The Dow notched a record close Monday, and the S&P 500 and Nasdaq are on pace for their biggest quarterly gain since 2020
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The Dow Jones Industrial Average is on track for its strongest first-half showing since 2021, gaining 8.6% through the first half of 2026, compared to 12.7% during the same period five years ago. The Dow notched a fresh record close on Monday. Futures pointed higher again Tuesday morning, with futures up 95 points, or 0.2%.
The second quarter has been the stronger stretch. Quarterly returns of nearly 14% for the S&P 500 and 19.6% for the Nasdaq $NDAQ would mark the largest three-month gains for both indexes since the second quarter of 2020. A 12.6% quarterly rise puts the Dow on course for a performance not seen since the final three months of 2022. For the full first half, the S&P 500 is up more than 8% and the Nasdaq has climbed 11.1%.
The gains have come despite a turbulent start to the year. Markets contended early in the year with erratic moves in energy costs stemming from the U.S.-Israeli war against Iran, alongside lingering doubts about how long the boom in AI investment could last. Both headwinds gradually faded as the quarter wore on, with AI anxieties cooling and signs of an end to the fighting beginning to emerge.
Markets moved higher Monday following weekend agreement between Washington and Tehran to cease their latest hostilities and reopen the Strait of Hormuz to commercial shipping. Monday's session ended with the S&P 500 up 1.18% and the Nasdaq closing 2.07% higher. Talks between the two countries were expected to take place in Qatar after Mr. Trump announced the meeting Monday, though Tehran had yet to confirm when it would participate. Oil prices were muted ahead of the expected talks.
Questions about the durability of AI spending have not fully gone away. Despite the upbeat tone to start the week, a Tuesday research note from UBS flagged that doubts about whether AI capital spending can keep growing at its current pace have not been put to rest, according to CNBC. The firm's strategists argued that while AI-linked holdings will continue to set apart winners and losers in equity markets for years to come, investors should not concentrate their bets, spreading risk across and outside the AI sector.
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