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Market Overview

Global markets experienced a difficult March, driven largely by geopolitical developments in the Middle East. The primary event was the U.S. and Israel’s coordinated strike on Iran and the resulting uncertainty. We will address these developments in greater detail in our upcoming Tally & Perspective, but will offer a brief overview here.

As of this writing, the situation remains fluid. Headlines have driven sharp market reactions, only to be revised or contradicted shortly thereafter. From an investor standpoint, visibility into both near-term developments and longer-term outcomes remains limited.

Energy markets have been particularly sensitive. All else equal, markets would prefer lower oil prices; whether that materializes in the near term remains uncertain. Bringing Iran into compliance will likely require either meaningful concessions or a more forceful escalation. At present, markets appear to be pricing in a higher probability that tensions ease and oil prices stabilize over the coming months, rather than a prolonged energy shock. We view this as a reasonable base case.

Increasing Exposure to AI

It has been more than three years since the launch of ChatGPT, and investment in artificial intelligence continues at a rapid pace. We believe the industry is approaching another important inflection point.

Recent developments—including tools such as OpenClaw, Claude Cowork, and Perplexity Computer—have introduced many users to agentic AI. Unlike traditional chatbots, these systems can execute multi-step tasks autonomously, interacting with software, tools, and other agents to produce meaningful work. As these capabilities expand, they are likely to drive significant productivity gains across industries.As agent performance improves, organizations will increasingly be willing to pay for these services, reinforcing demand for the underlying infrastructure.

AI Demand and Computing Requirements

The shift from traditional large language models to reasoning models—beginning with OpenAI’s o1—has already driven a meaningful increase in computing demand. We believe agentic AI will represent the next major multiplier.

This trend is beginning to show up in the data. Rental prices for Nvidia’s H100 GPUs (released in 2022) have risen approximately 30% year-to-date, suggesting that demand continues to exceed available supply.

Portfolio Positioning: Expressing the AI Thesis

We have taken several steps to increase portfolio exposure to AI, while maintaining diversification and limiting company-specific risk.

Broad Exposure Through ETFs

We initiated a position in BAI (iShares AI Innovation and Tech ETF). The fund holds approximately 20 to 40 global companies with exposure to AI, spanning infrastructure, software, power, and physical AI applications. Given the rapid pace of change in this space, we believe leveraging BlackRock’s research and portfolio construction capabilities is a prudent approach.

Semiconductor Equipment: The Next Bottleneck

We also added positions in Applied Materials, Lam Research, and KLA, which manufacture critical equipment used by leading semiconductor fabrication companies, including Taiwan Semiconductor, Micron, SK Hynix, and Samsung.

While power has been a primary bottleneck in AI infrastructure, we believe semiconductor capacity may soon follow. Evidence of tightening supply is already emerging, including memory constraints, Apple’s difficulty securing advanced node capacity, and discussion of large-scale fabrication facilities such as Elon Musk’s proposed “terafab” in Texas. These trends point toward continued capital investment across the semiconductor ecosystem.

Power Infrastructure: Bloom Energy

Lastly, we initiated a small position in Bloom Energy (BE), a manufacturer of fuel cell systems used for electricity generation. “Behind-the-meter” (BTM) power—where data centers generate electricity onsite—is becoming an increasingly important part of the AI infrastructure landscape. BTM solutions offer faster deployment compared to traditional utility connections and may be more politically acceptable as concerns grow around the impact of data centers on local power grids.

Bloom’s modular “fuel servers” can be installed in weeks and offer several advantages:

• Clean heat output that can be repurposed for cooling
• High efficiency and reduced need for excess capacity
• Compatibility with emerging data center power requirements, including 800V DC systems

The primary limitation remains the need to replace fuel cells approximately every five years. However, continued cost reductions and improvements in durability could expand adoption beyond current use cases.

