US Stock Market Posts Strongest Quarterly Gains Since 2020 Amid Iran Conflict and AI Surge

In Q2 2026 the S&P 500 rose 14.9%, the Nasdaq gained 21.4%, and the Dow climbed about 13%, per Reuters. The Dow closed at a record high for a second day, while the semiconductor-focused SOX index rose 3.9%.

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The rally unfolded as the United States and Iran signed a June 17 memorandum of understanding to end a four-month conflict that had initially spiked oil prices. Although renewed fighting over the weekend tested the pact, investors cited diplomatic “progress” as a stabilizing factor. Simultaneously, demand for AI infrastructure remained “insatiable,” supporting earnings optimism.

Reuters

Key figures: S&P 500 +14.9% (best since 2020), Nasdaq +21.4%, Dow ?+13%; SOX +3.9% on the day and +88% YTD; WTI ?$69.50/barrel; VIX 16.45; estimated Q2 EPS growth +23.1%.

Why the S&P 500 Posted Its Best Quarter in 6 Years Despite the Iran Conflict

Wealthspire Advisors’ Oliver Pursche said the first half “has been great… certainly better than most expected,” highlighting strong earnings despite geopolitical tension. Federal Reserve Bank of Cleveland President Beth Hammack warned that persistent high inflation could force a rate hike while noting the “insatiable” demand for AI infrastructure. Bank of America strategists said cyclical, value-oriented sectors such as energy and financials may outperform technology in the second half.

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Analysts flagged high valuations in heavyweight tech stocks and “massive spending on AI” that has not yet yielded profits. Reuters noted tech weakness weighed on the market in June, and BofA warned of a possible pullback after an unusually strong quarter. Kerux Financial CEO David Laut cautioned that June’s volatility could be “the tip of the iceberg.”

CNN

Reuters cites a 14.9% Q2 gain for the S&P 500; CNN reports a roughly 15% rise since late March and a 9.55% year-to-date increase; EBC repeats the 14.9% quarterly gain but adds a forward P/E near the low-20s, implying limited valuation headroom. None of the sources detail the exact timing of the Dow’s record close or the full-day magnitude of the semiconductor rally.

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• “We've had a great first half of the year, certainly better than most expected,” — Oliver Pursche, Senior Vice President, Wealthspire Advisors

Reuters

• “We believe the market volatility seen so far in June is the tip of the iceberg,” — David Laut, CEO, Kerux Financial

CNN

The upcoming earnings season will test whether AI-driven spending translates into sustainable profit growth. Traders also watch the Federal Reserve for possible rate hikes, as Hammack warned. Analysts remain split on the rally’s durability, with some expecting continued volatility and others viewing the quarter as a turning point for market optimism.

CNN