The S&P 500 just posted its best quarter since 2020. Let that sit for a second.
The index rose 14.9% in Q2, its strongest advance in six years, even as an active conflict in the Middle East threatened oil supply, inflation, and risk appetite. The Nasdaq added 20% over the same stretch. That’s not a quiet quarter. That’s a historic one.
And yet, here’s the uncomfortable part. The S&P 500 gained 9.5% in the first half, but 38% of its members declined. Seventeen of the 20 best-performing stocks in the index came from information technology. So this rally was real, but it wasn’t broadly owned. Most people didn’t get all of it. A lot of people got almost none of it.
What’s sitting on the other side of this record quarter is a macro calendar that is genuinely high-stakes.
The Week That Frames the Next Six Months
We’re in the middle of it right now.
Companies added slightly fewer workers than expected in June, with ADP reporting private sector employment growth of 98,000, down from 122,000 in May and below the consensus forecast for 110,000. That’s today’s number. ADP’s chief economist said the pace of hiring is “telling a story of both supply and demand,” adding that people are taking longer to find work and there are signs of labor supply constraints in certain industries. “For now, the overall effect is a slowdown in job creation.”
The miss was real. Markets shrugged.
Tomorrow is the one that counts. The Bureau of Labor Statistics releases June nonfarm payrolls Thursday at 8:30 a.m. ET, a day early because July 3 is a federal holiday. Economists expect 115,000 new jobs added and an unemployment rate unchanged at 4.3%.
But here’s what makes this particular jobs report different from the six before it.
At the Fed’s June meeting, rates held at 3.50%–3.75% and the updated dot plot moved the median projection toward at least one rate hike before year-end, reversing the earlier expectation of cuts. It was also Kevin Warsh’s first meeting as chair. There is currently a 72% chance of a 25 basis point rate hike in September. That number moves Thursday morning.
Slight tangent, but it matters: the May payrolls report triggered severe market volatility when the actual figure of 172,000 came in against an expectation of just 85,000, directly causing the Nasdaq to fall over 4% and gold to drop more than 3%. So this market has shown it will move fast on a surprise. A holiday-shortened week with thin liquidity makes that dynamic more acute, not less.
The Earnings Season Nobody Has Fully Priced
The jobs report is actually the warm-up act. The main event starts July 14.
The real earnings season begins on July 14, when JPMorgan Chase, Bank of America, Goldman Sachs, and Citigroup report their quarterly results, followed by Morgan Stanley, BNY, and PNC Financial Services the next day.
And the earnings expectations heading in are extraordinary. The estimated earnings growth rate for the S&P 500 for Q2 2026 is 23.1%, above the estimate of 18.8% at the start of the quarter. If 12.3% revenue growth is the actual rate, it will mark the highest revenue growth reported by the index since Q2 2022, and the second consecutive quarter of double-digit revenue growth.
Those are the expectations. That’s the bar. And in a market trading at a forward P/E of roughly 20x, there’s very little room to disappoint on guidance without a real repricing.
The clean confirmation investors need is firm guidance, stable margins, and AI demand converting into revenue rather than only capital-spending promises. A weaker signal, not even a headline EPS miss, would be the more dangerous outcome. Revenue guidance, AI capex returns, wage pressure, and energy-sensitive margins will show whether the 14.9% quarter priced durable earnings or pulled too much optimism forward.
The Risk Nobody Is Discussing Loudly Enough
Here’s what’s worth flagging on the way into July.
U.S. households now hold 25.63% of their net worth in the stock market, a record that tops the Dot-Com Bubble peak and the 1968 high. The share of equities in household wealth has nearly tripled since the 2008 Financial Crisis low of 8.77%. Measured as a share of financial assets, the Q4 2025 reading puts the figure at 47.1%.
That’s not just a portfolio observation. Consumer expenditures account for roughly 69% of U.S. GDP. At that level of stock exposure, any meaningful correction by stocks likely wouldn’t stay in portfolios. It would flow through to consumption. The wealth effect, which has long been a tailwind, could become a transmission risk.
In other words: the higher the market goes, the more dangerous a reversal becomes. That’s not a bearish call. That’s just the math of where we are.
What to Watch Next
FOMC minutes from Warsh’s first meeting publish Wednesday, July 8, with detail behind the dot plot’s shift toward a possible 2026 rate hike. June CPI, the last major inflation read before the July 29 FOMC decision, lands Tuesday, July 14. That’s the same morning the banks report. It’s going to be a loud morning.
The Q2 GDP advance estimate and June PCE both release July 30, the day after the FOMC decision. So within 30 days, the market absorbs NFP, FOMC minutes, CPI, the start of Q2 earnings season, a Fed rate decision, and GDP. There’s no escape hatch in this calendar.
The bull case is straightforward: earnings come in above the already-elevated bar, AI capex starts converting into revenue lines, and Warsh holds in July with a mild tone that takes September off the table. That outcome probably takes this market higher.
The bear case is more subtle. Earnings beat on the headline but guide cautiously. The jobs number tomorrow comes in strong enough to lock in September hike odds. And a market where 47% of household financial assets are in equities starts to feel the weight of a higher-for-longer rate environment for the first time since Q1. That’s not a crash scenario. It’s a slow grind lower that nobody is positioned for because the last three months rewarded buying every dip without exception.
The question going into Q3 isn’t whether this bull market has legs. It does. The question is whether the rally’s next leg gets built on actual earnings delivery or whether the quarter we just printed already borrowed from the future. Thursday gives us the first clue.
For informational purposes only.
