment Advisors' Mid-Year Market Outlook webinar on June 24, 2026.

The presentation used a slide deck provided by Fidelity Investments, ran about 30 minutes, and closed with a live Q&A session. The S&P 500 was up more than 10% year to date and over 26% for the trailing 12 months at the time of the recording, continuing a strong run for U.S. stocks.

Five Key Market Themes

• AI is drawing close to a trillion dollars in projected infrastructure investment over the next few years, a buildout the team expects to help businesses run leaner and grow profits over time.
• Last summer's tax bill is already showing up in client returns. Many senior clients are seeing refunds of $1,000 to $3,000 from higher deductions, and corporations now have added incentive to invest in new factories and equipment. Unemployment sits at 4.3%.
• Households absorbed two years of higher rates, higher gas prices, and elevated inflation. Now oil prices are coming down, and a new Federal Reserve chair, Kevin Warsh, is expected to eventually lower interest rates, which would help housing affordability and the spending that tends to follow a move.
• With markets concentrated in a handful of large stocks, the team compared a diversified portfolio to playing golf with a full bag of clubs instead of just a driver: you want the right tool available when conditions change.
• The firm remains long-term bullish, but performance won't be uniform across every company or sector, so the team is looking 3 to 5 years out at how businesses perform in a consumer-driven global economy.

Sean summed it up this way: lean into growth, especially AI, keep portfolios broad enough to capture it, and hold onto lower-volatility positions in case of a correction.

Market Corrections and the Bucket Method

• Since 1950, the stock market has averaged an 11% annual return, but not in a straight line. On average, investors see three 5% pullbacks a year, one 10% correction a year (already experienced in 2026 when the Iran conflict broke out), one 15% correction roughly every 3 years (seen in Q1 2025 with tariff announcements), and one 20% correction roughly every 5 years, last seen during COVID.
• Even with that volatility, the S&P 500 has posted positive returns in 75% of years since 1950.
• Summit's answer to that volatility is a bucket approach: shorter-term income needs sit in cash, money market funds, CDs, short-term bonds, and fixed annuities, so a market pullback doesn't force a sale at the wrong time.

Midterm Election Year Volatility

• Going back to 1938, the first three quarters of a midterm election year have historically leaned negative. 2026 has bucked that pattern so far, with positive growth through the first half.
• Equity returns have historically been strong following midterm elections. The team pointed to the razor-thin margins for House and Senate control this cycle, which tend to produce a neutral government, generally a favorable setup for markets.

Three Engines for Growth in 2026

• Brian pointed out that the more interesting story isn't AI company revenue, it's productivity: a manufacturing employee getting more done in a normal day with AI assistance is a gain that shows up across the broader economy, not just at tech companies.
• Semiconductors, called "the new oil" on the call, are driving a push to build domestic manufacturing capacity, with companies like Taiwan Semiconductor and Intel investing in U.S. production. Defense spending is rising both in the U.S. and abroad (Germany was cited as an example), and new manufacturing orders in the U.S. are up 20%.
• On the fiscal side, the new tax law raised the SALT cap so more households can itemize, and it lets businesses immediately expense 100% of costs like a new factory instead of amortizing over 7 to 10 years.

Risks and Tailwinds

• On the risk side: the unresolved conflict in Iran, a Federal Reserve holding rates steady while oil-driven inflation stays elevated, and concentration risk in the technology sector.
• On the positive side: corporate earnings have stayed resilient through the conflict and higher energy prices, consumers are still spending, and the tax act and rising defense spending are adding fuel.

Where the U.S. Sits in the Global Business Cycle

• The U.S. is now solidly in mid-cycle growth, an improvement from roughly 12 to 18 months ago when it was closer to a late-cycle position. Manufacturing reshoring, business spending, and a resilient consumer are driving that shift.
• The Eurozone, Canada, Japan, India, and Australia were also cited as well positioned in the current global cycle.

