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Q2 Market Recap

Written by Minich MacGregor Wealth Management on . Posted in Posts.

Imagine you were given two pairs of special glasses that were designed to look backward in time rather than forward in space. The first pair can only see how the markets did; the second pair is designed to focus on the economy.

Each would give you a very different picture of how the second quarter went.

The first pair would show you that the markets had their best quarter since 2020. The Dow gained nearly 13%. The S&P 500 rose 14.9%. And the Nasdaq shot up an astonishing 21%!1

The second pair, the one that sees the overall economy, has a less rosy view. In fact, it would show you a picture of an economy in some distress. An economy where the annual inflation rate rose to 4.2% in May, the highest in three years.2 An economy where consumer confidence fell to historically low levels in April and May (although it did rebound slightly in June).3 An economy that may have only grown slightly in Q2 compared to its historical average.4  

Both glasses are functioning properly. Both have the same maker. So why such different views? How can the markets be flying when the economy is grounded, and vice versa?

It’s not hard to understand why the economy had the quarter it did. Turmoil in the Middle East sent a shockwave through the oil and fertilizer markets, causing the goods and services that depend on those things to rise in price. (Think food, gas, electricity, transportation, and more.) By extension, a higher cost of living depresses consumer confidence. After all, it’s hard to feel confident about the future when more and more of your paycheck gets eaten up by simple necessities every month. And when consumer confidence drops, consumer spending drops…leading to slower economic growth overall.

The markets can be a bit harder to parse, but a closer look at what types of stocks performed well can provide the answers. Remember how we said the Nasdaq rose 21%, compared to 14.9% and 13% by the S&P and Dow? Well, the Nasdaq is primarily composed of technology companies. It’s those same companies that powered the S&P 500’s growth. A good example is semiconductor stocks, which surged 87.8% for the quarter.5

Tech companies have been the stock market’s main mover for years now due to the hope and hype around AI, and that story continued in Q2. What’s interesting, however, is that while the story remains the same, the characters inside it have changed. You see, just as the tech sector has been the single biggest propellant of the market, the sector itself has been largely driven by a handful of companies like Alphabet (Google), Amazon, NVIDIA, META (Facebook), Microsoft, Apple, and Tesla. These “Magnificent Seven”, as they are commonly known, have been at the forefront of the AI boom, and it’s their growth that has lifted the overall markets.

But that wasn’t the case in Q2. In fact, the Mag 7 fell during the quarter, and most have been essentially flat or even negative for the year overall.6 Instead of AI companies, investors paid more attention to AI infrastructure. (Again, semiconductors are a great example, as without them, we would lack the raw computing power needed to run AI.) In other words, it’s not the companies mining for gold, but the ones providing the picks and shovels that did well in Q2.

But none of this addresses the question we posed earlier. How can those two pairs of glasses show such diametrically different views?

The answer is a simple but critical truth: The markets and the economy are not the same.

The economy is how much our country produces and consumes. It’s the sum total of everything we make, buy, trade, and use. It’s the economy that drives our daily experiences.

The stock market, on the other hand, represents something far less tangible. It is the sum total of what we think, expect, and, yes, hope will happen in the future. It’s the market that drives our dreams and goals.

Politicians and pundits often like to use these two terms interchangeably, depending on which one makes them look better. Most common is when the markets are used as a stand-in for the economy. That’s because, while the markets are often hard to understand, they are easy to read: They go up or they go down.

As investors, though, it’s important that we remember that each is different and affected by different things. That’s because our feelings about the economy can sometimes color our opinions of the markets. This is largely due to something called status quo bias: The feeling that the current state of affairs will go on forever. When we feel frustrated or exuberant about the economy, it can impact how we invest, and not always in predictable ways.

For example, it’s easy to picture someone who, feeling negative about the economy, lacks confidence in the future and decides not to invest. But economic angst can also cause people to take more risk in the markets. In fact, there is some indication that is happening now. A recent survey found that 80% of Gen Z respondents — people born in the late 90s and early 2000s — often make “high-risk or speculative” investments because they feel financially left behind.7 And the Federal Reserve reported last year that American households now hold an all-time high of 45% of their total financial assets directly in stocks.8

That surpasses the previous record set during the dot-com bubble.  

