While the stock market has moved lower in July, the overall trend for the year has been positive. In this article, we highlight four reasons we remain constructive on the market and think investors will enjoy the second half of 2026.
1. History Suggests There May Be More Room to Run
Multiple historical market studies that triggered in the first half of the year suggest 2026 will produce above-average full-year returns. While history never guarantees future results, the data provides reason for optimism.
The S&P 500 rallied more than 7.50% in April this year which has been a very bullish signal:
At its worst point this year, the S&P 500 had fallen roughly 9% — well within a historically constructive range. When annual drawdowns stay below 15%, the market has finished higher every single time since 1926. Based on that track record, there may still be meaningful upside ahead for the remainder of the year.
2. Corporate America Profits Are Growing
Stocks represent ownership in real businesses, so over the long run their value is driven by the profits those businesses generate. That’s why stocks tend to perform poorly during recessions, when corporate earnings decline. Today, we’re encouraged that earnings growth is running well above average. The AI era appears to be ushering in strong corporate profits, at least initially.
While the Magnificent 7 stocks continue to be the fastest earnings growers, the rest of the market is earning more profits as well. This is not a story about 5-7 companies doing the best: earnings growth is broad and expanding.
3. Market Leadership Is Broadening
One of the healthiest developments we’ve seen this year is that market leadership is beginning to broaden. While the largest U.S. technology companies continue to dominate market headlines, investors are also being rewarded for owning smaller companies and international stocks. That’s exactly how diversified portfolios are designed to work—when more areas of the market participate, returns become less dependent on just a handful of companies.
4. Bonds & Gold Provide Diversification
While stocks have enjoyed another strong year, bonds and gold have taken a different path. Bonds have remained relatively flat as investors weigh inflation concerns and Federal Reserve policy, while gold has given back much of its early-year gains.
That’s not necessarily bad news. We own high-quality bonds and gold because they have historically helped cushion portfolios during periods of stock market weakness. When stocks are performing well, it’s normal for these diversifiers to lag.
Today, many government and corporate bonds offer yields between 4% and 7%, improving the odds of positive long-term returns.
Gold has also proven its value during market stress—for example, from 1999 to 2002, while the S&P 500 fell roughly 35%, gold gained more than 10%.
Every year brings new headlines, new uncertainties, and new reasons to question the market. Yet history consistently rewards investors who remain disciplined, diversified, and focused on the long term—and that’s the approach we’ll continue to take.
Note: Artificial intelligence assisted in the production of certain graphics and visual elements included in this article. All investment ideas, data selection, analysis, writing style, and editorial review are solely those of Blue Haven Capital.