Markets After Geopolitical Shocks: A Historical Look

• Looking back to World War II, the average S&P 500 return one year after a major geopolitical shock (the Cuban Missile Crisis, the Vietnam War, the Six-Day War) has been about 8% positive. 9/11 and the late-1970s oil embargo stand out as the outliers.
• Brian drew a distinction from the 1970s: the U.S. is now the world's largest oil producer and has been a net exporter of petroleum since 2020. Energy makes up roughly 6-7% of household spending today versus nearly 13% in the late 1970s.
• Oil has fallen from over $100 a barrel to around $70 in the past month, and the team expects that decline to reach the pump over time.

Earnings Drive the Market

• Over the long term, stock prices follow earnings, not headlines. Brian showed a chart tracking S&P 500 earnings against index performance since 1980, and the two move together.
• Looking ahead, the S&P 500 excluding the "Magnificent Seven" is projected to grow earnings 16% in 2026, with similar growth expected in 2027. Technology earnings are also still expanding, and emerging markets are showing strong earnings growth as they adopt new technology.

AI 101: Generative, Agentic, and Physical AI

• Scott walked through three categories getting attention right now. Generative AI creates images, text, and translation. Agentic AI acts more like an assistant, researching and completing multi-step tasks such as planning a trip. Physical AI is already embedded in things like autonomous vehicles and warehouse logistics.

The Hyperscaler Buildout

• Five companies, Alphabet, Amazon, Meta, Microsoft, and Oracle, run the data center infrastructure behind tools like ChatGPT. Combined, they spent $416 billion in 2025, and that figure is expected to rise to roughly $740 billion in 2026.
• That spending flows directly into GDP and supports real jobs across construction and the companies supplying data center hardware.

Dollar Strength and the Case for International

• The U.S. dollar is near a multi-year high. Looking back to 1988, a weakening dollar has historically coincided with an average U.S. market return around 13% and an average international return around 12.5%, while a strong dollar has historically weighed on international performance.
• With the dollar at the higher end of its range, the team sees a real chance it weakens from here, which would be a tailwind for international holdings.

Why International Diversification Still Matters

• Roughly 35% of the U.S. stock market sits in information technology. International markets carry a different mix, weighted more heavily toward industrials, which adds diversification beyond just currency exposure.

Fixed Income: The Best Setup in Years

• The 10-year Treasury yield has ranged from about 0.2-0.3% in 2020 to just north of 5% more recently. As of May 29, the yield sat at 4.67%, which the team said implies a forward 5-year return near 5%, the best bond outlook in over 15 years.
• Investment-grade bonds have delivered a positive return in nearly every down year for stocks going back decades, with 2022 as the one exception. Scott framed 2022 less as a warning sign and more as a one-time reset for the bond market.

Portfolio Changes Made So Far in 2026

• February 17: a full rebalance across all investment strategies, which included increasing exposure to international equity.
• April 9: a security swap, replacing an underperforming large-cap growth fund with two replacement funds, split 50/50.
• June 2: a full rebalance timed near an S&P 500 all-time high of roughly 7,600 points, during the dip tied to the Iran conflict. The team trimmed equity gains, replenished bond and income allocations, and replaced a large-cap value mutual fund that was closing to new investors with a comparable ETF.
• Russell noted the firm has been underweight international equity for about 15 years, a stance that paid off during years of U.S. outperformance. The recent increase reflects the shifting dollar picture rather than a full reversal of that positioning.

Live Q&A

Questions from attendees included:

• Is Social Security facing a 24% benefit reduction in the early 2030s?
• How can investors get exposure to SpaceX following its recent IPO?
• Will AI-driven productivity gains lead to job losses, particularly for entry-level or lower-wage positions?
• Is the U.S.-Iran situation already priced into the stock market?

If you have questions like these or wish to discuss your financial planning needs, schedule a meeting with us.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Investing involves risk including loss of principal.  No strategy assures success or protects against loss.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.

The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.