Summertime Blues?

Scott Poore, AIF^®, AWMA^®, APMA^®

July 02, 2026

Whenever I pen a market blog during the Summer, I'm reminded of a colleague who used to quote George Gershwin about this time in the calendar year, "Summertime, and the livin' is easy." At least, that's what this time of year is supposed to feel like. Lately, however, the markets are jittery over what appear to be contrived issues of worry. This week's musings are inspired by the 1987 movie "Summer School". Here is some trivia about the movie:

This movie was a moderate success at the box office. There is actually no published information about the film's budget, but since there are no special effects, no exotic sets, and no big-budget stars, one can assume the budget was minimal. The total box office was more than $35 million.
Both Mark Harmon and Kirstie Alley had some interesting roles prior to this film, but they were not big stars yet. Harmon had a recurring role on the TV show "St. Elsewhere" and Alley had appeared in several TV shows and had one considerable movie role in "Star Trek II: The Wrath of Khan."
The school (Oceanfront High) used for the primary set was the same school used in "The Karate Kid" (1984) and "A Nightmare on Elm Street 2" (1985) .
In the movie, Harmon's character Mr. Shoop helps one of his students with football. The actor himself was a scholarship quarterback at UCLA in the 1970s.
This movie was the second of two consecutive films directed by Carl Reiner that feature the word "Summer" in the title. The other was "Summer Rental" (1985) starring John Candy.
This movie also features a young Courtney Thorne-Smith. She would get her big break years later on "Melrose Place."

Here's what we've seen so far this week...

Tension Breaker? A key moment in the film "Summer School" comes when the students must pass a basic English competency test or Shoop will be fired. One of the students, "Chainsaw," yells just before the test as a "tension breaker." That's what investors need to do as June wasn't the best month for the market. However, despite the wringing of hands over the U.S.-Iran conflict, a perceived hawkish Fed, and AI-related volatility, the markets finished with a historically strong 2nd quarter. In fact, when the S&P 500 Index is higher by more than 10% for the 2nd quarter, it has been higher in every instance in the 4th quarter and higher in all but one instance in the 3rd quarter, going back to 1950.¹ In other words, if the market performs in-line with history, it could be a strong finish for the markets in 2026.The hand-wringing over the U.S.-Iran conflict and the price of oil seems to have largely dissipated. There is progress being made between the two sides, and as a result, the price of oil has declined 40% since the April 7th peak. However, the average price at the pump has declined about 17% since the mid-May peak.² Gas prices did not spike quite as much as the price of oil, but gas prices have also not declined to their pre-conflict level as oil has nearly done. This leaves room for more discount at the pump moving forward as consumers deal with inflation. Speaking of inflation, the Cleveland Federal Reserve has once again revised their projections of inflation lower. The June release of the Consumer Price Index has been revised slightly lower from -0.02% just a week ago to -0.06%. The July forecast is -0.22%.³ If that holds true, that would bring the year-over-year CPI reading at the end of July to 3.49%, which is right at the historical average. If another negative number were to be released in August, it's possible the current market expectation of a rate hike by the Fed would be off the table. The futures for Fed rates has dropped from an 80% probability of a September rate hike to only a 60% probability.⁴ Our expectation would be for that probability to continue to decline if inflation drops over the next few months.

Students of Markets. Working with a financial professional can help investors that have busy lives maintain investment discipline. However, investors can look at history in order to keep from panicking when markets act a little jittery. The month of July has proved, historically, to be one of the better months of the year for equities. In fact, the last 11 years in a row, July has been positive.⁵ The average return for the month of July over that period is +3.2%. Even during Mid-term election years, like we're in this year, the month of July has proved positive. The economic back-drop supports the possibility that equities could continue performing well through year-end. The U.S. consumer still makes up two-thirds of GDP. If the consumer is spending, companies make money, which ultimately pushes stock prices higher on earnings and and revenue increases. As measured by the Redbook Sales data, consumers are spending at a rate of +10.5% on a year-over-year basis.⁶ That is more than double the historical average of +4.4%. This data comes as consumers have simultaneously been facing higher prices at the gas pump. If the price of gas continues to ease, the consumer could be facing a tailwind of energy costs for the remainder of the year. As we enter 2nd quarter corporate earnings season, the prospect for continued good news on that front remains. According to FactSet, the forward guidance for S&P 500companies looks strong.⁷ More than 55% of S&P 500 companies have provided positive guidance on 2nd quarter earnings. Analysts have increased earnings estimates for the 2nd quarter by more than 2%, which is the highest increase in 5 years.⁸ If inflation abates, consumers continue spending, companies grow earnings, and the Fed holds rates steady, the environment could be ripe for markets to grind higher through year-end.

Click here to see the "tension breaker" scene.....

Have a happy and safe July 4th!

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Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

Past Performance does not guarantee future results.