Final Thoughts

AI remains one of the most powerful and rapidly evolving themes in global markets. While short-term volatility—particularly from geopolitical events—can dominate headlines, we continue to position portfolios to benefit from long-term structural trends.

As always, we will monitor developments closely and adjust positioning as warranted.

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20260401_MSFT

20260401_MDT

20260401_MAA

20260401_MA

20260401_LRCX

20260401_KLAC

20260401_BE

20260401_AMZN

20260401_AMAT

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Market Overview

U.S. equities started the year with modest gains. The S&P 500 rose approximately 1.5% in January. Energy was the standout sector, up more than 14% for the month, while Health Care, Information Technology, and Financials posted declines. In client portfolios, Alphabet and Cencora were notable contributors. Microsoft and Rocket Companies, by contrast, were the main detractors.

Software Under Pressure

Software stocks have come under significant selling pressure since peaking in October. The iShares Expanded Tech Software ETF (IGV), a proxy for the sector, is down 31% from its highs. High-quality names like Intuit, Salesforce, and Workday have each fallen more than 45%, while Microsoft—despite being more diversified—has declined 25%.

The market is grappling with several fundamental questions:

• Customized software through AI: With the rise of AI-assisted software development tools, some envision a future where businesses no longer rely on off-the-shelf enterprise platforms. Instead of paying Salesforce for a CRM system, for example, a company could enter its specific needs, constraints, and desired outcomes into a “vibe coding” tool and receive a fully customized application built on the fly. This raises questions about the long-term viability of traditional software licensing models and the role of mass-market platforms in an increasingly AI-driven world.
• Lower barriers to entry: As engineers become more productive with AI tools, the competitive moat around software development may shrink.
• Shrinking end market: If AI reduces the need for white-collar employees, will the number of software seats sold (often priced per user) decline over time?

These are real concerns, and they’re contributing to the sector’s pullback.

Microsoft’s Crossroads

Microsoft remains a dominant force in enterprise technology, and we believe it is well positioned to lead the next wave of AI-driven productivity. The concept of an AI coworker—one that understands your work, your files, your communication patterns, and your organizational context—is extremely compelling. Microsoft has invested heavily in this vision through its Copilot suite, M365 integration, and custom AI models.

However, competition is rising. Startups like Anthropic (maker of Claude) are pushing hard. Claude Cowork, in particular, has caught investor attention and is currently available on Mac, with plans to expand to Windows.

Source: Anthropic

Microsoft’s management appears focused on the opportunity. In its most recent earnings call, CEO Satya Nadella explained that slower Azure growth was partially due to resources being shifted toward Copilot and R&D. We interpret this as a sign of prioritization, not retreat.

While volatility may persist, we continue to view Microsoft favorably and may add select software positions in the coming months.

Rocket Companies: Volatility vs. Opportunity

Rocket (RKT) remains a volatile holding. In January, its shares declined after mortgage competitor PennyMac (PFSI) posted disappointing earnings. The market seemed to extrapolate PennyMac’s refinancing-related margin issues onto Rocket. We disagree with that assessment.

Rocket’s acquisition of Mr. Cooper was intended to capture refinancing opportunities from a large mortgage servicing portfolio. Rocket recaptures nearly 80% of refinancing activity—a rate four times the industry average. Additionally, when Rocket refinances these loans, its gain-on-sale margin (essentially the margin earned from generating a new loan) is close to 3%, compared to less than 1% at PennyMac. These dynamics suggest refinancing activity is a tailwind, not a headwind, for Rocket.

Shortly after the PFSI earnings release, Rocket CEO Varun Krishna appeared on CNBC and confirmed that Q4 2025 marked the company’s best quarter for volume and margins since the pandemic refinancing boom. We continue to like Rocket for its long-term positioning.

