• Stocks finish mixed – North American equity markets were mixed on Friday, recovering from steeper losses at the open. The TSX posted a modest gain for the day while all three major U.S. averages were modestly lower. Throughout the week, investors digested announcements from Apple and Microsoft regarding price increases on select hardware products amid rising memory costs, fueling concerns that higher prices could dampen consumer demand and weighing on the S&P 500 technology sector, which lost over 5% this week. Outside of technology, market performance was more constructive, with U.S. small- and mid-cap stocks posting modest gains for the week and the TSX finishing roughly flat. In fixed income markets, the 10-year GoC yield was little changed at 3.39%, while U.S. Treasury yields edged lower, with the 10-year yield ending the session near 4.37%. Commodity markets were also softer, as WTI crude oil settled around $69 per barrel.
   
• Taking stock of the recent pullback in tech – While North American equity markets finished near the flatline on Friday, both the S&P 500 and Nasdaq posted weekly declines amid weakness in technology stocks. The TSX fared better, finishing the week roughly flat. This week, Apple announced plans to raise prices on several products, including Macs and iPads, with expectations that iPhone prices could also move higher in the months ahead amid rising memory costs. Microsoft likewise announced price increases for Xbox products, fueling concerns that higher prices could weigh on demand for technology hardware. As companies look to pass along rising input costs to consumers, investors appear to be reassessing the durability of the strong momentum that has propelled technology stocks higher over the past several months.
  
  In our view, maintaining perspective during this pullback is important. Since the end of March, the S&P 500 has gained more than 15%, while the Nasdaq Composite has advanced over 20%. Semiconductor stocks—which have been among the primary beneficiaries of the AI buildout and growing demand for memory and storage—have rallied more than 90% over the same period. Against this backdrop, a period of consolidation appears both reasonable and healthy, in our view.
  
  More importantly, we believe the fundamental backdrop for equities remains supportive in the months ahead. While we would not characterize markets as cheap, it is worth noting that both the Nasdaq Composite and S&P 500 trade at lower forward price-to-earnings multiples today than they did at the start of the year. This highlights that this year's gains have been driven by earnings growth rather than multiple expansion.
  
  On that front, TSX and S&P 500 earnings are on track to grow by more than 20% this year. At the same time, economic activity has shown signs of resilience, supported by improving labour-market conditions and renewed strength in the manufacturing sector. Taken together, we believe the outlook for equities remains constructive. That said, diversification remains critical, in our view. As investors navigate the remainder of the year, we continue to recommend maintaining balance across both growth- and value-oriented investments.
   
• U.S. dollar has rebounded – While still well below its recent January 2025 peak, the ICE U.S. Dollar Index—which measures the value of the U.S. dollar against a basket of developed-market currencies including the Canadian dollar—has climbed to its highest level since May 2025. In our view, resilient U.S. economic data and a hawkish repricing of Federal Reserve rate expectations have supported the move higher. This week, preliminary data from the S&P Global U.S. Manufacturing PMI showed activity expanded at the fastest pace since May 2022, underscoring the U.S. economy's resilience. At the same time, persistently elevated U.S. inflation readings have prompted markets to price in the possibility of Fed rate hikes this year, in contrast to expectations for interest-rate cuts entering the year. Reflecting this shift, yield spreads between U.S. 2-year Treasury securities and comparable government bonds in Canada, Germany and Japan have widened to near year-to-date highs. Higher relative bond yields in the United States can support the U.S. dollar by attracting global capital flows, increasing demand for dollar-denominated assets and, in turn, the currency itself. While currency movements are notoriously difficult to forecast, we believe the U.S. dollar's recent rally could lose momentum in the months ahead. We believe shifting Fed expectations are reflected in current pricing, while improving economic conditions abroad—potentially aided by a lower oil-price environment—could help provide support for overseas currencies relative to the dollar.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.} 

• Markets close mixed as consumer stocks pull back – The TSX finished higher, while U.S. equity markets were down modestly, weighed down by weakness in the consumer discretionary and consumer staples sectors. Bond yields were also mixed, with the 10-year Government of Canada yield rising to 3.39% and the 10-year U.S. Treasury yield declining to 4.39%. In energy markets, WTI oil rose on renewed tensions in the Strait of Hormuz, though prices remain well below their recent peak. If sustained, lower oil prices would likely help ease inflation concerns and support consumer sentiment. However, geopolitical risks remain fluid and could continue to be a source of volatility. Meanwhile, the U.S. dollar weakened against major currencies but has remained broadly rangebound in recent trading.
   
