Global markets were volatile and mixed in June, and as of this writing, there is renewed tension in the Middle East to kick off the month of July. Investors are balancing resilient economic activity against sticky inflation, elevated geopolitical risk and a Federal Reserve that shows a desire to maintain a firmer policy stance. June was marked by a clear shift in market leadership. Large cap U.S. equities paused after a strong rally in the spring, while small caps, developed international equities and rate-sensitive real assets found support. The S&P 500 Index declined 1.0% in June but remained up 10.2% year-to-date, while the Russell 2000 Index gained 3.7%, extending its year-to-date advance to 22.6%.
U.S. equity performance reflected a rotation beneath the surface. After several months in which mega-cap technology and AI-related enthusiasm drove much of the market’s advance, investors increased selectivity as inflation data and Fed messaging pushed back against hopes for near-term rate cuts. Small caps benefited from improved breadth, stronger cyclical participation and modest relief in bond yields late in the month. The result was a rare month in which the Russell 2000 meaningfully outpaced the S&P 500, reinforcing the notion that equity gains in 2026 are broadening beyond the largest U.S. companies.
International developed equities also posted solid results for the month. The MSCI EAFE Index returned 3.1% in June and is currently up 9.4% year-to-date, supported by broad participation across non-U.S. developed markets. Emerging markets moved in the opposite direction, with the MSCI EM Index declining 1.4% for the month, though it remains one of the strongest major asset classes in 2026 with a 23.9% year-to-date return. The divergence reflected a more cautious tone toward higher-valuation and geopolitically sensitive markets after a powerful early-year rally, particularly as investors weighed Middle East risks, energy market volatility and an uncertain global policy backdrop.
Fixed income returns were positive but muted with the Bloomberg U.S. Aggregate Bond Index gaining 0.2% in June. The Fed held its policy rate steady at its June meeting, with Chair Kevin Warsh emphasizing price stability and removing some of the forward guidance that investors had grown accustomed to in prior cycles. May PCE inflation rose to 4.1% year over year while first-quarter GDP was revised higher to 2.1%, underscoring that the economy has not weakened enough to give the Fed a clear opening to cut rates.
Real assets were mixed. REITs posted modest gains while Commodities fell sharply. The Bloomberg Commodity Index declined 8.5% for the month, though it remained up 14.4% year-to-date. We expect continued volatility in energy prices as markets continue to follow the fluid situation with Iran. Overall, June was not a uniform risk-on month, but it was a constructive test of portfolio diversification. Large cap U.S. stocks softened, commodity prices reversed, and emerging markets cooled, yet small caps, developed international equities, and core bonds all produced positive returns.
SpaceX IPO Marks a Potential Turning Point for Public Market Supply
SpaceX’s highly anticipated Initial Public Offering (IPO) was not simply another large technology listing. It was a defining moment for public markets and a clear reflection of the enthusiasm that continues to surround AI, space infrastructure, and the broader ecosystem of companies viewed as enabling the next phase of technological growth. The offering raised roughly $75 billion, making it the largest IPO in history, and shares rose nearly 20% on their first day of trading, lifting SpaceX’s market capitalization above $2 trillion. As the closing bell rang on June 30, SpaceX was the sixth largest U.S. company by market value.
The scale of demand was equally notable. Retail investors reportedly submitted orders far greater than any prior IPO, with some estimates suggesting retail demand alone exceeded the size of the offering. While institutional participation remained critical, the breadth of individual investor demand underscored how powerful market narratives can become when a company sits at the intersection of several favored themes.
Beyond the public interest in SpaceX as a company, its IPO was also a major liquidity event for private markets. At an estimated IPO value of roughly $75 billion, the SpaceX IPO generated more exit value than all venture-backed IPOs over the last decade combined. Following several years of subdued exit activity for private investors, it was also a signal that the public market window has reopened for the largest private companies.