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DTE

CNP

ADSK

DISCLOSURES – This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be dependable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment advice and does not give investment recommendations. Any opinion included in this report constitutes the judgment of Lincoln Capital Corporation as of the date of this report and are subject to change without notice. Additional information, including management fees and expenses, is provided on Lincoln Capital Corporation’s Form ADV Part 2. As with any investment strategy, there is potential for profit as well as the possibility of loss. Lincoln Capital Corporation does not guarantee any minimum level of investment performance or the success of any portfolio or investment strategy. All investments involve risk (the amount of which may vary significantly) and investment recommendations will not always be profitable. The investment return and principal value of an investment will fluctuate so that an investor’s portfolio may be worth more or less than its original cost at any given time. The underlying holdings of any presented portfolio are not federally or FDIC-insured and are not deposits or obligations of, or guaranteed by, any financial institution. Past performance is not a guarantee of future results. Lincoln Capital Corporation prepare presentation, 401.454.3040, www.lincolncapitalcorp.com Copyright © 2026, by Lincoln Capital Corporation.

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Market Overview

The S&P 500 was relatively flat in December, closing the month with a modest gain. However, the full year delivered above-average equity returns. Leading sectors for the month included Financials, Materials, and Industrials, while Utilities, Real Estate, and Consumer Staples underperformed.

Charles Schwab was the top contributor to client portfolios in December, rising 7.7% and capping a strong year with a 36.6% return. Meanwhile, Cencora and Broadcom were the largest detractors for the month—though both stocks also performed well for the full year.

Portfolio Activity: Initiating a Position in Saia, Inc.

This month, we began a new investment in Saia, Inc. (SAIA), a U.S. transportation company specializing in less-than-truckload (LTL) freight. Founded in 1924, Saia operates over 214 terminals across the country with a fleet of approximately 6,600 tractors and 26,200 trailers, and employs more than 15,000 non-union workers.

LTL carriers transport freight shipments that are too large for parcel delivery but do not require a full truckload. Saia focuses on shipments between 100 and 10,000 pounds. In recent years, the company has aggressively expanded its footprint—adding 38 terminals since 2021, including 28 terminals acquired through the bankruptcy of Yellow Corporation, a major LTL carrier that ceased operations in 2023—to improve service density and compete more directly with industry leader Old Dominion Freight Line.

Industry Context: Consolidation and Discipline

The LTL industry is highly consolidated, with the top 25 carriers representing 91% of the market. This stands in contrast to the fragmented truckload (TL) market, where the top 15 carriers account for just 10%. LTL’s capital-intensive and consolidated structure has helped support rational pricing and margin discipline. That said, LTL carriers are not immune to the broader freight cycle. The freight market has been in recession since 2022, and LTL volumes are down approximately 15% to 20%. Saia has felt these pressures as well.

Strategic Investments for Long-Term Advantage

Despite a soft freight environment, Saia has invested nearly $2 billion over the past 11 quarters—about 23% of sales—into expanding its fleet and terminal network. Although these investments weighed on margins in the short term, they position the company for stronger performance as freight volumes recover. Notably, Saia achieved national carrier status in 2024. This milestone enables more efficient routing and linehaul operations, which can improve cost efficiency and margins—even in the absence of a broad market rebound.

Investment Thesis

We view Saia as a high-quality company operating in an attractive industry. Its ongoing expansion and operational upgrades offer long-term upside. We believe the company can perform well even in a low-growth freight environment, while any rebound in demand could accelerate both business fundamentals and share price appreciation.

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* chart finds difference between 11/30 starting date and 12/03 ending date. Due to RKT outperformance, value is negative. In reality – 1% was trimmed.

Market Overview

U.S. equities, as measured by the S&P 500, rose 0.2% in November. While broader market performance was relatively flat, several holdings within our portfolios—such as Rocket Companies (RKT) and Alphabet (GOOG)—delivered strong results. In contrast, Microsoft (MSFT), Amazon (AMZN), and General Electric (GE) experienced modest pullbacks. These dynamics reflect the growing influence of AI developments on sector and stock-level performance.

