US Stocks Post Strongest First Half Since 2021 Amid Tech Boom and Geopolitical Easing

U.S. stock markets have concluded the first half of 2026 with their most robust performance since 2021, shaking off geopolitical tensions and economic uncertainties. The Nasdaq Composite has led the charge with a year-to-date increase of 24.8 percent, followed by the S&P 500, which gained 8.7 percent, and the Dow Jones Industrial Average, up 8.6 percent.

Recovery from Early Volatility

The strong midyear performance belies a turbulent first quarter, during which equities experienced significant declines. In March, a military conflict between the United States and Iran caused energy prices to surge and triggered a market retreat, with the S&P 500 briefly dropping more than 7 percent as concerns grew over the Strait of Hormuz shipping lanes. However, a subsequent turnaround, fueled by a boom in artificial intelligence infrastructure and microchip manufacturing, helped markets recover these losses. The easing of hostilities was further cemented when Washington and Tehran reached an agreement to temporarily cease hostilities and reopen the Strait of Hormuz.

AI and Semiconductor Sector Dominance

Artificial intelligence companies and global semiconductor firms have been key drivers of the market rally. The Philadelphia Stock Exchange Semiconductor Index soared 74 percent in the second quarter alone, positioning it for its best quarterly performance on record. The VanEck Semiconductor ETF has surged 75.5 percent in the first six months of the year, its strongest half-year since its inception in May 2000.

Individual chip manufacturers have seen substantial gains. Micron Technology has reported a year-to-date increase of 301 percent, while Intel's share price has risen 257 percent since January. Marvell Technology advanced 227 percent, and British chip designer Arm Holdings gained 214 percent over the same period.

Corporate Earnings and New Listings

Analysts note that the current market valuations, particularly in the tech sector, will face scrutiny during the upcoming second-quarter corporate reporting season. Goldman Sachs predicts that AI data center construction and infrastructure spending will account for roughly half of the S&P 500's earnings growth in 2026. Global tech conglomerates are projected to invest $754 billion in infrastructure and building projects this year, an 83 percent increase from the previous year.

In addition to the ongoing market strength, SpaceX executed its initial public offering, raising $86.2 billion and marking the largest IPO in corporate history. Despite some post-IPO volatility, SpaceX shares have remained above their offering price. The broader group of companies that debuted in 2026 have also generally outperformed, achieving a weighted-average return of approximately 16 percent.