Weekly Wisdom: Post-War Disinflation and Broadening Markets

Oil Retreats as Middle East Tensions Ease

Following weeks of heightened volatility surrounding the conflict in Iran, energy markets have begun moving in the opposite direction. Oil prices have fallen sharply from their war-driven highs as ceasefire negotiations progress and fears of major supply disruptions continue to fade. WTI crude recently fell below $70 per barrel for the first time since March, while Brent crude dropped below $74.¹ More importantly, shipping activity through the Strait of Hormuz has begun normalizing, with tanker traffic increasing as safety conditions improve and regional exports recover as the UAE has restored exports to approximately 85% of pre-war levels.² With tanker traffic steadily increasing, and oil prices having retracted, national gasoline prices fell 14% since late May, while diesel prices have declined below $5 per gallon for the first time since March.³

Lower energy prices act as a tax cut for consumers and businesses alike. Reduced transportation and fuel costs help ease inflationary pressures throughout the economy while leaving consumers with more discretionary income to spend elsewhere. As we enter the second half of the year, declining energy prices could become an important disinflationary force that supports economic growth while simultaneously reducing pressure on the Federal Reserve. Combined with a healthy labor market and strong consumer spending trends, lower oil prices provide another tailwind for the economy and reinforce the likelihood of a constructive economic backdrop moving forward.

The Consumer Remains Resilient

Despite elevated interest rates and months of geopolitical uncertainty, consumer spending continues to demonstrate remarkable resilience. Recent retail sales data showed growth of almost +1%, increasing for a fourth consecutive month, with 11 of 13 major retail categories posting gains. Motor vehicle sales rose 1.2%, marking their strongest monthly increase in nearly a year,⁴ while online spending advanced for a fifth consecutive month. The breadth of spending gains highlights a consumer that remains engaged despite persistent concerns about inflation and economic growth.

Perhaps most encouraging was the strength in control-group retail sales, which rose 0.7% suggesting consumer activity accelerated during the quarter rather than weakened.⁵ Supporting this trend, spending data from several major financial institutions continues to point toward healthy household demand and stable consumption patterns. Recent GDP growth of near 3% further reinforces the view that consumer spending remains one of the primary engines supporting economic expansion.⁶ The combination of easing energy prices, moderating inflation, and steady employment conditions should continue supporting household balance sheets in the months ahead. While consumers have faced a challenging environment over the last several years, spending trends suggest that demand remains healthy and that the economy continues to benefit from a resilient consumer sector.

Economic Activity Accelerates as AI Expands Beyond Technology

Recent economic data continues to challenge the narrative that growth is slowing. The latest S&P Global flash PMI survey showed private-sector activity accelerating to its fastest pace in five months rising to 52.2 from 51.5 in May, while Manufacturing PMI climbed to 55.7, its highest level since 2022.⁷ Services activity also improved, rising to 51.3 and reaching its highest level since February. Both readings exceeded expectations and point toward continued economic momentum heading into the second half of the year.

What makes this expansion particularly noteworthy is where the growth is occurring. Manufacturing strength is no longer being driven solely by traditional cyclical demand. Instead, a surge in artificial intelligence investment is creating real-world economic activity across multiple industries. Data center construction, electrical grid upgrades, power infrastructure investment, and semiconductor fabrication facilities are generating demand throughout the industrial economy. This development is important because it demonstrates that the benefits of the AI investment cycle are expanding well beyond a handful of technology companies. As AI-related spending flows through the broader economy, it creates opportunities across industrials, utilities, construction, materials, and other sectors. The result is a healthier and more diversified economic expansion that is increasingly supported by both consumer spending and business investment.

Market Leadership Broadens Beyond Technology

While headlines focused on weakness in large technology stocks and semiconductors, market breadth continued to improve significantly. The Equal Weight S&P 500 rose 0.5% during the week, outperforming the traditional capitalization-weighted S&P 500, which declined 1.1%. That 160-basis-point spread represents one of the clearest signs of market broadening seen this year, indicating that gains are increasingly being driven by a larger group of companies rather than a handful of mega-cap technology names. The catalyst came early in the week when semiconductor stocks experienced a sharp selloff following reports that certain AI memory manufacturers may slow expansion plans. Technology was the worst performing sector of the week, falling 4.3%, while the Nasdaq 100 dropped as much as 3.4% intraday during Tuesday’s selloff.⁸ Several major semiconductor companies posted significant declines, pulling the broader technology sector lower. Yet despite the weakness in chips and mega-cap technology, other areas of the market remained remarkably resilient. Healthcare led all sectors with a 2.2% gain, followed by Utilities at 1.2%, Real Estate at 1.0%, Consumer Discretionary at 0.9%, and Financials at 0.2%.⁹ Notably, the Dow Jones Industrial Average remained positive for much of Tuesday’s session even as technology stocks experienced one of their sharpest declines of the year.

We view this development as constructive rather than concerning. Today, investors appear increasingly willing to allocate capital toward sectors that benefit from a strong domestic economy, improving manufacturing activity, resilient consumer spending, and potentially lower interest rates. Financials, industrials, consumer discretionary companies, REITs, healthcare providers, and utilities are all beginning to participate more meaningfully in the market’s advance. Combined with 3% GDP growth, the strongest manufacturing PMI reading in 49 months, improving services activity, and easing inflation pressures from lower oil prices, the current environment increasingly resembles a broadening economic expansion rather than a narrowing technology-driven rally. Historically, bull markets become more durable when leadership expands rather than contracts, and this week’s sector performance suggests that process is already underway.

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[1] Bloomberg, as of June 24, 2026

[2] IEA Report, As of June 22, 2026

[3] Bloomberg, as of March 24, 2026

[4] Bloomberg Intelligence, As of June 17, 2026

[5] Bloomberg Intelligence, As of June 17, 2026

[6] Atlanta Fed GDP Now, as of June 17, 2026

[7] Bloomberg intelligence, as of June 24, 2026

[8] Bloomberg, as of June 24, 2026

[9] Bloomberg, as of June 24, 2026