Quarterly Review and Outlook - July 2026

“What good is the warmth of summer, without the cold of winter to give it sweetness?”

-  John Steinbeck, Travels with Charley 

Summer has a way of reminding us that seasons are constantly changing. Markets are no different.

As the second quarter came to a close, investors had good reason to feel encouraged. Following a volatile start to the year, equities rebounded sharply from their March lows, supported by resilient economic data, stronger-than-expected corporate earnings, expectations of a lasting cease-fire in the war with Iran, and continued enthusiasm surrounding artificial intelligence.

Just days into July, however, the mood shifted once again. Renewed concerns surrounding the Iran conflict, higher oil prices, global trade uncertainty, and fresh questions about the enormous capital being invested in AI reminded investors how quickly sentiment can change.

While the headlines may have shifted, our view of the fundamentals has not.

The most encouraging development this year has received far less attention than the turbulent news cycle: corporate America continues to deliver. Earnings have remained remarkably strong, with many companies producing double-digit profit growth despite an unpredictable environment. Over time, earnings remain the primary driver of stock prices, supporting our constructive long-term outlook.

History also reminds us that geopolitical crises often create periods of sharp market volatility, but they are not usually a reason for panic selling. At the height of geopolitical uncertainty, the S&P 500 bottomed on March 30 before rallying more than 18% through the early days of July. While history never repeats perfectly, some of the market's most uncomfortable moments have also proven to be among its most rewarding.

Rather than fearing volatility, we view it as an opportunity. Market swings allow us to rebalance portfolios, harvest tax losses when appropriate, and selectively add to high-quality investments at more attractive prices. Volatility is rarely enjoyable, but it can be productive.

Interest rates remain an important area to watch during the second half of the year. Another war-related spike in oil prices could foment temporary inflation pressures, and the Federal Reserve's new leadership appears somewhat more willing to keep rates elevated until inflation is firmly under control. Even so, we do not expect an aggressive or prolonged series of rate hikes. Barring a sustained resurgence in inflation, monetary policy is likely to evolve gradually rather than abruptly.

Artificial intelligence has reached a new stage as well. The conversation has shifted from AI's potential to a more practical question: which companies will ultimately earn attractive returns on the hundreds of billions of dollars now being invested? We believe AI represents one of the most important productivity advancements in decades, but healthy skepticism surrounding valuations and capital spending is both normal and necessary. Like the Industrial Revolution and the commercialization of the internet, transformative innovation rarely follows a straight line.

Our investment positioning remains largely unchanged. We remain overweight U.S. equities, reflecting our confidence in the innovation, profitability, and earnings power of American companies. At the same time, we maintain meaningful exposure to developed and emerging international markets because diversification remains a cornerstone of long-term investing.

Within fixed income, we continue to emphasize short- and intermediate-term U.S. Treasuries, which offer attractive yields while avoiding many of the liquidity concerns emerging in portions of the private credit market. Recent redemption pressures across several private credit funds serve as a timely reminder that liquidity is often most valuable when markets become unsettled.

Beyond the markets, summer is also a good opportunity to revisit your broader financial plan. Investment returns are only one part of long-term financial success. Through Evermay's integrated Family Office services, we bring together investment management, tax planning and preparation, estate planning, and personalized financial guidance to help families make better coordinated financial decisions with greater confidence.

Summer Reading from Evermay

To help you make thoughtful financial decisions beyond the markets, we've recently published several practical planning resources:

Should I Open a Trump Account for My Child?
A practical look at the new government-sponsored savings account and how it compares with other planning options.

IRMAA: The Medicare Cost That Can Catch Retirees by Surprise
Understand how Medicare premium surcharges work and the planning strategies that may help reduce their impact.

Complete These Documents Before Your Child Heads Off to School
The essential legal documents every family should consider before a student leaves for college.

You'll find these articles, along with additional market commentary and planning resources, in the Newsroom at Evermay.com.

As we look ahead to the second half of 2026, we're reminded of Margaret Mitchell's simple but enduring observation in Gone with the Wind:

"After all, tomorrow is another day."

Markets have difficult days, difficult months, and occasionally difficult years. Headlines change. Investor sentiment changes. Tomorrow really is another day.

Earlier, Steinbeck reminded us that "the warmth of summer" is made sweeter by the memory of winter. Investing is no different. Periods of uncertainty help create the opportunities that reward patient, disciplined investors over time. Our responsibility is not to predict tomorrow's headlines. It is to help you make thoughtful financial decisions that can endure through every season.

As always, we encourage you to reach out at any time to discuss your portfolio to ensure your mix of assets is appropriate and aligned with your financial goals. We wish you and your family a safe, relaxing, and enjoyable summer, and we look forward to speaking with you soon.

Warmly,

Mitch Schlesinger, CFA
Chief Investment Strategist

Important Disclosure Information

Evermay Wealth Management, LLC (“Evermay”) is a registered investment adviser. For more information about Evermay’s advisory services, please request a free copy of our Firm Brochure.

Past performance is no guarantee of future results. All investments involve risk, including loss of the principal amount invested. Diversification and asset allocation strategies do not ensure a profit and do not protect against a loss, especially during periods of market downturns.

This information is educational in nature, and not as a recommendation of any particular investment strategy. Given various factors, including changing market conditions, the views and opinions expressed are subject to change.

Statements herein reflect opinions regarding future financial or economic performance. Such statements are “forward-looking statements” based on various assumptions, which may not prove to be correct. Certain information contained herein was derived from third party sources as indicated. While the information presented herein is believed to be reliable, no representation or warranty is made concerning the accuracy of the information presented.

Please contact Evermay if there have been any changes to your financial situation or investment goals or if you would like to add or modify any reasonable restrictions to your investment portfolio.