Asset Management
06/29/2026 Market Strategy
June 29, 2026
Context Matters
US Investors Continue to Diversify Portfolios to Avoid Overconcentration of Risks
Key Takeaways
- US stocks traded mixed last week as investors weighed the risks of overconcentrated positions in momentum stocks in chips and memory segments of tech that have rallied powerfully throughout much of this year.
- Crude oil prices fell nearly 10% last week as some oil tankers and container ships resumed navigating through the Strait of Hormuz.
- Last week’s data on inflation from the PCE deflator showed both headline and core price gauges rising in April as the spike in oil prices is spilling over into generalized inflation due to higher commodity and transportation costs.
- Reports on personal consumption and spending showed resilience. The wide measure of income growth showed consumers bolstered by a range of sources while spending gains were well in excess of inflation in May.
- With S&P 500 Q2 earnings season several weeks away, news flow, economic data, and developments in the Middle East are likely to drive market sentiment in the meantime.
With a four-day week ahead we expect investors to focus on the themes that have moved the market through most of this year. We expect the market to monitor negotiations to end the hostilities in the Middle East as well as the non-farm payrolls report on Thursday.
Our favorite sectors of the S&P 500 remain: information technology, communications services, industrials, financials, and consumer discretionary.
What the Market Is Telling Us
US stocks traded mixed last week with the Dow Jones Industrials Index, the S&P 400 mid-caps, the S&P 600 small-caps and the Russell 2000 small-caps respectively gaining 0.6%, 0.7%, 3.1%, and 1%.
The S&P 500 and the Nasdaq Composite shed 2% and 4.6% respectively as market participants appeared to lighten up on concentrated positions in some of the most popular names in the market that had been driven higher earlier in the rally from the broad market low on March 30 of this year.
Keeping Things in Context
We’ll note that on a year-to-date basis all six indexes show positive results from the start of the year through last Friday with the Dow Jones Industrials, the S&P 500, the Nasdaq Composite, the S&P 400, the S&P 600, and the Russell 2000 respectively higher in the period by 7.9%, 7.4%, 8.8%, 15.5%, 22.5%, and 21.28%. None too shabby in our view in an environment with plenty of the aforementioned challenges.
The year-to-date numbers through last Friday also appear supportive of our view that diversification is a prudent consideration for investors in the face of a powerful bull market driven by economic and corporate fundamentals that are underpinned by potentially transformational innovation.
From the broad market’s low on March 30 the Dow Jones Industrials, the S&P 500, the Nasdaq Composite, the S&P 400, the S&P 600 and the Russell 2000 are respectively higher by 14.7%, 15.9%, 21.7%, 16.2%, 22%, and 24.7% suggesting to us that so long as the resilience in the fundamentals that have carried stocks higher across sectors, market capitalizations, and styles (growth vs. value) this year persist, stocks may indeed have further opportunity for upside.
Evidence of resilience in economic data and positive corporate results this week and in the weeks, months, and quarters ahead will be key in our view to market performance that will be navigating what appears to us to be a transitional period to a new normal in interest rates and sustainable economic growth.
In our view, investors should seek to avoid overconcentration and instead opt for diversification across sectors, market capitalizations, and styles among equities as well as among other asset classes.
We find the adage of “know what you own, why you own it and maintain right sized expectations of how what you own performs in times of transition” useful when investor patience is tried in times that are transitional and even transformational.
Where We Stand
We remain positive on stocks particularly in the US but also from a global perspective as the current conflict in the Middle East moves towards resolution and the economic backdrop shows opportunity to move towards “the next new normal.”
Our favorite sectors of the S&P 500 remain: information technology, communications services, industrials, financials, and consumer discretionary.
We continue to favor GARP (growth at a reasonable price) stocks, and “growthier” value (avoiding value traps) and the weighting of cyclical sectors and stocks over defensives.
We suggest intermediate- to longer-term investors consider the importance of diversification across sectors, market caps, and style (growth vs. value) and avoid overconcentration in positioning portfolios.
Name:
John Stoltzfus
Title:Chief Investment Strategist, Oppenheimer Asset Management Inc.
John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.
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