More stock market participation is generally a good thing, and it’s probably another reason why the markets performed well in Q2. But it can be a red flag when more and more people are taking on more and more risk due to their feelings about the economy.

On the other hand, market exuberance can sometimes make us forget the realities of the economy…realities that may eventually impact the stock market. Higher inflation can lead to higher interest rates. When both become “sticky,” it can prompt fears of a recession, which in turn can drag down the markets. (We experienced this in 2022.) Failing to remember this can also cause investors to start chasing ever higher returns, forgetting all about risk in the process.

The point, is to emphasize that there are two mistakes investors can make when it comes to the relationship between the markets and the economy. The first is to confuse one for the other, or to use one to drive our decisions regarding the other.

The second is to ignore one and focus solely on the other, forgetting that, while they are different, they do have a relationship…and there are times when both can converge.

Remembering this is all the more important after a great quarter in the markets. We cannot predict the future, of course, so it’s quite possible the economy will improve in Q3, and that the markets will continue progressing upward. But when the economy and the markets diverge this sharply, it’s worth asking ourselves whether what we’re seeing in stocks is driven more by hype and speculation than by real, solid fundamentals.

It’s also worth preparing ourselves for that possibility.

So, a great quarter for the markets; a not-so-great quarter for the economy. While we here at Minich MacGregor Wealth Management certainly cheer the former, we will continue watching the latter carefully. After all, that’s what you rely on us for: To keep our glasses on, and our eyes open.

In the meantime, have a great month, and a great third quarter!

1 “S&P 500, Nasdaq register best quarter since 2020 despite Iran war,” Reuters, https://www.reuters.com/business/us-stock-futures-little-changed-strong-quarter-nears-end-2026-06-30/
2 “Consumer prices rose 4.2% annually in May, highest in three years,” CNBC, https://www.cnbc.com/2026/06/10/cpi-inflation-report-may-2026.html
3 “The Index of Consumer Sentiment,” University of Michigan, https://www.sca.isr.umich.edu/files/chicsh.pdf
4 “Current and Past GDPNow Commentaries,” Federal Reserve Bank of Atlanta, https://www.atlantafed.org/research-and-data/data/gdpnow/current-and-past-gdpnow-commentaries
5 “Semiconductor stocks just had their best quarter ever,” Axios, https://www.axios.com/2026/07/01/semiconductor-ai-stocks-chips
6 “Mag 7 value shrinks by $2.3 trillion,” CNBC, https://www.cnbc.com/2026/06/30/magnificent-7-stocks-sell-off-investors-grow-jittery-on-ai-spending.html
7 “Americans’ Finances are Improving – But Some Still Feel Behind,” Northwestern Mutual, https://news.northwesternmutual.com/2026-03-09-Americans-Finances-are-Improving-But-Some-Still-Feel-Behind-and-are-Turning-to-Prediction-Markets,-Sports-Betting-and-Crypto-to-Catch-Up,-According-to-Northwestern-Mutuals-2026-Planning-Progress-Study
8 “Americans have more money in stocks than ever before. Economists say that’s a bright red flag,” CNN Business, https://www.cnn.com/2025/09/28/business/us-stocks-record-highs-american-households

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Covid lessons and the Strait of Hormuz image

Lessons from Covid: How Global Disruptions Impact Your Investments

Written by Minich MacGregor Wealth Management on . Posted in News, Posts.

No, you are not reading a message that’s been stuck in our drafts since 2020. This message is about the world in 2026. But as you’ll see, the lessons we can apply today are drawn from the markets as they were exactly six years ago.

As you know, geopolitical conflicts tend to have a short-lived effect on the markets. But sometimes, conflicts can lead to economic disruption. When that happens, investors must contend with major uncertainty…and uncertainty means volatility. This is what we’re seeing now due to the ongoing war in Iran and the near-total closure of the Strait of Hormuz.