Portfolio Updates

We made minor adjustments in tax-exempt accounts to realign portfolio tracking error with target thresholds. In taxable accounts, we opted not to make changes, as the potential benefits did not justify realizing additional capital gains taxes.

AI: The Driving Force in Markets

As has been the case all year, artificial intelligence (AI) continued to dominate market dynamics in November.

Google’s Gemini 3 Upsets Expectations
The release of Google’s Gemini 3 model was a major surprise to investors and industry insiders alike. Previously criticized for lagging in AI and search innovation, Google quickly reversed sentiment with a model that earned top marks from experts.

Built on Google’s custom silicon (TPUs) rather than Nvidia GPUs, and available only via Google Cloud, the launch disrupted investor assumptions about AI infrastructure. As a result, Google and its chip partner Broadcom saw share price gains, while companies more tied to OpenAI’s ecosystem—such as Nvidia, Microsoft, Oracle, and Softbank—underperformed.

Investor Anxiety Over a Potential AI Bubble
At the same time, fears of an AI investment bubble began to take hold. Although demand for AI services is growing at a breakneck pace, some investors are questioning whether monetization is keeping up.

To illustrate: ‘Tokens’ represent the building blocks of consumer requests and AI responses. Each one reflects a small piece of text processed when someone uses an AI model like GPT-5 or Gemini 3. Google reported processing 9.7 trillion tokens per month in May 2024. By October 2025, this figure had ballooned to 1,300 trillion. On earnings calls, cloud executives from major firms echoed a common theme: demand is outpacing supply.

“You’re going to see us continue to be very aggressive investing in capacity because we see the demand. As fast as we’re adding capacity right now, we’re monetizing it.”
— Andy Jassy, CEO, Amazon.com, Q3 2025 earnings call

Supply Build-Out: A Massive Undertaking
The infrastructure build to support this demand is staggering. JPMorgan estimates that 122 gigawatts of global data center capacity will be added between 2026 and 2030, double the approximately 60 GW in place today. With construction costs ranging from $40 to $60 billion per gigawatt, the financial investment required is immense.

What Could Derail the AI Investment Trend?

While AI holds transformative potential, its trajectory is not guaranteed. We are monitoring three key factors that could influence whether the current AI wave continues—or falters:

1. Ongoing Model Improvements
   Continued enhancements in AI model performance are crucial. Without meaningful progress, adoption and monetization may slow, undermining investment.

2. Capital Market Support
   The current build-out relies on external financing. If credit markets grow wary, infrastructure investments could slow, impacting key providers like Nvidia, Vertiv, and GE Vernova.

3. CEO Commitment Under Pressure
   Some AI-driven companies (e.g., Meta, Oracle, Google) have significant insider ownership. If share prices drop—like Oracle’s did after its September OpenAI announcement—will CEOs remain committed to aggressive AI spending? Even visionary founders are not immune to market pressure and loss aversion.

Final Thoughts

AI continues to offer exciting potential, but its investment path carries risk. We remain focused on identifying meaningful opportunities while avoiding excessive speculation. As always, we will adjust our strategies as needed and remain committed to disciplined portfolio management.

Tear Sheets

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There were no taxable model portfolio changes during the month.

Market Overview

U.S. equities declined in February, with the S&P 500 posting modest losses for the month. Weakness was concentrated in Information Technology, Communication Services, and Consumer Discretionary stocks. Most of the large technology names—including Nvidia, Amazon, Microsoft, Alphabet, and Meta—fell at least mid-single digits. Within client portfolios, SAIA and General Electric delivered strong performance, while Amazon and Charles Schwab were the primary detractors.

Trucking Industry Stabilization and SAIA

The less-than-truckload (LTL) trucking industry continues to search for the bottom of a downturn that began more than three years ago. Late in 2025, attention began shifting toward the supply side of the truckload market, as new regulations and stricter immigration enforcement were expected to reduce the number of available drivers.

