JEFF'S MARKET UPDATE
3rd Quarter 2026 Market Commentary
KEY POINT: Time to celebrate….with restraint.
With the World Cup in full swing and this week’s July 4th holiday marking America’s 250th anniversary, there’s certainly a lot to celebrate here in the U.S.—especially with markets hovering near all-time highs. As I noted in my first-quarter commentary, several supportive factors have driven markets to these levels, and they don’t appear to be fading anytime soon.
Since bottoming on March 30 during the Iran-related pullback, the stock market has rallied approximately 18% (as of this writing). Much of this rebound has been fueled by continued enthusiasm surrounding artificial intelligence, along with strong corporate earnings. In fact, first-quarter earnings grew by 24%, well above the 14% expectations.
Looking ahead, both earnings strength and the AI theme are likely to remain key market drivers. As capital expenditure continues to shift toward building out AI-related infrastructure, we are beginning to see broader leadership across the market. This serves as a good reminder that the ways to invest in the AI story will continue to evolve over time.
One area that remains less certain is Treasury yields. Since late February, the 10-year Treasury yield rose by roughly 0.7% through mid-May, before easing about 0.2% more recently. Even with that pullback, higher yields translate to increased borrowing costs across the economy. The key question is whether these elevated yields could disrupt the market rally. So far, they haven’t—and in my view, strong earnings and AI-driven momentum have played a major role in offsetting that risk.
As I opened with, there is much to celebrate right now. That said, inflation remains an important factor to keep in mind. I recently came across an article discussing how prices have changed since the U.S. last hosted the World Cup in 1994. The study focused on three distinctly American staples: hamburgers, homes, and automobiles. While prices for these items have risen faster than cumulative CPI inflation of 123% (with home prices alone increasing 213% since 1994), wages have also grown—up 185%—helping consumers keep pace.
Despite these wage gains, many Americans still feel they are falling short of achieving the level of wealth they desire, contributing to weaker consumer sentiment. The article ultimately concluded that restoring access to the American Dream will be key to sustaining prosperity over the next 250 years.
Here’s to a wonderful Fourth of July, and I hope you all enjoy a great summer ahead.
Wells Fargo Advisors did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.
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