~5 minute read

By Tim Russell (President & Wealth Manager) at Life Financial Group
Originally shared on the Life in the Markets podcast — 7/6/2026

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*Note: you will get the most out of this market update by watching the video above*

2026 Mid-Year Market Review

As we conduct our 2026 mid-year market review, we recognize that the first half of 2026 has been remarkably strong for investors. In fact, many people would gladly accept these returns over an entire year, yet the market delivered them in just six months.

What’s especially remarkable is everything that happened along the way. The United States captured Venezuela’s president, military conflict erupted with Iran, President Trump survived another assassination attempt, and oil prices surged above $100 per barrel for more than a month, with West Texas Intermediate (WTI) briefly reaching $120 per barrel.

Given those headlines, many investors might have expected markets to struggle. Instead, they demonstrated once again that markets often look beyond today’s news and focus on tomorrow’s expectations.

AI and the Labor Market

One of the biggest concerns among workers today is whether artificial intelligence will replace their jobs.

While AI is certainly changing many industries, fears of widespread unemployment appear to be overstated…for now.

Several major technology companies, including Oracle, Meta, Microsoft, Amazon, and Cisco, have announced AI-related layoffs. However, according to Challenger, Gray & Christmas, just over 87,700 jobs were eliminated due to AI during the first half of 2026. Although AI was the single largest cited reason for layoffs, it still represented only a fraction of total job reductions.

Meanwhile, the overall labor market has remained resilient. Most displaced workers have been able to find new employment relatively quickly, and many businesses continue hiring to meet customer demand. As shown in JPMorgan’s Guide to the Markets, nonfarm payroll growth has remained positive over the past several months.

Are the Mega Caps Losing Their Momentum?

For several years, the largest companies in the S&P 500 have been responsible for a significant portion of the index’s returns. We’ve discussed this trend several times on the podcast.

This year, however, that dominance appears to have paused.

The “Magnificent Seven”—Nvidia, Meta, Tesla, Amazon, Alphabet, Microsoft, and Apple—have not continued the extraordinary pace of growth investors became accustomed to over the past three years. While these companies remain important market leaders, their performance has become more balanced relative to the broader market.

Small Caps and Value Stocks Show Signs of Life

One encouraging development during the first half of the year has been the strength of smaller companies and value-oriented investments.

Although leadership has rotated throughout the year, small- and mid-cap stocks have generally delivered healthy returns. This has been particularly beneficial for investors using Biblically Responsible Investing (BRI) portfolios, which often maintain greater exposure to mid- and small-cap companies than traditional market-cap-weighted indexes.

Broader market participation is generally a healthy sign, suggesting that gains are no longer concentrated in just a handful of large companies.

Inflation Remains a Concern

Inflation has proven to be more persistent than many economists expected.

Much of the recent pressure can be attributed to elevated energy prices, particularly oil. If oil prices continue their recent decline, inflation may gradually move toward a more manageable level. However, investors should expect inflation to remain an important economic theme throughout the remainder of the year.

Investor Takeaways from the First Half of 2026

The first six months of 2026 reinforce several timeless investing principles.

Maintain a long-term perspective. Markets will experience periods of volatility, but attempting to time those movements has historically proven to be a losing strategy for most investors.
If you have a major spending goal approaching, such as purchasing a home, paying college tuition, or making another large planned expense. This may be a good opportunity to discuss with your advisor whether it’s appropriate to move those funds out of the market and into safer investments.
Focus more on your personal financial situation than on media headlines. Build a healthy budget, continue saving consistently, and avoid letting sensational news shape your outlook. While the media often highlights the loudest voices and worst stories, there is still much to be thankful for.
Don’t allow election season to dictate your investment decisions. Every election cycle brings predictions of market catastrophe, yet history has consistently shown that disciplined, long-term investing outperforms emotional reactions to political news.
If you’re still in the workforce, embrace AI as a tool rather than fear it. Employees who continually develop new skills and create greater value for their organizations are often the best positioned for long-term success.
If you’re retired, consider investing in the next generation. Share your knowledge, experience, and wisdom with younger family members, coworkers, or your church community. Your greatest legacy may not be financial, it may be the wisdom you leave behind.

Verse of the Week

Matthew 22:39 — “Love your neighbor as yourself.”

Stay Connected

Have questions or topics you’d like us to cover in a future episode? Email us at contact@thelifegroup.org with “Life in the Markets” in the subject line.

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Disclaimer: The topics discussed here are for informational purposes only and do not constitute specific investment advice. Investing involves risks, including potential loss of principal. Past performance does not guarantee future results. Securities and advisory services offered through Geneos Wealth Management, member FINRA/SIPC.