Disruption, uncertainty, and volatility.

Here’s the situation in a nutshell: 20% of the world’s oil flows through the Strait.1 With only a few tankers passing through over the last few weeks, the world is facing the single largest supply disruption in history, made worse by the fact that Iran has also struck nearby oil and gas facilities across the Persian Gulf. Due to this, the price of oil has risen to over $100 a barrel, with Brent crude, the global benchmark, rising as high as $113.1

Oil, as you know, is the blood that powers the world economy. Furthermore, it’s not just oil that passes through the Strait. In fact, up to 20% of the world’s natural gas and 30% of its fertilizer transported by ship must first transit the Strait before reaching the wider ocean.2

Take a moment to visualize what this looks like. Three products, oil, gas, and fertilizer, all choked off in one of the world’s most important pipelines. Over the coming weeks, ships that have already left the Strait will finish delivering what supplies they have, but after that, shortages may begin.

Now, the United States does not heavily rely on oil and gas passing through the Strait, as we have our own supply of both. But Asia and Australia do, which means that goods produced on these continents may become much more expensive. Natural gas is a critical part of producing fertilizer; fertilizer is a critical part of growing food. Both gas and oil are used to produce plastic, which is used to contain nearly everything that gets shipped from one place to another. Shipping, of course, requires oil.

Some countries that normally depend on oil and gas from the Persian Gulf can potentially pivot to other forms of energy. China and India, for example, have enormous coal reserves. But not all countries can do this, and even those that can, probably won’t be able to replace all of what they normally get from the Strait. Furthermore, pivots take time. As a result, many countries simply may not be able to produce the amount of goods they normally do. And as we know from the Law of Supply and Demand, when supply goes down but demand does not, prices rise. Not just for oil and gas, but for everything that is made or transported by oil and gas.

Here is where the lessons of the Covid years begin to kick in, because we’ve seen something like this before. When supply chains get disrupted, as they were during the Covid shutdowns of 2020, prices rise. We call this inflation.

When the price of goods rises, something else tends to rise with it: The cost of money itself. By this, we’re referring to interest rates. Here in the United States, the Federal Reserve, which is mandated to keep prices stable, typically fights inflation by raising interest rates. (Investors learned all about this after 2020, too.) Higher interest rates make it more expensive to borrow money, which in turn tamps down on spending. Lower spending, in turn, forces businesses to reduce their prices, thereby reducing inflation.

As of this writing, the Fed has not raised the Federal Funds Rate, which is the key interest rate that our central bank controls. But this isn’t the only interest rate that matters. One rate that has jumped in recent weeks is that of the 10-year Treasury Note.3 This interest rate — which is essentially the rate at which the government borrows from investors for a term of 10 years — influences mortgage rates, credit cards, and other types of loans. The fact that it’s on the rise is the market’s way of saying that investors expect interest rates in general to rise, too.  

Put all these factors together and you suddenly have a situation that looks a bit like the Covid-era. There are some important differences, of course. For one thing, oil prices initially plummeted during the Covid shutdowns. And it was the combination of snarled supply chains plus a major surge in demand after the world reopened that triggered inflation. But the potential trio of economic disruption, rising inflation, and higher interest rates is doing the same thing it did all those years ago: Inject significant uncertainty into the markets.

Which is why the Dow, the S&P 500, and the Nasdaq are all in “market correction” territory.4 (A correction, remember, is a drop of 10% or more from a recent high.)

Now, note that we used the word “potential” just a moment ago. That’s because we’re still in hypothetical territory here. We don’t yet know exactly whether and how much inflation will go up, or for how long, or what that will mean for interest rates over the long-term. We certainly can’t predict what the markets will do. Corrections are common, and it’s possible the war could end as quickly as it started.

