The stock market closed out its strongest first half in five years on June 30, with the Dow Jones Industrial Average gaining 8.9%, the S&P 500 climbing 9.6%, and the Nasdaq advancing more than 12%. The Dow’s first-half performance marks its best showing since 2021, when it jumped 12.7%, according to CNBC reporting on the final day of the first half.
The second quarter delivered exceptional results across all three major indexes. The S&P 500 surged 14.9% in Q2, the Nasdaq climbed 21.4%, and the Dow gained 12.9%, with the S&P and Nasdaq posting their strongest quarterly gains since the second quarter of 2020, according to CNBC. The Nasdaq’s quarterly advance also marked its best quarter since June 2020, when it gained 30.63%.
Semiconductor and chip stocks powered much of the rally, driven by surging demand for artificial intelligence infrastructure. The VanEck Semiconductor ETF (SMH) climbed more than 3% on the final day of the first half, putting its year-to-date gain at 82%. Shares of Nvidia gained 2.6%, while Advanced Micro Devices added 7.7% and Intel advanced 6% on the last trading day of June, according to CNBC’s reporting.
The first half began with volatility as the major averages hit all-time highs despite wild swings in energy prices tied to the Iran conflict and uncertainty around the sustainability of AI spending. However, fears around the AI trade eased as the quarter progressed and the Middle East conflict appeared to near resolution. “For me the lesson of the first half of 2026 is that earnings matter more than just about anything, except for maybe interest rates,” said Tim Holland, chief investment officer at Orion, according to CNBC.
Small-cap stocks also benefited from the broadening market rally. The Russell 2000 Index gained almost 22% for its best first half since 1991, according to CNBC. Semiconductor and semiconductor-equipment companies accounted for 16 of the Russell 2000’s 50 best-performing stocks this year, with companies like Aehr Test Systems, Ichor Holdings, and MaxLinear rallying more than 400%.
The stock market’s performance in 2026 contrasts with the broader economic backdrop of geopolitical uncertainty and elevated interest rates. Despite these headwinds, strong corporate earnings and the AI investment boom sustained investor optimism. Looking ahead, analysts expect the market’s momentum to continue, with investors potentially broadening their focus beyond mega-cap technology stocks into cheaper areas of the market if geopolitical tensions remain stable.
Sources
- CNBC — First-half stock market performance figures, Dow/S&P 500/Nasdaq gains, Q2 quarterly gains, semiconductor stock performance, and commentary from Tim Holland at Orion
- Barchart.com — Confirmation of best first-half performance in five years and individual index gains
- Yahoo Finance — Dow Jones first-half performance data and comparison to 2021
