July 13, 2026
The market enters the third quarter with a more supportive fundamental backdrop than geopolitical headlines might suggest.
Inflation appears to be easing from its recent peak, corporate earnings remain strong, and the Federal Reserve may be able to leave interest rates unchanged while it waits for clearer economic data. At the same time, investors should expect periods of volatility as new public offerings, geopolitical uncertainty, and shifting market leadership create temporary pressure.
In Landsberg Bennett Private Wealth Management’s third-quarter market update, Chief Investment Officer Michael Landsberg emphasized that earnings, rather than political headlines or short-term market predictions, remain the foundation of the practice’s outlook.
“At the end of the day, stocks go up because they make money, period,” Landsberg said.
Inflation accelerated earlier in the year as energy prices rose, but Landsberg believes those pressures have started to reverse.
Lower oil and commodity prices can affect the economy in several ways. Consumers may have more room in their budgets, while businesses may face lower expenses for transportation, manufacturing, packaging, and other oil-related inputs.
“Less inflation means your money goes further,” Landsberg explained.
This matters because consumer spending accounts for a large portion of U.S. economic activity. When household purchasing power improves, the effects can extend to retailers, service providers, manufacturers, and other businesses.
Landsberg expects inflation readings to gradually decline as higher figures begin falling out of the year-over-year comparisons. That process could move inflation closer to the Federal Reserve’s target over time, although the path is unlikely to be perfectly smooth.
Easing inflation would also reduce the likelihood of further interest rate increases.
Landsberg does not expect the Federal Reserve to raise or cut rates in the immediate future. Instead, policymakers may enter an extended period of observation while assessing inflation, employment, consumer activity, and the delayed effects of previous policy decisions.
“We don’t think they’re going to do anything with rate policy this year. No raises, probably no cuts either,” he said.
A steady policy environment would remove one source of uncertainty for businesses and investors. It would also allow the economy to respond to existing interest rates without an immediate shift in borrowing conditions.
Although inflation and monetary policy influence market sentiment, Landsberg believes corporate profitability remains the stronger long-term driver.
He expects another quarter of double-digit earnings growth, with profit growth potentially exceeding 20%.
“There’s a lot of noise about the Strait of Hormuz or Fed policy,” he said. “At the end of the day, stocks go up because they make money.”
Strong earnings do not ensure uninterrupted market gains. Prices can move ahead of fundamentals, valuations can become elevated, and temporary selloffs can occur even when businesses remain profitable.
However, companies that continue increasing earnings over several quarters and years generally provide a stronger foundation than investments supported primarily by market excitement.
Earlier stages of the market advance were driven by a relatively narrow group of large companies. Landsberg believes participation has begun to broaden, with smaller companies and previously overlooked sectors contributing more to returns.
A broader market can be healthier because performance does not depend on a small number of companies.
“The problem with having a few horses pull the sled is we’re relying on those horses,” Landsberg explained. “It’s good to see somebody else picking up some of that work.”
This broadening does not mean the former market leaders have become unattractive. In some cases, investors may simply be trimming positions that have grown too large and reallocating capital toward other opportunities.
A healthier market for initial public offerings can signal that investors are willing to commit capital to new businesses. It can also create temporary selling pressure elsewhere.
Investors sometimes fund new purchases by taking profits from companies that have already performed well. That can cause established market leaders to decline even when their underlying business conditions remain unchanged.
Landsberg considers many new offerings speculative because they do not have the same public reporting history as established companies.
A steady flow of new listings may be constructive. However, an environment driven by excessive enthusiasm, limited supply, and fear of missing out would warrant greater caution.
Landsberg cautioned against making portfolio decisions solely in response to political statements, negotiations, or rapidly changing headlines.
“Part of what we do as a practice is we don’t listen to what people say. We look at what happens in the data,” he said.
The Strait of Hormuz provides an example. Announcements about reopening the shipping route may sound positive, but actual shipping activity, tanker availability, energy flows, and oil prices offer stronger evidence of whether conditions are improving.
Even after restrictions ease, restoring normal trade may take time. Tankers that were redirected to other regions cannot immediately return, which means supply disruptions may persist after an agreement is announced.
