The S&P 500 surged approximately 14% in the second quarter of 2026, while the Nasdaq posted gains between 20% and 25%. These are the strongest quarterly performances for both indices since the pandemic rebound in 2020.
Artificial intelligence remained the dominant market narrative, driving technology and semiconductor stocks higher. Corporate earnings projections for the S&P 500 indicate 22% to 25% growth for the full year, supported by actual earnings beats from major AI-linked corporations. The easing of geopolitical tensions between Iran and Israel further supported the rally.
The quarter included sharp, episodic selloffs in chip stocks and a rare multi-day losing streak for the S&P 500.
While equities soared, Bitcoin stagnated near $60,000, failing to participate in the broader risk-on trade. The divergence suggests that capital flowing into equities is distinguishing between AI-driven earnings growth and crypto assets, which have not produced a comparable earnings narrative this cycle.
For investors, the structural strength in technology earnings justified elevated valuations, even amid intra-quarter volatility. The digital asset stagnation indicates crypto may not be directly correlated to a potential equity pullback later this year.