• GDP revision shows stronger-than-expected growth– An updated GDP report showed that the U.S. economy expanded at 2.1% annualized rate in the first quarter, above expectations that the prior 1.6% estimate would remain unchanged. The upward revision was driven primarily by a smaller drag from imports, which are subtracted from GDP. Partially offsetting that improvement, consumer spending was revised lower, pointing to some moderation in household demand and perhaps contributing to today's pullback in consumer stocks. Higher domestic investment provided some additional support, as business spending remains strong. Overall, the report suggests that the economy entered the second quarter with better momentum than previously thought, recovering from the fourth-quarter slowdown that was partly driven by the government shutdown.
   
• Fed's preferred inflation measure remains elevated – Headline U.S. personal consumption expenditures (PCE) price index inflation rose to 4.1% year-over-year in May, matching forecasts. Energy prices were a major contributor, up 24.3% from a year earlier, while goods prices also continued to show pressure. Core PCE inflation, which excludes the more-volatile food and energy categories, ticked up to 3.4%, slightly above estimates pointing to 3.3%. With both headline and core inflation moving further above the Fed's 2% target, we expect policymakers to remain on hold as they have since the start of the year. A resilient labour market and stronger-than-expected GDP growth should give policymakers more room to prioritize inflation risks, in our view. If the recent pullback in energy prices persists, the Fed may be reluctant to respond to what could prove to be a temporary oil-supply shock. However, if higher energy costs feed into broader goods and services inflation — or if long-term inflation expectations move higher — we think policymakers may be more inclined to keep rates higher for longer and possibly consider a hike.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.} 

• Stocks end mixed as tech rotation continues - Following yesterday’s tech-driven decline of more than 1% in major indices, investor sentiment stabilized today, but the weakness in semiconductors persisted. The TSX and S&P 500 finished lower, but the Dow ended higher, supported by lower oil prices and easing bond yields. WTI crude fell more than 4%, trading near $70 per barrel, the lowest level since early March. Progress toward reopening the Strait of Hormuz is helping ease concerns about supply disruptions and is beginning to bring relief at the pump, although the U.S. administration has directed the Department of Justice to review gasoline prices, arguing they have not declined enough. Moderating inflation expectations are also relieving pressure on rates, with the 10-year Government of Canada yield falling to 3.37%. The Nasdaq underperformed as investors await Micron’s earnings after the close, which will refocus attention on AI spending and the elevated expectations surrounding it. In corporate news, Alphabet is set to replace Verizon Communications in the Dow, effective before the market opens on June 29, 2026.
   
• Falling oil prices help provide consumer and central bank relief - Oil prices are extending their decline today, with WTI crude trading near $70 per barrel, the lowest level since the start of the Middle East conflict. Following the signing of the Iran agreement, the Strait of Hormuz is reopening, boosting supply. The EIA reported last night that UAE exports have recovered to nearly 85% of pre-war levels. At current prices, oil has retraced almost all of its March and April gains, offering relief at the pump for consumers ahead of the summer driving season. The Fed’s preferred inflation measure, core personal consumption expenditures (core PCE), is due tomorrow and is expected to edge up to 3.4% from 3.3% in May, marking the highest reading since October 2023 and reinforcing the Fed’s hawkish tilt. However, if oil prices remain contained, May likely marked the peak in headline inflation. This would provide the Fed and BoC with some breathing room to maintain a prolonged pause, in our view.
   
• First-half performance check - With just a handful of trading days left in the quarter and the first half of the year, equities remain on solid footing, with several indices near all-time highs, including the TSX, the Dow and the Russell 2000, a proxy for U.S. small-caps. While geopolitical uncertainty drove a near-correction earlier in the year, recent de-escalation has helped lift sentiment. The TSX and S&P 500 are up about 10%, supported by strong corporate earnings, even as valuations have modestly compressed since the start of the year. In contrast, investment-grade bonds are flat and have underperformed cash, as persistent inflation and uncertainty around central bank policy have pushed yields higher. Despite continued market concentration, diversification has added value so far this year, with emerging markets (+30%), U.S. small-caps (+24%), and mid-caps (+18%) all contributing to portfolio returns. After a strong run in technology, leadership is beginning to broaden and market swings are increasing. In our view, markets are transitioning from narrow to broader leadership, from suppressed to more normalized volatility, and from momentum-driven gains to a more balanced environment. This likely implies some near-term choppiness. However, with the economy remaining resilient and earnings growth still robust, we believe pullbacks should be viewed as corrective rather than trend-ending.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data: Bloomberg.}

• Stocks waver on tech weakness – North American equity markets closed lower Tuesday, with the S&P 500 and Nasdaq falling 1.4% and 2.2%, respectively, as weakness in technology shares weighed on sentiment. The TSX, which has less exposure to tech, held up better, declining by roughly 0.3%. Within the technology sector, semiconductors were the clear laggard, with the S&P 500 semiconductor industry down roughly 6% on the day. Overseas, tech-related weakness was even more pronounced overnight, highlighted by a 10% decline in South Korea’s KOSPI Index, which also has heavy semiconductor exposure. In our view, today’s pullback likely reflects profit-taking following the sharp rally from the March lows, with the S&P 500 up more than 15% and the Nasdaq up more than 20% since March 30. Bond yields were little changed, with the 10-year Government of Canada yield closing around 3.44% and the 10-year Treasury yield at 4.5%. In commodities, oil prices continued to trend lower, with WTI crude closing near $73 per barrel.
   
