Insights
June 2026 Monthly Market Review
July 7, 2026 · The Faith Foundation Team
June was a month of two distinct halves. We continue to monitor the durability of the peace framework with Iron, as well as re-emerging concerns about AI-related market concentration and the trajectory of policy under new Fed Chair Warsh.
U.S Overview
June was a month of two distinct halves. The first half brought a significant positive development: on June 17, the United States and Iran signed an interim peace framework mediated by Pakistan, ending the active phase of the conflict, agreeing to reopen the Strait of Hormuz, and lifting the U.S. naval blockade. Oil (Brent crude) prices declined by nearly 40%, the largest monthly drop in years. The second half brought a sharp technology-led decline in the Nasdaq as fears of an AI bubble once again entered the conversation. The Dow, by contrast, showed positive returns as investors rotated out of technology and into financials, healthcare, and industrials, closing the month at new record highs. Despite June’s pullback, the second quarter was the best quarterly performance for the S&P 500 and Nasdaq in more than a decade. These mixed results affected our portfolios asymmetrically: the rotation away from tech and into value stocks favored the value-oriented components of our portfolios, while the tech selloff weighed more on growth-oriented portions of our portfolios.
The mid-month peace framework was a meaningful positive development for the global economy and, potentially, for the sustainability of the recent rally. However, the final days of June brought trepidation regarding the viability of the deal as several violations of the truce have occurred. The extreme concentration of market gains in a small number of AI-related names remains a structural risk we continue to monitor closely.
Chair Kevin Warsh held his first FOMC meeting on June 17. The committee voted unanimously (12-0) to hold the federal funds rate steady. May CPI data, released just before the meeting, showed the highest inflation since April 2023. Markets sold off following the meeting as investors repriced the possibility of a hike, and the Fed’s hawkish shift continued to weigh on the fixed-income portions of our portfolios.
International Overview
The European Central Bank raised its key deposit rate to 2.25% — its first rate hike since 2023. The move reflected the ECB’s determination to counter energy-driven inflation stemming from the Iran conflict; officials revised the 2026 eurozone inflation forecast upward while lowering the growth forecast. Europe’s STOXX 600 posted modest gains for the month, benefiting from the mid-month peace deal that lifted oil-sensitive sectors and eased some of the industrial-economy pressure. The Bank of England likewise held its base rate steady while acknowledging elevated inflation risks. Positive European equity performance contributed modestly to the international allocations across our portfolios.
Asian markets were extraordinarily volatile in June. In the wake of the peace deal, Japan’s Nikkei 225 and South Korea’s Kospi surged. However, in the final week of the month, Asian tech stocks experienced a sharp correction as concerns about AI-related valuations intensified. The Kospi tumbled nearly 6% in a single session, triggering circuit breakers, and the Nikkei fell more than 4% on the same day. Even after the pullback, both indices delivered strong monthly gains — the Nikkei up roughly 7% and the Kospi up approximately 20%. The Bank of Japan also raised its policy rate to 1%, the highest level since the mid 1990s, citing accelerating inflation as firms passed on higher costs. Despite the intra-month volatility, the strength in Japan and Korea continued to contribute meaningfully to the international equity allocations of our portfolios, though the extreme moves late in the month reinforce the value of broad diversification.
Emerging markets benefited early in the month from the peace deal and the sharp decline in oil prices, which reduced the import-cost burden for many energy-dependent economies. The late-month tech correction weighed on Asian emerging markets, though most regions still ended June with positive returns. This continued to benefit the Diversified portfolios, which carry direct emerging market exposure through their international equity allocation.
What does this mean for you?
June’s modest equity declines in our portfolios reflected the month’s volatility — the mid-month peace deal was offset by the late-month tech correction. Notably, all six of our Diversified and Fossil Free portfolios outperformed their respective benchmarks in June, a defensive characteristic that our diversified construction is designed to provide. Our Diversified portfolios returned between -0.29% and -0.15% for the month, and all three now sit ahead of their benchmarks year-to-date. Our Fossil Free portfolios returned between -0.32% and -0.22%. For several months, the surge in oil prices has buoyed the performance of our portfolios with oil exposure. However, the declining oil-price environment is beginning to narrow the monthly performance gap between similarly allocated Diversified and Fossil Free portfolios, consistent with our expectation that lower oil prices would reduce the impact of the fossil fuel exclusion. Our Stable Value Portfolio returned 0.30% for the month and 1.45% year-to-date (annualized 2.89%), reflecting the continued benefit of laddered FDIC-insured CDs and short-duration U.S. Treasuries. The primary objective of the Stable Value Portfolio is to allow short-term or rainy-day funds to keep up with inflation while maintaining liquidity. The intra-month volatility — with Asian markets making record highs one week and correcting sharply the next — underscored the importance of the broad diversification we maintain across regions, sectors, and asset classes.
The fixed income component of our portfolios had to weather a shifting landscape in June. Longer-dated Treasury yields held in an elevated range, but short-term yields rose as markets repriced the possibility of a Fed rate hike. The stabilizing role of bonds in periods of equity volatility remains an important feature of our portfolio construction, and this was particularly relevant during the late-month equity selloff. Looking ahead — whether the next move is a hike or a hold — will remain a central factor for fixed income markets. Three consecutive months of positive equity gains, interrupted by intra-month volatility, reinforce our core investment discipline: staying invested through turbulence is what has allowed our portfolios to participate in the recovery.
What we are monitoring
U.S.-Iran Military Conflict: The most significant development of June was the signing of an interim peace framework between the United States and Iran. The 60-day truce agreement has only grown more fragile since its signing. While the deal is a meaningful step toward normalization, execution risks remain significant: shipping volumes through the Strait have not yet returned to pre-conflict levels, mines and other obstructions may persist, and the underlying tensions between the U.S. and Iran are far from resolved. The damage sustained by energy infrastructure across the Persian Gulf region will likely take years to repair. We continue to monitor the durability of the peace framework, alongside re-emerging concerns about AI-related market concentration and the trajectory of policy under new Fed Chair Warsh.
Thank you for your continued trust and support. It is our privilege to serve as stewards of your financial assets.
Sincerely,
The Faith Foundation Team
