2H 2026 Market Outlook

Research evidence excerpt

2H 2026 Market Outlook

s

JulyJuly6,6,20262026

Sector Recommendations

Looking out over the 2nd half of 2026, we’ve adjusted our sector recommendations.

Our 3 favorite sectors now include Tech, Industrials, & Health Care.

Most Least

Preferred Preferred

Overweight

AI secular growth/capital spending Tech

Technology Semiconductors Hardware remains intact while IPOs pick-up

Own AI plays; ISM mftg expansion AI Plays, Commercial &

Industrials Aerospace Professional supports industrial economy Svcs

Worst of policy risk behind it,

Health Care MedTech Managed Care valuations look very attractive

Oil prices under pressure post Iran

Exploration &

resolution, but global demand is Energy Production Integrated Oil

insatiable to fill reserves

AI and solid eco growth drive upside Materials Construction Chemicals

for metals and aggregates

Re-accelerating US economy & secular Interactive Telecom Comm. Services

forces drive ad and entertain spend Media Services

Stay long AI thematic, modestly higher Utilities IPPs Regulated

yields to add downward pressure

AMZN/TSLA 58% weight; consumers Consumer Consumer Housing

have burnt through their OBBB Services Related Discretionary

buffers; expect weak housing activity

Higher bond yields cap valuations Real Estate Senior Housing Apartments

Strong capital markets & deregulation

are tailwinds, but flattening yield curve, Financials Capital Markets Insurance

& stablecoin fears drive downside

Too defensive in a positive eco Merchandise

environment; WMT/COST benefit from Staples Retail Food

consumer stimulus

Underweight

Sources: Wolfe Research Portfolio Strategy and Standard & Poor’s.

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