June 2026

At BlueStem Wealth Partners it is important to us that you are well informed about how we are managing your portfolio. The written commentary below is for the time period ending May 31st, 2026.

Equities spent the second half of May caught between two powerful forces, and the bulls won. On one side stood a genuine inflation scare, rooted in a Middle East energy shock that pushed oil sharply higher, hardened the Federal Reserve’s resistance to interest rate cuts, and revived talk of potential rate hikes. On the other side, a wave of artificial intelligence enthusiasm and resilient corporate earnings carried equities to fresh record highs. Sentiment improved further late in the stretch, when reports of a preliminary ceasefire between the United States and Iran eased fears around the Strait of Hormuz and sent crude tumbling. The result was a market that repeatedly looked past hot inflation readings and hawkish central bank commentary, with technology-led optimism ultimately overpowering geopolitical risk.

Technology set the tone. Nvidia anchored the period with another blockbuster quarter, reporting record revenue driven by surging data center demand. The company paired the results with an $80 billion buyback authorization, reinforcing confidence that AI infrastructure spending remains on a steep upward path. Even though Nvidia’s own stock slipped after the report, suppliers and peers rallied, underscoring how thoroughly AI capital spending has become the market’s central engine. The momentum helped lift the S&P 500 and Nasdaq to repeated record closes, extended the S&P 500’s weekly winning streak to eight, and broadened beyond megacap technology into health care and smaller companies.

The economic data complicated that optimism. The Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, rose to 3.8% for the 12 months ended April, its hottest reading in nearly three years, while core PCE, which excludes food and energy, climbed to 3.3%¹. The oil spike tied to the Iran conflict added to the pressure, hardening the case for patience at the Fed and reviving concern that rates could move higher if inflation proved more persistent. Consumer confidence weakened as households flagged the rising cost of living, and Treasury yields touched a one-year high before easing back late in the period. Futures markets went further, pricing rising odds of a hike and erasing expectations for any near-term easing².

The bottom line: The path ahead now hinges on whether the ceasefire holds and oil stays contained. With Brent crude still hovering near $100 a barrel and up more than 45% since the conflict began, energy remains the swing factor for both inflation and the Fed’s next move. Any concrete progress toward reopening the Strait of Hormuz would relieve price pressure and could revive hopes of rate cuts, while renewed escalation could have the opposite effect. Investors will watch employment data, incoming inflation figures, and the June Fed meeting closely for signs of how policymakers are balancing sticky inflation against softening confidence. For now, AI momentum has proven powerful enough to carry markets over a wall of worry, but that resilience will be tested if energy costs keep climbing and the path to lower rates stays blocked.

Recent Trade Rationale: If you would like to see a high-level recap of recent changes to the model portfolios, please click on the link to read the June 2026 Trade Rationale. As a reminder, we utilize quantitative techniques to manage the models. Level Elements are designed to manage your model’s equity and fixed income exposure over time. This changes as fundamental, quantitative, and economic data changes. Style Elements are designed to manage what is in those equity and fixed income exposures. 

1. Bureau of Economic Analysis, https://www.bea.gov/news/2026/personal-income-and-outlays-april-2026
2. CME Fed Watch Tool, https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

All opinions expressed in this commentary are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable; however, BlueStem Wealth Partners cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This commentary is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through BlueStem Wealth Partners are only offered where BlueStem Wealth Partners and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place. The material provided is for informational purposes only and is not meant to be a solicitation or recommendation to buy/sell any security. BlueStem Wealth Partners is an investment advisory firm registered with the Securities and Exchange Commission (“SEC”). SEC registration does not imply a certain level of skill and or expertise.