• Tech pullback sparks volatility – Weakness in technology shares weighed on global markets Tuesday, with equities in Canada and the U.S. closing lower and the tech-heavy Nasdaq underperforming. Overseas technology stocks were also under pressure overnight, with South Korea’s KOSPI Index declining by 10%. With no clear catalyst driving the move lower, we believe today’s pullback likely reflects profit-taking following a strong rally from the March lows. Taking a step back, the Nasdaq had gained 26% from March 30 through yesterday’s close, while the PHLX Semiconductor Index had advanced more than 100% over the same period. Viewed through this lens, a period of consolidation is reasonable, in our view, after such a sharp move higher. Looking ahead, we believe the broader market remains supported by solid fundamentals. The TSX and S&P 500 are on pace to grow earnings by more than 20% this year, while economic activity has remained resilient, particularly in the U.S. We continue to recommend an overweight to equities as part of our opportunistic asset allocation guidance. However, we believe diversification remains key to managing risk, particularly after the strong gains in technology and other growth-oriented segments of the market. To view our full suite of portfolio guidance, check out our Monthly Portfolio Brief.
   
• First half of July has historically been favourable for stock returns – While we ultimately believe fundamentals and economic conditions drive markets — not the calendar — history suggests July has tended to be a favourable month for equities. Since 1980, the S&P 500 has posted an average return of 1.3% in July, compared with an average monthly return of 0.9% over the same period.* What’s more, the first half of July has historically been particularly strong.* Since 1980, the S&P 500 has gained an average of 1% from July 1 through July 15, with returns positive 68% of the time.* By comparison, the second half of the month has delivered an average return of 0.2%, with positive returns 55% of the time.* Of course, there is no guarantee that history will repeat itself this year. Still, when combined with what we view as a solid fundamental backdrop — supported by healthy economic activity and strong earnings growth — we believe the environment for equity markets remains positive.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data not cited: FactSet. 
Source for data cited: *FactSet, Edward Jones.} 

• Equities mixed at the start of the week – Sharp declines in technology stocks helped push the Nasdaq index 1.3% lower over the session and weighed on the S&P 500 index too. This continues the bumpy ride in AI stocks in recent weeks, but performance in other parts of the market was better, hinting at a potential rotation in market leadership, in our view. The Dow Jones Index moved higher to approach record highs, while the small-cap Russell 2000 index broke new ground, hitting a record close after a 0.8% gain today. In single stock news, SpaceX was down more than 10% following news of its plan to issue significant debt to finance AI investment. Otherwise, U.S. government bonds continued to struggle after last week's hawkish Fed meeting, with the 2-year U.S. Treasury note hitting a new 2026 high of 4.23% and longer-dated bonds selling off too. Canadian bonds were also weaker, but the moves in yields were more contained. Finally, higher U.S. interest rates continue to support the U.S. dollar, which is trading at a 2026 high against the Canadian dollar.
   
• Iran peace talks start in earnest – Newswires are reporting "major progress" between the U.S. and Iran as they kick start peace talks to address the issues unresolved in last week's interim two-month agreement. Headlines over the weekend highlighted ongoing tensions in the region, with Iran threatening to walk away from discussions in the face of Isreal's war in Lebanon, while President Trump warned of renewed military action. Hurdles to a durable peace agreement remain, but for the time being we are seeing tanker traffic through the reopened Strait of Hormuz pick up, even if this remains well below pre-war levels. Oil markets are trading lower today, with WTI oil at $75 per barrel, with the drop in crude prices, if sustained, to provide some helpful disinflationary relief for households in coming months, in our view.
   
• A peak in Canadian inflation? In our view, the prospect of lower oil and gas prices should mean that the spike in the Canadian consumer price index (CPI) over May reported this morning might well represent the peak of the 2026 price spike. Headline inflation hit 3.2% year-over-year, a stronger-than-expected reading, according to the Bloomberg consensus. However, this surge largely reflected rising energy and food prices, and excluding these, the core CPI measure is running at a more moderate 1.6%. Consistent with this picture of more moderate underlying inflation trends, the Bank of Canada's median and trimmed mean measures of inflation remain close to 2%. We think these data should help provide reassurance that inflation pressures are contained in the energy sector and encourage the Bank of Canada to leave interest rates on hold at 2% as it looks to cushion the economy in the face of trade policy uncertainty.

James McCann;
Investment Strategy

^{Source for all data: Bloomberg, FactSet}