A Sizzling Summer Market: Are Investors Getting Spoiled?

With the stock market setting fresh highs throughout the summer, we haven’t seen a pullback of 5% or greater since March. In fact, we’ve experienced only one 5% dip all year.

Historically, the market experiences an average of three to four separate declines of 5% or more every year. While this kind of pullback “drought” isn’t unprecedented, it is exceptionally rare. It serves as an important reminder: while it may be easy to relax during a prolonged rally, we cannot afford to become complacent.

The primary engine behind this run has been corporate earnings, powered heavily by mega-cap technology and the massive investments in artificial intelligence. Their earnings power has been extraordinary, and investors have grown accustomed to—perhaps even spoiled by—those outsized beats. That concentration has led many to overlook the broader market. Yet under the hood, market participation is widening: when looking outside the dominant “Magnificent Seven,” the remaining 493 companies in the S&P 500 recently registered a remarkable 31% year-over-year earnings growth acceleration. The market’s foundation is broader than headline tech alone.

At the same time, a tug-of-war between stocks and interest rates continues. Higher longer-term yields increase borrowing costs, which can weigh on equity valuations and temper corporate and consumer spending.

Looking ahead, headline volatility is inevitable. Geopolitical friction in the Middle East and critical shipping corridors, shifting monetary policy, and election cycles can quickly sway energy prices and bond yields. Rather than betting on where oil or interest rates will land next month, sound wealth management focuses on what we can control: diversified sector exposure, strong corporate balance sheets, and disciplined rebalancing.

This landscape could make for a very comfortable autumn—just make sure you keep a windbreaker handy.