Market recap: Week ended June 26, 2026

Stock markets moved lower

Markets were mixed on Monday, with weakness in large-cap tech stocks weighing on sentiment. The S&P 500 fell 0.37% and the Nasdaq closed 1.32% lower, with “Magnificent Seven” members Alphabet, Amazon and Microsoft the biggest drags on performance. The Dow, which has less exposure to Mega-Cap tech stocks, edged up 0.29%, supported by gains in health-care and industrials. The TSX also gained, rising 0.4% to halt a streak of three daily declines. Strength in the materials and energy sectors helped lift Canada’s benchmark index.

Selling pressure intensified on Tuesday and the tech stock sell-off expanded to include semiconductor and AI-related names. Sandisk, one of the S&P 500’s top-performing stocks this year, fell 14%. Micron, a key supplier for Nvidia and the only U.S.-based producer of high-bandwidth memory (HBM) chips, dropped 13% ahead of its earnings report later in the week. The Nasdaq fell 2.2%, the S&P 500 declined 1.4% and the Dow slipped 0.1%. The TSX also closed lower, down 0.2% as weakness in materials and resource shares weighed on the index.

Selling pressure picked up on Wednesday, as investors reacted to the Federal Reserve’s (the Fed’s) latest policy decision. While the U.S. central bank held interest rates steady, markets moved lower on expectations that its next move could be a rate hike. Rebounding oil prices also hurt sentiment. The Dow fell 0.98%, snapping a two-day run of record highs. The S&P 500 and Nasdaq declined 1.21% and 1.34%, respectively. Canada’s TSX dropped 0.75%, ending a four-session winning streak.

Markets remained under pressure on Wednesday, as oil prices fell and concerns about tech stock valuations persisted. The S&P 500 and the Nasdaq both declined for a third consecutive session, easing 0.10% and 0.43%, respectively, while the Dow rose 0.35%. The TSX fell 0.55%, as sharp declines in energy and materials stocks offset gains in technology and consumer staples. Oil prices dropped to their lowest level since before the start of the Iran conflict on Wednesday. Gold and copper prices also moved lower, as a stronger U.S. dollar and rising interest-rate expectations weighed on commodities.

On Thursday, weakness in technology stocks continued to weigh on the major U.S. indexes. The S&P 500 slipped 0.01% and the Nasdaq edged 0.47% lower, led downward by declines in Apple, Nvidia, Microsoft and Alphabet. Apple shares fell after the company increased prices on several products to offset rising component costs. The Dow moved higher, gaining 0.17%. In Canada, the TSX rose 0.33%, supported by strength in commodity prices.

The narrative on Wall Street remained unchanged on Friday, with technology and AI-related stocks out of favour. The Dow slipped a modest 0.09% but still posted a small weekly gain. The Nasdaq fell 0.24% and the S&P 500 declined 0.05%, with both indexes ending the week lower.

The TSX rose 0.4% on Friday, as gold prices rebounded about 1%, boosting metal mining shares. The index also posted a 0.35% gain for the week.

Canadian inflation rose to a multi year high

Canada’s inflation rate climbed to 3.2% in May, according to Statistics Canada’s consumer price index (CPI) report released on Monday. That’s up from 2.8% in April, and the highest rate reported since late 2023.

Fuel prices were primarily responsible for the increase, with gasoline costs surging 33.2% year over year, as supply disruptions in the Strait of Hormuz continued to filter through to consumers. Jet fuel was also more expensive, contributing to a 7.4% increase in transportation costs.

Excluding gasoline, inflation edged up to 2.2% last month, supported by higher costs for food, recreation and alcohol. Grocery prices rose 4.3% year over year, led by a sharp 5.3% increase in fresh fruit and 9% jump in fresh vegetables. The price for tomatoes alone soared 45.2% annually in May. The grocery costs reflected a combination of supply constraints, higher transportation costs and challenging growing conditions, according to the CPI report. Measures of core inflation, which exclude food and energy, showed a more modest 2.05% increase.

Statistics Canada also noted rising costs for computer equipment, as tight supply for components such as memory chips pushed prices higher. This mirrors broader global trends, where strong demand for AI infrastructure has contributed to supply imbalances.

The Fed’s preferred inflation gauge ticked higher

The U.S. Commerce Department released its May personal consumption expenditures (PCE) price index data on Thursday, which showed inflation continuing to trend higher. The PCE price index, which is the Fed’s preferred gauge for inflation, rose 4.1% year over year last month, up from 3.8% in April – the first reading above 4% in three years. On a monthly basis, PCE inflation increased 0.4% for a second consecutive month.

Core inflation, which excludes food and energy, rose 3.4% year over year in May, up slightly from 3.3% in April, while monthly core prices increased 0.3%. The relatively contained movement in core inflation suggests that, while headline pressures have increased, underlying price trends remain more stable.

The Fed held interest rates steady at its most recent meeting, but signalled that further tightening remains possible if inflation persists above its 2% target. CPI data (released June 10) showed that headline inflation climbed to 4.2% year over year in May, reaching its highest level in three years.

Financial markets continue to price in the potential for a rate hike as early as this fall, with a growing consensus that borrowing costs could remain elevated for longer than expected.