Equity and balanced accounts under our management outperformed benchmarks for the three months ended June 30, 2026. A robust rebound in the stock market was driven by a ceasefire with Iran, further fueled by unprecedented performance in semiconductor stocks.
Reviewing our best and worst performing equity sectors relative to the S&P 500 benchmark:
- The Industrials sector accounted for the largest relative contribution. Concentrated positions in a construction equipment producer, a premium airline, and a power generation equipment manufacturer drove returns.
- Information Technology underperformed in the quarter. In general, our tech holdings delivered strong absolute gains, however, an underweighting in two CPU-focused semiconductors caused the sector’s relative lag.
Just as seen in both the first and second quarters, the conflict with Iran continues to hold the potential to create dramatic market moves on a daily basis. However, investors appear comfortable that energy flows will eventually be adequate as evidenced by current oil prices trading only about $10 per barrel higher than pre-war levels and $40 per barrel lower than this year’s peak.
Before proceeding to our outlook, it is important to observe the market’s pattern over the last year and a half or so. Twice, exogenous events (tariffs in 2025, Iran in 2026) propelled double-digit declines in equities. However, in both instances, stocks subsequently climbed the proverbial “wall of worry” to deliver new highs. We believe the overarching variable driving this action is corporate profit growth and that this trend should continue over the foreseeable future. The reasoning behind our forecast is found in two of the economy’s components. The Consumer is healthy, enjoying near-full employment across the board and tremendous gains in net worth (wealth effect) at the high end. The next segment, capital spending (Investment), is riding a multi-year cycle driven by AI infrastructure (from chips to bulldozers) expenditures. Although we realize that this goldilocks economic environment will not last forever, we cannot find compelling evidence that it will end soon.
Translating corporate profits to capital markets is a more difficult exercise. After eight years of Jay Powell leading the Federal Reserve, the new Chair, Kevin Warsh, represents a bit of a wild card situation. He initially presented himself as more focused on fighting inflation than his predecessor’s recent patient approach, however, talk has yet to become action. We will also note that despite six changes in Fed Funds rates since October of 2023, the current yield on 10-year Treasuries remains at the same level. In other words, a tweak up in the Fed Funds rate may not significantly change longer-term interest rates.
Another complicating factor is that capital markets never move in straight lines. Despite our confidence in corporate profits’ uptrend, investor concentration at the industry and stock levels feels extreme at times. The best example is the occasionally violent rotation between semiconductor and software stocks. While we remain confident that earnings ultimately drive stock prices, current investor positioning at times creates tremendous volatility.
Our posture has remained largely consistent over the course of this year. We retain overweightings in capital markets-oriented financials and AI infrastructure beneficiaries while remaining underweight defensive stocks such as utilities, traditional telecom, and other defensive sectors.
Best wishes for an enjoyable summer,
Craig B. Steinberg Matt Ward Bob Ruland
Equity and balanced accounts under our management outperformed benchmarks for the three months ended June 30, 2026. A robust rebound in the stock market was driven by a ceasefire with Iran, further fueled by unprecedented performance in semiconductor stocks.
Reviewing our best and worst performing equity sectors relative to the S&P 500 benchmark:
Just as seen in both the first and second quarters, the conflict with Iran continues to hold the potential to create dramatic market moves on a daily basis. However, investors appear comfortable that energy flows will eventually be adequate as evidenced by current oil prices trading only about $10 per barrel higher than pre-war levels and $40 per barrel lower than this year’s peak.
Before proceeding to our outlook, it is important to observe the market’s pattern over the last year and a half or so. Twice, exogenous events (tariffs in 2025, Iran in 2026) propelled double-digit declines in equities. However, in both instances, stocks subsequently climbed the proverbial “wall of worry” to deliver new highs. We believe the overarching variable driving this action is corporate profit growth and that this trend should continue over the foreseeable future. The reasoning behind our forecast is found in two of the economy’s components. The Consumer is healthy, enjoying near-full employment across the board and tremendous gains in net worth (wealth effect) at the high end. The next segment, capital spending (Investment), is riding a multi-year cycle driven by AI infrastructure (from chips to bulldozers) expenditures. Although we realize that this goldilocks economic environment will not last forever, we cannot find compelling evidence that it will end soon.
Translating corporate profits to capital markets is a more difficult exercise. After eight years of Jay Powell leading the Federal Reserve, the new Chair, Kevin Warsh, represents a bit of a wild card situation. He initially presented himself as more focused on fighting inflation than his predecessor’s recent patient approach, however, talk has yet to become action. We will also note that despite six changes in Fed Funds rates since October of 2023, the current yield on 10-year Treasuries remains at the same level. In other words, a tweak up in the Fed Funds rate may not significantly change longer-term interest rates.
Another complicating factor is that capital markets never move in straight lines. Despite our confidence in corporate profits’ uptrend, investor concentration at the industry and stock levels feels extreme at times. The best example is the occasionally violent rotation between semiconductor and software stocks. While we remain confident that earnings ultimately drive stock prices, current investor positioning at times creates tremendous volatility.
Our posture has remained largely consistent over the course of this year. We retain overweightings in capital markets-oriented financials and AI infrastructure beneficiaries while remaining underweight defensive stocks such as utilities, traditional telecom, and other defensive sectors.
Best wishes for an enjoyable summer,
Craig B. Steinberg Matt Ward Bob Ruland
The information in this presentation is for discussion purposes only. The material presented herein is compiled from sources thought to be reliable, including in certain instances, from third party sources, but accuracy and completeness cannot be guaranteed. Any opinions expressed herein reflect the judgment of Atalanta Sosnoff as of the date of this presentation, and are subject to change. This presentation does not take into account the particular investment objectives, restrictions, or financial, legal or tax situation of any specific investor, and is not intended to be, nor should it be construed or used as, investment, tax or legal advice.
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It should not be assumed that any securities or holdings discussed herein were or will prove to be profitable, or that the investment decisions we make in the future will be profitable or will equal the investment performance of the securities shown herein. There is no assurance that any security discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. Holdings and weightings are subject to change at any time at Atalanta’s discretion. Individual portfolios may vary.
Past performance does not guarantee future results. All performance is reported in U.S. dollars. This presentation may not be reproduced in whole or in part and may not be delivered to any person (other than an authorized recipient’s professional advisors under customary undertakings of confidentiality) without the prior written consent of Atalanta Sosnoff.
The S&P 500 Index (“S&P 500”) measures the performance of large capitalization U.S stocks. The S&P 500 is a market-value-weighted index of 500 stocks that are traded on the NYSE, AMEX and NASDAQ. The weightings make each company’s influence on the index’s performance directly proportional to the company’s value. The S&P 500 is one of the most widely used benchmarks of U.S. equity performance. The index does not reflect any initial or on-going expenses, but does reflect reinvestment of dividends and interest.
Index returns do not reflect taxes, sales, charges, expenses or other fees that the SEC requires to be reflected in the Fund’s performance. Indices are unmanaged, hypothetical portfolios of securities that are often used as a benchmark in evaluating the relative performance of a particular investment. An index should only be compared with a mandate that has a similar investment objective. An index is not available for direct investment. Atalanta Sosnoff Capital, LLC (“Atalanta”) is a New York state limited liability company registered with the Securities and Exchange Commissions as an investment advisor. Atalanta is 49% owned, but not controlled by Evercore.