But there are two major mistakes an investor can make whenever uncertainty kicks in. The first is to bury our heads in the sand and pretend everything is fine. As you can see from all the analysis you just read, we are certainly not going to make that mistake here at Minich MacGregor Wealth Management. Because there’s no point in sugarcoating it: This situation has major ramifications for the global economy. And even if the war were to end tomorrow, that doesn’t guarantee everything will go back to normal overnight. Oil prices alone may remain elevated for some time. (There’s a saying among economists that oil prices rise like a rocket and fall like a feather.)

The second mistake is to take that uncertainty and think the sky is falling. And here is where the major lessons from Covid come into play.

Over the coming days and weeks, we may see plenty of headlines that point out just how serious the situation is. We might see words like “unprecedented” or “historic.” Terms like “correction,” “downturn,” or even “bear market” could be on the cards, too. But if that happens, remember this: We’ve been through this before. And we’ve made it through this before, too.

Close your eyes and think back to how much uncertainty existed in the spring of 2020. We can still remember where we were when we heard the news about quarantines and shelter-in-place restrictions. We can still remember how the schools closed, and “non-essential” offices closed, and grocery store shelves got frighteningly bare. And we can remember how the markets reacted to it all. We’re sure you can, too.

We can also recall what happened next. How the markets stabilized, rebounded, and expanded.

Covid taught us that patience, steadiness, and the ability to look past immediate headlines become more important during times of increased uncertainty, not less. Because while uncertainty creates volatility, it also creates opportunity. Opportunities for companies to adapt, and in adapting, find new ways to grow. Opportunities for the markets to rebound, and in rebounding, reach new heights. It’s not easy to endure the volatility to get to the opportunity. It never is. But the one thing we know for sure is that we do not want to be absent when opportunity comes.

The pandemic was a historic event that had major ramifications for the global economy. It’s possible that what’s happening in Iran will be, too. We don’t know how long it will last, or how deep its impacts will be. But even historic events eventually become just that: History.

One day, we expect we’ll write a message titled, “Lessons from Iran,” too.

The final lesson that we hope all our clients learned during Covid, is that our team will always be here for you. Whether the current volatility resolves or increases, we are always available to answer your questions, address your concerns, and examine every development. So, if you would ever like to talk — about Iran, about your portfolio, or anything else — please reach out. We always love to hear from you!  

1 “A new oil shock is building,” CNBC, https://www.cnbc.com/2026/03/28/oil-gas-prices-iran-war-hormuz.html
2 “It’s not just oil. Here comes Hormuz inflation.” Politico, https://www.politico.com/news/2026/03/14/hormuz-inflation-helium-fertilizer-00828680
3 “Treasury yields rise as Iran ceasefire optimism fades,” CNBC, https://www.cnbc.com/2026/03/26/treasury-yields-rise-uncertainty-ceasefire-talks.html
4 “Dow closes in correction,” CNN, http://cnn.com/2026/03/27/investing/us-stocks-iran

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Second Half of 2025

Preparing for the Second Half of 2025

Written by Minich MacGregor Wealth Management on . Posted in News, Posts.

In most quarters, we typically send a short “market recap” message looking back at the previous three months in the markets.  This quarter, we want to do something a little different by looking ahead.  Not to make predictions — we don’t waste our time with that sort of thing here at Minich MacGregor Wealth Management — but to mentally prepare ourselves for various possibilities.  The more prepared we are, the easier it will be to maintain a long-term perspective rather than overreact to headlines. 

To that end, let’s look at some of the storylines our team is following that could have an impact on the markets in the second half of the year.

Tariffs.  Back in April, the sweeping slate of tariffs enacted by the Trump Administration sent markets into a tailspin.  Many of those tariffs were eventually canceled or suspended, and markets normalized.  Since then, investors have entered a kind of “worst is over mindset.”  As many tariffs — which were originally suspended until July 9 — were further pushed back into August, the markets have continued to climb, unaffected by trade war fears. 

In recent weeks, however, President Trump has again begun suggesting the possibility of new tariffs against various countries.1  Furthermore, many of the “Liberation Day” tariffs announced back in April that were subsequently paused are set to go into effect in August. 

