2026 Mid-Year Market Outlook

Earnings, Elections & Expectations

Friday, July 24, 2026

Riverfront Capital Strategies is pleased to present our 2026 Midyear Market Outlook: Earnings, Elections and Expectations. This semiannual update provides a comprehensive review of the current economic and market environment, along with the potential implications for investors and their portfolios.

In our 2026 annual outlook, The Policy Engine, we emphasized the growing influence of public policy on the capital markets. The economic and market disruptions surrounding the conflict with Iran offered yet another reminder that geopolitical decisions, government policy, and global uncertainty must remain top of mind for investors.

So, where do we go from here?

We expect policy to remain front and center throughout the second half of the year. Attention will increasingly turn toward the U.S. midterm elections, the balance of power in Congress, and the leadership of Kevin Warsh as the new chair of the Federal Reserve. His ability to influence fellow policymakers, along with the direction of fiscal and monetary policy, could play an important role in shaping market conditions through year-end.

At the same time, we have not lost sight of artificial intelligence, corporate investment, and earnings growth. In fact, continued strength in corporate earnings is a primary reason we have raised our expectations for 2026 stock market returns. While elevated enthusiasm surrounding AI and increasing market concentration warrant caution, the strength of the earnings environment provides greater conviction in our outlook.

Internationally, our view is more measured. European economies have once again struggled to keep pace, while emerging markets are likely to remain uneven. We continue to favor U.S. equities, although the performance gap between the United States and international markets may be less pronounced than it has been in recent years.

The central question for investors is not simply what may happen next, but how portfolios should be positioned to take advantage of opportunities while managing uncertainty. We remain constructive on equities for the second half of the year, but investors should remember that midterm election years have historically produced periods of increased volatility.

For that reason, we believe bonds should continue to serve as an important stabilizing allocation. Current market conditions may also support selective exposure to alternative investments. Above all, maintaining a well-balanced and diversified portfolio is especially important during periods when policy decisions can cause markets to change direction quickly.

These are only a few of the themes explored in our 2026 Midyear Market Outlook: Earnings, Elections, Expectations. We invite you to review the full report and encourage you to reach out with any questions or topics you would like to discuss.

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Jim Pannell | Managing Principal