As 2026 has begun, however, signs of improving demand are starting to emerge. The ISM Manufacturing Index posted two consecutive readings above 52—levels not seen since August 2022. For the freight industry, stronger manufacturing activity typically translates into higher shipment volumes, which provides a constructive backdrop for LTL carriers such as SAIA.

General Electric: Continued Fundamental Strength

General Electric continues to perform well despite trading at elevated valuation levels. Operational fundamentals remain strong as the company transitions its installed engine base to the newer LEAP platform, which should allow GE to continue gaining market share in narrow-body aircraft engines.

There may also be an emerging, though less discussed, tailwind tied to artificial intelligence. Companies such as FTAI Aviation have begun converting retired aircraft engines into aeroderivative turbines used for behind-the-meter power generation at data centers. As demand for data center electricity rises, this may accelerate jet engine retirements and create stronger replacement demand.

Schwab and the “AI Disruption” Narrative

Charles Schwab experienced volatility in early February, with the stock declining roughly 9% after a smaller competitor, Altruist, announced an AI-based tax harvesting tool.

In our view, the market reaction appears exaggerated and reflects a broader pattern seen across industries in recent months, where the announcement of AI capabilities by smaller firms creates immediate concerns about disruption to established companies.

We believe Schwab understands the urgency of integrating AI into its platform to enhance the client experience. Given its scale and technology resources, Schwab should be able to incorporate these capabilities efficiently and at a lower cost per client than many smaller competitors.

Portfolio Update: Adding to Wise

During the month, we added to our position in Wise within tax-exempt accounts. The company continues to report strong operational momentum. Cross-border payment volumes grew 26% year-over-year in the most recent quarter (Wise operates on a March fiscal year-end), while underlying income increased 21%.

Following aggressive price reductions last year aimed at expanding market share, profitability metrics are now beginning to move back in line with transaction growth.

Additionally, Wise remains on track to complete a primary U.S. listing during the first half of calendar 2026. We believe this transition could broaden the investor base and potentially result in a valuation that more fully reflects the strength and growth prospects of this high-quality business.

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Market Overview

U.S. equities, as measured by the S&P 500, returned 3.6% in September. Top performing sectors for the month were Information Technology, Communication Services, and Utilities, while Materials, Consumer Staples, and Energy underperformed.

Top contributors to Lincoln Capital client portfolios were Alphabet, Rocket Companies, and General Electric, each gaining more than 9%. Amazon, Charles Schwab, and Mid-America Apartments were the most significant detractors.

Rocket Companies: Well-Positioned for a Rate Shift

Rocket continues to trade in response to mortgage rate movements. While the Federal Funds rate garners most headlines, the 10-year treasury yield is more relevant to mortgage pricing. The 10-year treasury yield fell by 7 basis points in September, according to the U.S. Treasury, and Freddie Mac’s mortgage survey indicates rates have returned to levels not seen since last fall (6.30% as of the last reading). Outside of macroeconomic trends, Rocket also closed on its acquisition of Mr. Cooper, building on its earlier acquisition of Redfin. These acquisitions support Rocket’s strategy of offering a fully integrated homeownership experience, from property search to closing, mortgage origination, and now loan servicing.

Post-Month-End Update: Wise PLC Purchase

Subsequent to month-end, we purchased Wise PLC within tax-exempt accounts and may consider adding it to taxable accounts once we better understand the tax implications. Wise, a company launched in 2011 and went public in 2021, is disrupting the legacy ‘correspondent banking’ system for international (cross-border) payments with a faster, novel, and lower-cost alternative.

Moving funds via the correspondent banking system, powered by SWIFT, can take multiple days and costs over 3%, depending on the sending and receiving bank locations. Wise settles 70% of its transfers within 20 seconds, charging an average fee of just over 0.50%. The company now processes $190 billion per year, nearly triple its volume from four years ago. With 83% of cross border volume still routed through legacy systems (i.e. correspondent banking), the market opportunity is substantial, estimated at $23 trillion for consumer and small business transfers.

