S&P 500 starts second half of 2026 with 9.3% gain
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Key Takeaways
- The S&P 500 records a 9.3 percent gain as of July 4, 2026 since the beginning of the year, led by small- and microcap stocks as well as technology and AI stocks.
- Corporate earnings in the S&P 500 rose 60 percent over the past three years, but are supported by solid cashflows and disciplined capital expenditures.
- Analysts see stabilizing factors such as stricter accounting standards and better capital allocation in contrast to the Dotcom bubble.
- Early critical voices question the sustainability of the AI rally, while OpenAI faces operational challenges.
- Kevin Warsh expressed optimism about AI productivity gains and their possible positive growth and inflation effects.
The S&P 500 – a market-capitalization-weighted index of the 500 largest publicly traded US companies – is up 9.3 percent since the beginning of the year as of July 4, 2026. According to current market reports, the performance is driven primarily by small- and microcap stocks, while technology and AI stocks remain the main drivers of gains.
Broad market performance across different sectors
In addition to technology stocks, oil stocks and non-US stocks also benefited from positive market dynamics in the first half of 2026. The index's performance shows a broader distribution across various market segments, with smaller companies taking a leading role.
Earnings momentum in the S&P 500 has reached remarkable dimensions over the past three years: corporate earnings rose by 60 percent. According to market observers, this development raises questions about valuation and sustainability, but also recalls earlier periods of strong earnings growth such as the Dotcom era.
Cashflows and capital discipline in focus
Analysts point to differences from the Dotcom bubble: current corporate earnings are supported by solid cashflows, while more disciplined capital allocation (Capex) and stricter accounting standards could reduce risk compared to earlier periods. These factors are cited as stabilizing elements for current valuation levels.
First doubts about the sustainability of the AI rally
At the same time, critical voices about the AI-driven market rally are growing. Observers see signs of a possible slowdown, while OpenAI – one of the most prominent AI companies – faces operational challenges. Additionally, major tech companies are reconsidering their capital expenditures in the AI sector.
Kevin Warsh expressed optimism about productivity gains from AI at the ECB forum, pointing to possible positive growth effects. These could affect the reported inflation rate, according to Warsh. This assessment contrasts with growing doubts about the immediate feasibility of translating AI promises into sustainable corporate earnings.
Wealth building and market context
The market context also shows structural developments among retail investors: only 3.2 percent of retirees in the US have liquid assets of at least one million US dollars. This figure underscores the importance of long-term investment strategies and the role of equity investments in wealth building, while debt-free home ownership is also cited as a stabilizing factor.
The further development of the S&P 500 in the second half of 2026 will likely depend significantly on whether corporate earnings can justify current valuations and whether AI-driven productivity gains translate into measurable business results.