Market snapshot: difficult end to first half of 2026

Leading into the last trading days of the half-year, the S&P 500 and Nasdaq endured a bruising week with falls of 2% and 4.6% respectively.

The Magnificent Seven saw some evaporation of interest, with declines of around 8% for the likes of NVIDIA Corp (NASDAQ:NVDA) and Alphabet Inc Class A (NASDAQ:GOOGL) and more than 4% for Meta Platforms Inc Class A (NASDAQ:META), Amazon.com Inc (NASDAQ:AMZN) and Apple Inc (NASDAQ:AAPL). After an initial flurry, Space Exploration Technologies Corp Class A (NASDAQ:SPCX) ended down by 17% on the week although still comfortably above its IPO float price. 

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Quite apart from a rotation which resulted in some strength in defensive stocks and healthcare in particular, sentiment was further dampened by reports which suggested that OpenAI was considering delaying its IPO until the new year given the chequered performance of SpaceX and a more general bout of volatility in the AI sector. The levels of uncertainty have been a headwind on such stocks of late, as investors question the pace and scale of investment spending and whether an ultimate return on the capital being deployed is even possible. Inevitably there will be winners and losers from this tech race, but at this stage the cycle is in its early stages and the outcome of the hundreds of billions of dollars of spend will take some considerable time to become apparent.

An additional complication evolved over the week as it became apparent that some of this success will be dependent on which side of the AI frenzy a company sits. Micron Technology Inc (NASDAQ:MU)’s stellar results showed that demand for chips remains insatiable, whereas the likes of Apple and Microsoft Corp (NASDAQ:MSFT) have needed to raise prices to pass on these higher costs to consumers.

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Indeed, this has further implications. The recent opening comments from the new Federal Reserve chair suggested that with the employment situation stable, focus would be concentrated on taming inflation. At the same time, the data is pointing to inflationary pressures which are not solely attributable to energy prices such as the cost of technology chips and, with the 2% target having been missed for a number of years, he is clearly looking to make his mark. Despite data on Friday which revealed better-than-expected consumer sentiment data and an improved inflation outlook, the likelihood of one interest rate hike this year remains firmly on the table.

Meanwhile, doubts are lingering on the strength of the ceasefire in the Middle East, with reports of some tit-for-tat strikes in the region between the US and Iran casting a cloud. The oil price ticked higher as a result, although still at a level largely equivalent to that at the beginning of the hostilities at the end of February, but subsequent comments from the White House suggested that the resumption of peace talks could restore a fuller level of traffic through the Strait of Hormuz waterway, lifting Dow futures accordingly.

Despite a difficult end to the first six months of trading, the main indices have for the most part delivered a strong return in the year so far. The Dow Jones has added 7.9%, the S&P 500 7.4% and the Nasdaq 8.8%, with each having tested record highs despite a period which has provided a multi-faceted barrage of potential investor concerns.

The main UK indices continued on what has been a tepid journey of late, with an absence of positive catalysts driving some investor indifference. A broker upgrade lifted Lion Finance Group (LSE:BGEO) to the top of the leader board, but further weakness in the gold price weighed on Endeavour Mining (LSE:EDV) and Fresnillo (LSE:FRES), with the minor spike in the oil price working against International Consolidated Airlines Group SA (LSE:IAG). The FTSE 100 remains ahead by 5.6% in the year to date, although some of the interest in the index from earlier this year has waned as the wave of tech opportunities has tended to divert investment elsewhere.

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A particularly interesting development came in the telecoms sector, underlining the importance of the technology in a rapidly evolving communications world. BT Group (LSE:BT.A) announced that it would be forming a joint venture with Verizon Communications Inc (NYSE:VZ) of the US – a company previously intertwined with Vodafone Group (LSE:VOD) – in a move which would represent some $4 billion (£3 billion) of combined annual revenue, serving 3,000 customers in around 180 countries and which is expected to complete next year. As investors scrambled to calculate the effect of the JV on BT’s existing standalone revenue streams, the shares moved ahead by around 1.5% at the open.