Stocks on Tuesday wrapped up their strongest quarter in years as traders shrugged off concerns about an AI bubble and hoped for a final peace deal with Iran – but more volatility could be in store this year.
The Dow Jones Industrial Average jumped 0.3%, or 136.46 points, for a record close of 52,319.20 Tuesday, while the S&P 500 and Nasdaq rose 0.8% and 1.5%, respectively.
After weeks of wobbly tech stock trading, shares in chipmakers helped lead the rise Tuesday, with Nvidia, Advanced Micro Devices and Intel gaining 2.6%, 7.7% and 6%, respectively. The VanEck Semiconductor ETF also rose more than 3% – and it’s up 82% so far this year.
As Tuesday marked the final day of the first half of 2026, the Dow wrapped up its best six-month stretch since 2021, while the S&P 500 and Nasdaq clinched their largest quarterly gains since the pandemic.
Markets were largely influenced by the movement of oil prices relative to the war in Iran and back-and-forth concerns about AI stock valuations – and there are plenty more factors that could influence stocks in the third quarter.
“In the next quarter, markets are going to be driven by what happens in the Iran conflict, expectations for the November elections, performance by SpaceX and expectations for the Anthropic IPO,” Kenin Spivak, chief executive of SMI Group, told The Post.
“If hostilities resume in Iran, it will reverse recent gains in the market. It also could depress pricing if markets expect the Democrats to take control of both houses [of Congress], because that would potentially paralyze the Trump administration.”
Ken Mahoney, chief executive of Mahoney Asset Management, said he expects a bull market moving forward – but investors should still “continue to expect volatility in both directions.”
“July has strong historical statistics, yet quarter three of midterm years can be quite weak and volatile,” Mahoney said.
“There will come a time where markets start to hone in on midterm elections and their potential outcomes, and we know September has tricky history,” he added. “We have seen many late summer doldrums and that could be in the cards for the market this year.”
Investors will also be keeping a close eye on the Federal Reserve and new chairman Kevin Warsh for any clues on where interest rates are headed – though the market has so far “taken it in stride” following Warsh’s surprisingly hawkish speech on June 17, Mahoney said.
In the first six months of 2026, the Dow climbed 8.9% – its best first-half performance since 2021, when it rose 12.7%. The S&P 500 and Nasdaq rose 9.6% and 12%, respectively, over the same period.
The Russell 2000, a small-cap index, gained more than 21% in the first half of this year – its best result since the first six months of 1991.
While the first quarter of 2026 was relatively strong, the second was even stronger – despite swings related to higher oil prices and concerns that tech companies might be overspending on AI.
The S&P 500 and Nasdaq jumped 14.9% and 21.4%, respectively, in the second quarter for their largest quarterly gain since the second quarter of 2020. The Dow rose 12.9% over the same period for its strongest quarter since the end of 2022.