If tariff troubles begin rising again, it will be interesting to see whether investors react negatively, or whether the idea of tariffs has been normalized to the extent that it doesn’t really provoke a strong reaction.  Either way, while various trade deals have begun to materialize, we should still prepare ourselves for tariffs to continue influencing the pulse of the markets moving forward. 

Inflation.  One reason tariffs make both economists and investors nervous is because they can stoke inflation.  Since many tariffs have been suspended or were never enacted, inflation has remained low for the year, but there are signs the tariffs that are in play are finally starting to have an effect.  Consumer prices rose by 0.1% in May, and a further 0.3% in June, raising the overall inflation rate to 2.7% over the past twelve months.2  Those aren’t huge increases, but the fact that they apply to a wide variety of goods suggests that companies are now passing on the cost of tariffs to customers. 

For investors, this matters because it has a direct impact on…

Interest Rates.  The task of fighting inflation belongs to the Federal Reserve, which has a mandate to stabilize prices.  The Fed’s ability to do this largely rests on its ability to drive interest rates. 

President Trump has been very vocal about his desire for the Fed to lower interest rates quickly and significantly to help stimulate the economy.  The Fed has been resistant to that idea, however, preferring to see how tariffs will affect inflation first.  If inflation does continue to climb, it’s extremely unlikely the Fed will lower rates any time soon.  Depending on how things go, it’s even possible the Fed could raise interest rates again. 

It’s been said that interest rates act like ankle weights on stocks, in that they make it harder for them to rise and easier to fall.  Higher interest rates can depress both spending and borrowing, two things companies need to generate revenue, which is one of the things investors look for when deciding where to invest.  But there’s another reason rates matter right now: If they remain elevated, or even rise higher, the result could exacerbate our fourth and final storyline:

D.C. Drama. Due largely to his frustration with higher interest rates, President Trump has frequently criticized the Fed’s chairman, Jerome Powell.  On several occasions, the president has even suggested he might fire Powell.3  (At other times, he has also said he has no intention of doing so.) 

Under normal circumstances, this sort of beltway drama is interesting only to other politicians — but the idea of a president firing the chairman of the Federal Reserve is anything but normal.  You see, the Fed has historically functioned as an independent central bank, meaning its decisions do not need to be approved by either the president or Congress.  Why does that matter?  Because it gives the Fed freedom to accomplish its mission of maximum employment and stable prices during times of economic stress without having to seek approval first.  It also has historically shielded the Fed from being overly influenced or controlled by other factions in Washington.  In other words, it enables the Fed to focus on policy over politics. 

Whether President Trump can legally fire Powell is an open question.  The reason this could affect the markets, though, is because it would signal that the Fed’s independence is effectively over.  That, in turn, would change everything about how investors expect the Fed to act when it comes to monetary policy.  In other words, it would throw a major wrench of uncertainty into the markets.  And uncertainty, as we know, is ultimately what causes volatility. 

So, there you have it.  Some of these storylines may have a significant impact on the markets.  Others may be complete nonfactors.  The ultimate takeaway we must remember is to avoid overreacting to any of them.  Remember: While storylines like this can drive the markets for weeks, months, even quarters, we are investing for years. 

As always, our team will continue to keep a close eye on Washington and Wall Street, so you don’t have to.  But if you have any questions or concerns as we move towards the end of the year, please don’t hesitate to let us know!

1 “Trump intensifies trade war with threat of 30% tariffs on EU, Mexico,” Reuters, www.reuters.com/business/trump-announces-30-tariffs-eu-2025-07-12/
2 “Consumer Price Index Summary,” U.S. Bureau of Labor Statistics, https://www.bls.gov/news.release/cpi.nr0.htm
3 “Trump says ‘maybe’ he’ll try to fire Fed chief,” CBS, www.cbsnews.com/news/trump-says-maybe-try-to-fire-federal-reserve-jerome-powell-interest-rates/

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