Aside from the fundamentals, Wise is preparing to change its primary listing to the United States, either on the NYSE or NASDAQ. As of today, the company is only listed in London (we own the U.S. traded ADR) and the shares average about $10 million in daily trading volume, relatively low for a company with a $14 billion market capitalization. We expect the primary listing switch to be the first step to becoming a U.S. domiciled company. This process should improve liquidity, attract larger institutional investors, and pave the way for future index inclusion.

Tear Sheets

WISE

There were no changes to the portfolios in August following our last update.

Market Overview

U.S. equities, as measured by the S&P 500, returned 2.0% in August. The strongest performing sectors were Materials, Health Care, and Energy, while Utilities, Industrials, and Information Technology lagged.

Despite being a relatively quiet month, two key developments helped shift market sentiment: a notably weak July employment report and remarks from Fed Chair Jerome Powell at the Jackson Hole Symposium. Together, these events boosted expectations of monetary easing, with the market-implied probability of two rate cuts by year-end rising from 40% to approximately 86% over the course of the month (source: CME Fed Watch Tool).

Portfolio Contributors and Detractors

Top contributors to Lincoln Capital client portfolios in August included Rocket Companies and Alphabet. Microsoft and Charles Schwab were modest detractors.

• Rocket Companies benefited from falling interest rates. Given the volume of mortgages originated in recent years at higher rates, we believe Rocket is well positioned to capitalize on a future refinancing wave. Additionally, we view the completed acquisition of Redfin and the pending acquisition of Mr. Cooper as long-term positives.
• Alphabet performed well as investor concerns began to ease. Earlier this year, the stock came under pressure amid fears that generative AI would disrupt its dominant position in search, along with potential consequences from its ongoing antitrust suit. More recently, sentiment has shifted toward the view that Alphabet is likely to maintain a leadership role, even in a search-alternative environment shaped by AI.
• Microsoft and Charles Schwab declined by 4.9% and 1.7%, respectively—moves we view as minor and not reflective of any fundamental change. Schwab remains fundamentally strong, and Microsoft continues to hold a leading position in enterprise AI.

Post-Month-End Development: Alphabet Antitrust Ruling

Shortly after month-end, a judge issued a ruling on remedies related to Alphabet’s monopolistic business practices. Importantly, the decision was broadly viewed as favorable to investors, avoiding harsher outcomes such as banning payments to device manufacturers or forcing the divestiture of Chrome. While Alphabet is expected to appeal, potentially prolonging resolution, the judgment provided a degree of clarity welcomed by the market.

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Summary of Month’s Action

U.S. equities, as measured by the S&P 500 Index, posted a solid gain of 2.2% in July. Leading sectors included Information Technology, Utilities, and Industrials, while Health Care, Consumer Staples, and Materials underperformed.

Key contributors to client portfolios in July were Microsoft, Charles Schwab, and Amazon.com. Detractors included Cencora and Autodesk.

Microsoft: Strong Results Validate Cloud Investment

Microsoft delivered an excellent quarterly report on July 30, pushing shares up 7.3% for the month. Over the past year, investors have closely monitored the aggressive infrastructure spending by cloud providers, raising concerns over whether such outlays would be justified by business demand.

In its fiscal Q4 results, Microsoft eased those fears: Azure and other cloud services posted 39% revenue growth, up from 35% in the prior quarter. This level of acceleration is remarkable for a business nearing $75 billion in size. Microsoft continues to be well-positioned as both a platform for AI-native businesses and a key enabler for companies integrating AI into existing workflows.

Charles Schwab: Cash Sorting Fears Fade

Charles Schwab also performed well following an encouraging update on business trends. After multiple false starts, the so-called “cash sorting” issue that arose during the 2023 banking crisis finally appears to be in the past.

