Rising Markets: Review of a Record Half-Year and Caution

What a day on Wall Street yesterday! A fantastic rally, soaring indices, and I received a lot of messages from students happy with their results. On my end, a short 20-minute session was enough to make my month. It's a sign of a dynamic market, but also, as this first half of 2026 comes to a close, it's time to take stock. Because while the euphoria is here, we must remain cautious and remember the lessons of history. We'll look at that together.

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An Euphoric Day for a Record Half-Year

Yesterday, the US market really reacted. We saw a big general rise, a bit linear, but very clear. The Dow Jones, for example, broke through 52,000 points and, importantly, closed above it. That makes all the difference. When an index crosses a threshold but closes well below it, it doesn't really have much value. Here, it's a strong signal.

The Nasdaq soared by almost 2%, and the S&P 500 gained over 1%. We saw heavyweights like Alphabet (which joined the Dow Jones yesterday) gain almost 5%, and Tesla soar by 8.5%. It was one of those days where you feel carried by the current.

This day marks the end of a record first half, despite quite a few storms like the tensions in the Strait of Hormuz. The S&P 500 has gained nearly 8% since January, largely thanks to artificial intelligence. It's in this context that fund managers do what is called "portfolio window dressing." Basically, they sell some stocks to take profits and buy new gems for the next half-year. This can create some odd movements and volatility.

Key Issues to Watch

For the coming days, three things in particular will set the pace for the markets:

1. End-of-half-year review: As I was saying, this is when managers adjust their positions, which can lead to volatility in certain stocks.
2. The Fed's speech: We're waiting to see what Kevin Warsh will say. The Fed seems to want to raise rates, which not everyone is happy about and could create tensions, especially in real estate.
3. The US jobs report: This is the big event on Thursday. This monthly figure can be explosive, one way or the other, depending on its impact on inflation.

The VIX is Down: A Suspicious Calm?

The VIX, for those who don't know, is nicknamed the "fear index." It measures, in a way, the price of insurance on the markets. The higher it is, the riskier things are perceived to be. Yesterday, the VIX fell to 17.65, a drop of more than 4%. In short, calm has returned.

However, in my view, it's a calm that's almost too good to be true. With the jobs report coming on Thursday and a shorter trading week (Wall Street is closed on Friday), the situation can change very quickly. Is yesterday's rebound a true bottom or just a trap before another drop? That is the question.

The Lesson from History: From RCA to Alcatel

History repeats itself, and it's our best compass. In the 1920s, the great revolution was the radio, and one company embodied that future: RCA. It was the Nvidia of its time. Everyone was scrambling for its shares; people went into debt to buy them. Then the crash of 1929 came, and the stock collapsed by 98%.

I myself lived through the dot-com bubble of 2000. I remember Alcatel, the European tech flagship. The stock was at 100 euros, and analysts predicted it would hit 300. Three months later, after the bubble burst, the stock was worth less than 2 euros. We used to joke that you couldn't even buy a Big Mac with it.

This "irrational exuberance," as Alan Greenspan called it, is exhilarating, but it should urge us to be extremely cautious. Even the best stories can have bad endings.

My Quick Analysis of the Indices

• Dow Jones: Very positive as long as it stays above 52,000 points. It even seems a bit less risky than the Nasdaq right now.
• Nasdaq: It bounced back well and broke a downward trendline. This is a strong recovery signal.
• S&P 500: It's rising, but more cautiously. It still needs to break through a resistance zone to be truly reassuring.
• CAC 40 and DAX: Meh. Not much to say, there's no drive. A bit like Madame Bovary's husband.
• Bitcoin, Gold, and Oil: Contrary to what some say, not everything is going down. Global indices are rising! It's mainly commodities and Bitcoin that are struggling at the moment.

Conclusion

We're ending this half-year on a very positive note, with markets showing defiant health. It's great, and we should enjoy it. But this euphoria shouldn't blind us. Between the Fed's decisions, the employment figures, and the lessons of the past, there are plenty of reasons to be cautious. Let's keep a cool head, enjoy these moments, but never forget that trees don't grow to the sky.

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