By: Michael Sellers
Partner, Portfolio Manager
We are in the early days of second-quarter earnings season—roughly 16% of the S&P 500 reported this week. Earnings, again, continue to be solid. We’ll take a deeper dive into earnings in August. Roughly 50% of the S&P 500 will be reporting in the next two weeks.
Escalating Tension In The Middle East
On the geopolitical side, tensions in the Middle East have once again come into focus. The on-again, off-again nature of the Iranian conflict appears to back on again.Over the weekend and into this week, the US has stepped up attacks after repeated Iranian strikes on ships passing through the Strait of Hormuz. In an escalation of events this week, Iranian-backed Houthis claimed responsibility for attacks on two tankers in the Red Sea, with President Trump warning that he will hold Iran responsible for any further Houthi aggression.
In response to this escalation, crude oil climbed above $100 a barrel, moving the average US gas price north of $4 a gallon. The 10-year Treasury yield rose to approximately 4.7% on Thursday, reaching its highest intraday level since January 2025. As a result, investors have begun to reprice inflation and interest-rate expectations, just as earnings season enters its busiest stretch.
In short, geopolitical uncertainty and renewed inflation concerns have temporarily outweighed the otherwise strong earnings backdrop, leading to increased market volatility. The CBOE Volatility Index (VIX) moved into the 19-20 range as the week progressed, reflecting a more cautious market sentiment.
What does this mean for markets on a go-forward basis? A deeper dive on our perspectives and positioning for the back half of 2026 can be found in our latest quarterly market outlook webinar. Click here to watch.
