Perspectives
Quarterly Market Newsletter
Second QUarter, 2026
Do you like excitement? There was plenty to be had in this past quarter’s stock market performance. A war, restricted oil supplies to the world, higher inflation (partly as a result), higher interest rates, and a record-setting SpaceX initial public offering, just to mention a few. However, the dominant, underlying theme was the Artificial Intelligence buildout and the great earnings that this creates for those companies making this happen.
Earnings are a good place to start understanding the stock market this past quarter. In a nutshell, they are growing at an astounding rate. The economy has had good momentum coming into this recent period. Companies have had pricing power. With the elevated inflation, firms have cover to raise prices, and they have.
The consumer, which accounts for almost 70 percent of our economy, appears healthy. Certainly, there are haves and have-nots, but the haves have the spending power, and they are doing just that – spending. The consumer sector is not strong across the board, but most are doing just fine. As always, there are shifts in trends and preferences. Experiences are still a strong theme, but select goods are also thriving.
Capital expenditures are an exciting story. These are mostly in support of AI. The numbers here are staggering. As a result, many contractors and suppliers are having their best days. Sooner or later, this cycle will fulfill itself, but it does not appear to be soon. The multiplier effect of all these dollars being put to work is accounting for more than half the growth in the overall economy.
What comes next? Read our Forecast section to see what we think. The excitement should continue. Hopefully, profits should too.
Forecast
Economy
Oil prices are coming down, interest rates are stabilizing, and the AI revolution is in its early stages. This is a good backdrop for the economy in this third quarter. Surely there will be surprises. These should be short-lived events for the most part. As long as the underlying fundamentals stay strong, this bull market should stay on course.
The course of interest rates is the more interesting factor now. Fed Chairman Walsh has promised some major overhauls of how this central bank operates. It may be that reform is overdue. It seems that our Federal Reserve has attained an outsized role in our economy. Perhaps a quieter role would let the markets operate more efficiently. Markets are better prognosticators and governors of activity than any committee. Remember the power of crowds in prediction.
Some high-growth sectors have investors on edge. Sometimes things look too good to last. As soon as a few rush for the exit, a crowd develops wanting to do the same thing. These are normal phases in any high-growth opportunity. These usually pass in a few weeks, if not days.
Equities
The stock market has waffled between a focus on growth and value. This year started out as a market broadening to include a larger variety of stocks participating on the upside. Then, the war with Iran started. This created concern for the economy, especially since energy prices were driven immediately higher. Therefore, investors retreated to those companies that were assumed to be immune from higher energy prices – technology, especially those involved with AI.
Recently, the high-growth beneficiaries of the AI revolution, such as chip stocks, have taken a swoon. This may just be a bout of profit-taking since many of their values have increased parabolically. There is a case that can be made that the success and profit margins that some of these companies are enjoying are about as good as they can get. However, we still seem to be a long way from building out for this technological upheaval.
And upheaval it is! Investors are grappling with not only which companies will succeed, but also which ones will be hurt or even displaced. It seems in some cases that the assessments have been too harsh. There are larger moats around some companies’ business models than investors in their haste may recognize. It will take some time and some earnings experience to truly sort out the successful from the vulnerable. Software as a service (SaaS) companies have been the object of this scrutiny.
Fixed Income
The Bull wrote earlier this year that market participants had built-in expectations of interest rates coming down this year. They were not prepared for the opposite. So far, inflation has not only been sticky, but it has also been rising. Some of this is due to higher oil prices. These are now receding, so some of the pressure on inflation may come off. However, services’ inflation, remembering that two-thirds of our economy is services, has not waned.
With a new head of our Federal Reserve, it is even more difficult to forecast interest rates. It may be that a holding pattern for Fed policy will be likely. That is what we expect through most of the remainder of this year. Once more variables like oil prices play out, it will be easier to prognosticate the course of rates.
Investment Strategy
Equities
With such frequent rotations from growth to value and back again, we at Riverplace Capital are maintaining some balance between the two. We continue to focus on individual corporate prospects, regardless of whether they are currently popularly anointed. If their internal business trends continue to meet our expectations, we will be patient holders of these positions.
We are currently seeing performance improve in some of the neglected sectors during the recent AI mania. Healthcare, financials, and some industrial names have recently been joining the bull market party. The Bull is watching carefully and scouring for opportunities.
Fixed Income
Since the course of future interest rates is so uncertain, we continue to favor commitments shorter than five years. Hopefully, rates will not go much higher, but there is little need to take the risk. After all, the difference between short-term rates and longer-dated ones is not large.
Remember, fixed income instruments in balanced portfolios should provide protection from volatility. They should also reduce other risks, such as that of losing money. Therefore, quality is paramount for us. Our strategy therefore, is to ladder maturities up to about five years and use only the highest quality issues.
Wealth Management
Talk With Us
Riverplace Capital is evolving and growing. The firm will soon merge with a financially strong and experienced local investment firm. The same great service and results you have grown to expect will continue and be enhanced. Peter Bower will continue to lead the firm and help ensure that even more can be achieved. The office will not move and will continue to be in Riverplace Tower.
The staff you have counted on for service and help continues and is always available to you. They bring competence and quality to your day-to-day needs. Terri Kimball continues as our Controller. Maleia Spresser, our Director of Technology & Trading, handles our technology, reporting, trading, and general account servicing. Anny Campos, our Director of Operations & Compliance, continues to manage your needs and our daily operations while safeguarding your privacy and security. Robert Willett has returned to aid in this transition.
Mark Ross and Scott Wohlers are no longer with the firm. They will not make the transition. Riverplace Capital will continue to grow and deliver the most professional level of service possible. Your accounts are in our same good hands and being managed to the excellent standards we established years ago. Please call me with any questions or concerns. I will be personally managing all Riverplace Capital accounts as usual. If you would like to talk about your account(s) or circumstances, please call. I would love to hear from you. (904) 346-3460 Talk with Us.
as of 06/30/2026
9.6%
Dow Jones Industrial Average
8.9%
Mid Cap Stocks (S&P 400)
16.6%
NASDAQ Composite
12.8%
Small Cap Stocks (Russell 2000)
21.9%
MSCI EAFE
7.74%
*Bloomberg US Aggregated Bond Index
0.8%
Inflation
4.2%
(Equity indices are three-month returns excluding dividends)
"People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game"
- Peter Lynch
Notice
Are you ready to take a serious look at your financial prospects?
Riverplace Capital is offering a free financial plan (value $1500) for anyone, not just for our clients. Information is powerful, and knowing how well your needs are being covered can help you make better decisions during this time of heightened uncertainty and stress. You may want to analyze a variety of “what ifs.” Can you be more aggressive with your investments, or should you be more conservative? If you get sick, how well can you manage through the illness? Other questions may come to mind that cold, rational analysis can help you see through the fog of the moment.
Free is free, and no one is under any obligation to Riverplace Capital. The Bull and his partners want to help investors make the correct decisions. In other crises, we have seen too many people do great harm to their financial futures. This can be avoided with proper analysis and counsel. It is important to stay on a disciplined path. You may need to make changes; just do them as part of a rational plan. Let us help you.