Week in Review: Mid-Year Market Outlook Recap, Technology vs Cyclicals
As U.S. indices hit new highs, market participation and earnings growth point to underlying support, but panelists in the Schwab 2026 Mid-Year Market Outlook note that volatility is increasing and portfolio diversification is likely to be important over the next six months.
For the week that was, the Dow set a new record, smallcaps meandered lower, and Oppenheimer downgraded some big banks, saying valuations may be more attractive in publicly traded private equity investments. Meanwhile, a prior pull-back in tech put eyes on some cyclical names. Soaring costs, AI, and tariffs will impact shares of Caterpillar (CAT), Space Exploration Technologies (SPCX), and JPMorgan Chase (JPM), says Aquiles Larrea, Jr., CEO of Larrea Wealth Management.
Memory chipmakers like Micron Technology (MU) and their role in the AI buildout continue to be a topic of discussion. During the Schwab 2026 Mid-Year Market Outlook, Joe Mazzola talks trading and optimism for semiconductors, and what the future might hold for technology stocks. Joe is the head of trading and derivatives strategy at Charles Schwab.
As part of the full hour of the Schwab 2026 Mid-Year Market Outlook Special, Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research, discusses AI, valuations, volatility risk, and mass underestimation of earnings strength that has supported this bull market. Looking at 2026 S&P 500 earnings growth, Sonders noted that when it comes to price-to-earnings multiples, "there is some risk in assuming the pace of growth is going to persist. In contrast to the late 1990s, when the bubble was in the P [price] ... because there was no E [earnings] in many of the leadership companies. In this case you have an extraordinary amount of E in the P/E equation, and you have seen multiples come down.”
Technology was also a Schwab Mid-year Outlook theme for Chris Ferrarone, who examines why growth in international markets has accelerated risk. A part of that is emerging market tech exposure, weakening consumer sentiment, and stagnant incomes. Chris is the head of equity research and strategy at the Schwab Center for Financial Research.
Also in the Schwab Mid-year Outlook, Cooper Howard discusses fixed income, bond market volatility, and opportunities in shorter-duration bonds and longer-term yields. Cooper is director of fixed income research and strategy at the Schwab Center for Financial Research.
Jim Ferraioli outlines key themes for Bitcoin and cryptocurrency for investors, including key fundamentals for Bitcoin mining, and risks miners face. Jim is the head of crypto research and strategy at the Schwab Center for Financial Research.
In the lightening round, the panel answered questions about the outlook for inflation, Fed policy, risks lingering from the U.S.-Iran war, and the artificial intelligence spending cycle.
As always, bookmark our articles page for more insights on themes moving markets. Last week that included the decline in Oracle (ORCL) shares, the likelihood of a crude glut and $60 oil, the soaring price of memory chips, and more on fertilizer investments.
