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Global Markets Close Best Quarter in Years as AI Optimism Drives Historic First Half

Strong earnings and AI investment have powered global equities to record highs, but the next phase of the rally will depend on execution rather than expectations.
Stock market chart showing upward trend in major equity indices, reflecting broad gains driven by strong earnings and artificial intelligence optimism.

Global equity markets ended the second quarter with their strongest performance in years, driven by accelerating artificial intelligence investment, resilient corporate earnings, and easing geopolitical tensions. The S&P 500 climbed 14.9% during the quarter, while the Nasdaq surged more than 20%—both recording their best quarterly gains since 2020. The Dow Jones Industrial Average also delivered its strongest quarter since late 2022, closing at a record 52,319.



Q2 2026 Market Performance

Index

Q2 Return

H1 2026 Return

Key Note

S&P 500

~14.9%

~8–9.5%

Strongest quarter since 2020

Nasdaq Composite

~20–21.4%

~11.1%

AI-led tech rally

Dow Jones Industrial Average

~12%+

~8.6%

Record high at 52,319

Technology remained the market's dominant driver. Seventeen of the 20 best-performing S&P 500 stocks in the first half came from the information technology sector, while first-quarter earnings exceeded expectations across 83% of reporting companies. Strong results from major financial institutions and steady consumer spending also reinforced confidence in the broader economy.



Market Drivers Behind the Rally

Driver

Impact

AI investment

Primary growth engine across tech sector

Earnings strength

83% of S&P 500 beat expectations

Geopolitical easing

Ceasefire reduced oil and risk premium

Inflation stabilization

Energy inflation cooled CPI pressure

Investor sentiment improved further after a U.S.-Iran ceasefire reduced geopolitical risk and helped stabilize energy prices. Markets recovered from a nearly 10% correction in just 11 trading sessions, one of the fastest recoveries on record, as concerns over inflation eased and economic growth remained resilient.


Attention now shifts to the second half of the year. While equity benchmarks continue to reach record highs, the rally has remained relatively concentrated, with 38% of S&P 500 companies declining during the first half. Investors will closely monitor second-quarter earnings and AI-related capital spending to determine whether current valuations remain supported by underlying business performance.



Sources:

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