Market Commentary

June 8, 2026

U.S. equity indices, notably growth-oriented indices, posted strong returns again in May, driven almost entirely by a broad-based rally in technology stocks. Three of the eleven GICS sectors in the S&P 500 Index—information technology, consumer discretionary, and healthcare—delivered positive returns in May. However, excluding Tesla, Amazon, and Eli Lilly, consumer discretionary and healthcare returns would have been negative. In contrast, information technology soared 16.0 percent, driven by further evidence of an AI-related inflection in demand and by strong earnings from infrastructure and security software providers that refuted much of the bear case.

As equity indices hit new highs, 10-year U.S. Treasury yields continued to rise amid inflation worries. The Strait of Hormuz has remained effectively closed for nearly 14 weeks, choking off about 15 percent of global oil supply. Ample global crude and product stocks prior to the U.S.-Iran conflict have helped suppress Brent oil prices, which have ebbed to the low $90s more recently amid hopes for an agreement to open the strait. Yet, should the strait remain closed, oil prices could surge, with mid-to-late summer widely viewed as a period when global oil and product stocks are depleted to critical thresholds.

We expect the stock market to broaden ultimately, though it will likely require a resolution on the Strait of Hormuz issue and lower energy prices. We believe that industrials and financials are best positioned to rebound meaningfully if this occurs. Transportation stocks are also attractive (as pricing is rising across all modes), as are defense stocks amid the current geopolitical backdrop.

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