The first half of 2026 was a tale of two quarters for U.S. equity markets, as the S&P 500 experienced a drawdown of ~4.5% in the first quarter, followed by a ~15% rally in the second quarter. As investors look forward to the second half, the artificial intelligence (AI) trade remains top of mind, much as it has over the last three-plus years. With second quarter (Q2) earnings season well underway, attention is laser-focused on capital expenditure (capex) spending signals from the cloud computing “hyperscalers” driving the majority of spend. Here, we take a data-driven approach to help frame the debate on the return on invested

Oil has staged an impressive rebound this month as the conflict between the U.S. and Iran has re-escalated. The memorandum of understanding signed on June 17 created a 60-day window for negotiations, but the diplomatic opening lasted only a few weeks. Both sides subsequently accused the other of violating the peace agreement, and military operations have resumed. The U.S. has now conducted 11 consecutive nights of airstrikes against targets in Iran, while Iranian forces have retaliated across the region. Neither side has provided much clarity on when, or under what conditions, negotiations could restart.

Oil prices have responded

With midterm elections fast approaching, history suggests investors may be better served focusing on market behavior rather than political predictions. As LPL Research highlighted in its Midyear Outlook 2026: Policy, Buildouts, & Bottlenecks, our base case is a split Congress. In that environment, investors should expect fewer large legislative changes and more volatility around key issues like government funding and the debt ceiling. With major bills harder to pass, policy momentum is likely to shift away from Congress and toward the executive branch, where action can be taken through executive orders and regulatory rulemaking.

Private equity buyouts remain a cornerstone of many private market programs. However, today, the investment opportunity finds itself at a noteworthy crossroads. The long-term performance remains attractive, yet faces compression, while near-term liquidity for existing investors remains challenging. As discussed in LPL Research’s Midyear Outlook 2026: Policy, Buildouts, & Bottlenecks, we remain constructive on the industry but believe investors should be more discerning than at any point in the last cycle.

Performance

Historically, buyout funds have provided net internal rates of return (IRRs) in the mid-teens, with