The firm’s use of costly supplemental borrowing has declined 71% since peaking in May 2023, driven by stabilized client cash allocations and growth in new sweep deposits. While Schwab may experience another quarter or two of balance sheet shrinkage, it is nearing a point where it can resume expansion. With current securities yielding ~2%, compared to today’s market rate of ~4%, any new asset purchases should offer meaningful upside.

That said, with shares up 33% year-to-date, valuations are no longer as compelling. As Schwab approaches or exceeds our estimate of fair value, we may consider trimming the position in tax-exempt accounts.

T-Mobile (TMUS): Trimming a Strong Performer

During July, we exited our position in tax-exempt accounts and reduced our overweight position in taxable accounts. T-Mobile has served clients well, delivering a 96% total return since our initial investment in March 2021, compared to 72% for the S&P 500 over the same period.

At the time of purchase, the market was underestimating the value of synergies and free cash flow from the Sprint merger. Since then, free cash flow has grown substantially and so has the company’s valuation. Today, T-Mobile trades at a reasonable premium to AT&T and Verizon, reflecting its superior growth profile.

We continue to hold shares in taxable portfolios given the company’s strong management and high-quality business. However, should more attractive opportunities arise, we may look to T-Mobile as a source of funds.

Tear Sheets

TMUS

There were no changes to the portfolios in June following our last update.

Summary of Month’s Action

U.S. equities posted strong gains in June, with the S&P 500 rising 5.2% for the month. This brings the total return for the second quarter to 10.8%. Top-performing sectors in June were Information Technology, Communication Services, and Energy, while Consumer Staples, Real Estate, and Utilities underperformed.

Resilience in the Face of Geopolitical Risk

The strength of the market in June is particularly notable given the escalation of tensions in the Middle East. In a surprising development, the U.S. launched attacks on Iranian nuclear facilities. Under normal circumstances, such an event might be expected to trigger market volatility or a downturn.

However, Iran—already weakened by last year’s Israeli strikes and lacking support from regional allies—opted for a limited and largely symbolic response. It appears they sought the least disruptive off-ramp possible while preserving some political posture.

Shifting Rate Expectations and the Fed’s Future

Meanwhile, the Trump administration’s tariffs have yet to show up in inflation data. Combined with the decreased likelihood of a spike in crude oil prices due to the Iran situation, markets have begun to price in additional Federal Reserve rate cuts for the remainder of 2025.

Another factor influencing rate expectations is speculation that President Trump may name a successor to Jerome Powell well before his term ends in May 2026. An early announcement of a “shadow chair” could shift sentiment toward looser monetary policy, especially if the appointee openly advocates for lower rates and contrasts with Powell’s current messaging.

These developments—the potential for further rate cuts, contained geopolitical risks, and steady economic and employment data—provided ample reason for the S&P 500 to continue its rebound in June.

Key Contributors and Detractors

The largest contributors to relative performance this month were Microsoft, Rocket Companies, and Amazon. Meanwhile, Mastercard and Mid-America Apartments were the most significant detractors.

Mastercard and the Rise of Stablecoins

Of the names mentioned, Mastercard saw the most noteworthy developments during the month. Stablecoins, which are cryptocurrencies pegged to fiat currencies like the U.S. dollar, gained momentum following the Senate’s passage of the GENIUS bill, which lays the groundwork for a regulatory framework in this space.

Further attention was drawn to the sector after Circle, the issuer of USDC, went public with strong investor enthusiasm. These developments raised concerns that stablecoins could disintermediate traditional payment networks like Mastercard.

Despite these fears, we remain confident in Mastercard’s ability to adapt and thrive in a stablecoin-enabled environment. The company is already taking proactive steps—allowing crypto holders to spend stablecoins at Mastercard merchants, offering settlement options in stablecoins, and supporting cross-border applications.

While areas like remittances and cross border transactions may face disruption, we view retail card payments as more insulated, thanks largely to consumers’ strong preference for rewards programs—a key feature funded by merchants and enabled by card networks.

*All figures sourced from Bloomberg. Please note that due to rounding differences, certain data presented may not sum to 100%.