The SpaceX IPO is likely the first in a broader wave of large private companies expected to go public over the next year, including OpenAI, Anthropic, Databricks and others. IPOs often arrive when investor enthusiasm is high, but historical returns have been more mixed after the initial excitement fades. In a sampling of the 10 largest U.S. IPOs since 2000, each experienced a drawdown of at least 10% within its first year of trading, with a median maximum drawdown exceeding 50%. While this is a limited sample, it reinforces how even the largest, high-profile public offerings were historically accompanied by significant volatility. That does not mean SpaceX or the next generation of listings will follow the same path, but it does argue for selectivity as the IPO calendar becomes active.
Ultimately, the SpaceX IPO carries significance for a variety of different reasons. It confirmed that investor appetite for transformative technology companies remains extremely strong. It also provided a long-awaited liquidity opportunity for private market investors. It might also mark the beginning of a new phase in which public markets will be asked to absorb a larger amount of equity supply. Ultimately, the IPO pipeline bears watching because it signals a meaningful shift in the balance between equity supply and demand, and a potential change in one of the more durable technical supports for U.S. stocks.
Outlook
As we enter the second half of 2026, investors are presented with an opportune time to rebalance portfolios. The implementation of diversification was abundantly clear during the first six months of the year, but those who were heavily allocated to the narrow themes of AI and technological innovation were not necessarily punished. This leaves a potential opportunity to re-assess portfolio positioning and ensure proper balance in portfolios.
For equity markets, the back half of 2026 will present challenges both new and old, including an increase in net equity supply, uncertainty surrounding monetary policy and continuous geopolitical risks. At the same time, corporate fundamentals remain supportive, and broader market participation could help reduce the dependence on a small group of mega-cap leaders.
Fixed income also continues to offer a more compelling role than it has in much of the past decade, making it easier for investors to justify diversifying beyond equities. Elevated yields provide income, ballast, and a cushion against modest rate volatility, even as the Fed navigates a difficult mix of persistent inflation and uneven growth. In this environment, disciplined rebalancing, broad diversification, and focus on long-term objectives remain our most reliable tools for managing uncertainty.
Disclosures
The information provided is illustrative and for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
The views expressed in this commentary are subject to change based on market and other conditions. This document may contain certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. Certain targets within the presentation are estimates based on certain assumptions and analysis made by the advisor. There is no guarantee that the estimates will be achieved.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All investments include a risk of loss that clients should be prepared to bear. The principal risks of Clarendon Private’s strategies are disclosed in the publicly available Form ADV Part 2A.
Diversification does not ensure a profit or guarantee against loss. Asset Allocation may be used in an effort to manage risk and enhance returns. It does not, however, guarantee a profit or protect against loss. Index returns are unmanaged and do not reflect the deduction of any fees or expenses.
Comparisons to any indices referenced herein are for illustrative purposes only and are not meant to imply that actual returns or volatility will be similar to the indices. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income. You cannot invest directly in an Index.
• S&P 500 is a capitalization-weighted index designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
• Russell 2000 consists of the 2,000 smallest U.S. companies in the Russell 3000 index.
• MSCI EAFE is an equity index which captures large and mid-cap representation across Developed Markets countries around the world, excluding the U.S. and Canada. The index covers approximately 85% of the free float-adjusted market capitalization in each country.
• MSCI Emerging Markets captures large and mid-cap representation across Emerging Markets countries. The index covers approximately 85% of the free-float adjusted market capitalization in each country.
• Bloomberg U.S. Aggregate Index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.
• Bloomberg U.S. Corporate High Yield Index covers the universe of fixed rate, non-investment grade debt. Eurobonds and debt issues from countries designated as emerging markets (sovereign rating of Baa1/BBB+/BBB+ and below using the middle of Moody’s, S&P, and Fitch) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included.
• FTSE NAREIT Equity REITs Index contains all Equity REITs not designed as Timber REITs or Infrastructure REITs.
• Bloomberg Commodity Index is calculated on an excess return basis and reflects commodity futures price movements. The index rebalances annually weighted 2/3 by trading volume and 1/3 by world production and weight-caps are applied at the commodity, sector and group level for diversification.
Clarendon Private, LLC (“Clarendon Private”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Clarendon Private and its representatives are properly licensed or exempt from licensure. For additional information, please visit our website at https://www.clarendonprivate.com or the Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov by searching with Clarendon’s CRD # 316616