As the mid-year draws near, let's look at where the markets and the economy are right now and where we could be headed as we enter the second half of the year.
Despite concerns about geopolitical conflict, rising oil prices, and stubborn inflation, the US economy has remained surprisingly resilient in 2026. Markets experienced volatility earlier this year, but strong corporate earnings, continued consumer spending, and growing investment in artificial intelligence helped fuel a market rebound and renewed investor confidence. Manufacturing activity has also improved, signaling that many companies still expect healthy demand ahead, all good news for the labor markets and the economy overall.
While the labor market has softened slightly, unemployment remains relatively stable and there are few signs of a major economic slowdown. Businesses continue investing heavily in infrastructure, technology, and AI, which has supported growth across multiple industries. Analysts also point to strong earnings growth among US companies as an important reason markets have remained strong despite ongoing uncertainty.
The biggest risk investors continue to watch is inflation. Elevated energy costs and ongoing global tensions could keep prices higher for longer, potentially leading to continued market volatility and higher interest rates. Despite these inflation concerns, most analysts and major Wall Street firms generally are maintaining a constructive, cautiously positive outlook on the second half of the economy.
While concerns can feel unsettling, short-term volatility does not always mean long-term plans need to change. Here at XML, we work to maintain an investment strategy that aligns with your goals, timeline, and risk tolerance. If you have questions about how the second-half of the year could affect your portfolio, reach out to your XML wealth advisor or contact us here.
To read the full economic and market outlook from our partners at Fidelity, click here. You can also join us for our Mid-Year Market Webinar by clicking here to register.