The practical investment lesson is to distinguish between a political announcement and measurable economic progress.
Lower oil prices can benefit consumers and businesses by reducing fuel, shipping, manufacturing, and material costs.
“A falling oil price is a tax cut for everybody watching this and for every company,” Landsberg said.
The effect can extend well beyond the energy sector. Oil is used in transportation, plastics, chemicals, packaging, and a wide range of industrial processes. When those expenses decline, companies may be able to protect margins or pass some savings to consumers.
However, energy markets remain sensitive to geopolitical developments, and the movement of global oil supplies may take time to normalize.
Artificial intelligence remains a central investment theme, but Landsberg stressed that the opportunity extends across a much wider ecosystem.
Data centers require construction, power, cooling, water, electrical equipment, copper wiring, networking systems, and other infrastructure. Those supporting industries may benefit even before it becomes clear which consumer-facing AI platforms will generate the greatest profits.
“We don’t know who’s going to win the AI race, but I want to supply the arms to the AI race,” Landsberg said.
The current phase still resembles the “picks and shovels” stage of a gold rush. Much of the spending is directed toward building the physical and digital infrastructure required to operate AI systems.
Future opportunities may increasingly involve companies that use AI to improve productivity, lower costs, and create new revenue. For now, elevated capital spending continues supporting the infrastructure side of the theme.
Beyond infrastructure spending, Landsberg believes AI could eventually allow businesses to become more efficient and profitable.
The transition may also displace or relocate some jobs. The impact will not be evenly distributed, and certain industries may face disruption as technology changes existing workflows.
Even so, higher productivity could allow companies to complete more work with the same resources, improve customer service, and develop new products.
The investment challenge is identifying which businesses can convert those capabilities into sustainable earnings rather than merely adopting AI because it is popular.
Strong performance can create a new form of portfolio risk.
A holding that begins as a modest allocation may grow into an outsized portion of a portfolio after a rapid increase. Even when the company remains attractive, the larger position exposes the investor to greater losses if conditions change.
Landsberg Bennett addresses this through regular rebalancing.
“We take stocks that have done the best and trim them back and add to some stuff that’s underperformed,” Landsberg explained.
This does not necessarily mean selling an entire position. It can involve taking partial profits and restoring the holding to its intended allocation.
Rebalancing allows investors to participate in long-term gains while limiting the degree to which a single holding, industry, or theme controls the portfolio’s outcome.
Landsberg described risk as one of the few elements an investment practice can directly control.
“As the market goes higher, risk increases,” he said. “What we have control over as a practice is risk.”
The objective is not to avoid every decline or capture every possible gain. It is to take an appropriate amount of risk based on each client’s goals, timeline, income needs, and capacity to tolerate losses.
This becomes especially important for retirees and other investors who are withdrawing money from their portfolios. A sharp decline during the distribution stage can be more damaging because assets may need to be sold before they have time to recover.
Landsberg compared the process to keeping someone safely on an inner tube behind a moving boat. Reaching the destination means little if the ride becomes so violent that the passenger is thrown off along the way.
The same principle applies to investing. A portfolio strategy only works when the investor can remain committed through periods of uncertainty.
The third-quarter outlook is constructive, but not without risk.
Cooling commodity prices may reduce inflation pressure. A steady Federal Reserve could remove one source of uncertainty. Strong earnings and broader market participation may continue supporting equities.
At the same time, investors should prepare for volatility related to geopolitical events, shifting market leadership, and enthusiasm surrounding new public offerings.
Artificial intelligence remains a powerful structural theme, but the opportunity is wider than a small group of technology companies. Infrastructure, power, cooling, construction, networking, and industrial suppliers may all participate in the continued buildout.
The larger lesson is that favorable markets still require discipline. Strong returns can create concentration, speculative enthusiasm can weaken valuation standards, and headlines can distract investors from earnings and measurable economic data.
Maintaining a balanced portfolio, rebalancing positions, and aligning risk with long-term financial goals may help investors participate in continued growth without depending on a perfectly smooth market.
Landsberg Bennett is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.
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