How did Financial Markets do?
The second quarter of 2026 was decidedly positive for diversified portfolios after more mixed results in the first quarter, as global equities rallied and fixed income delivered positive, income-led returns. U.S. large-cap stocks posted one of their strongest quarters in recent years as resilient earnings, margin strength, and continued investment in artificial intelligence supported investor sentiment. U.S. small-cap stocks also participated meaningfully, benefiting from improved earnings expectations and rotation toward smaller companies that are seen to be beneficiaries of improved productivity due to AI. International equities advanced as technology and financials helped offset weakness in energy, while emerging markets rose driven largely by AI-linked technology strength in Korea and Taiwan. Real estate also contributed positively, with U.S. REITs supported by stronger results from office and health care companies.
Fixed income produced more modest but still positive results. Core bonds benefited from coupon income, though rising rates limited price appreciation. Short-term bonds, TIPS, high yield bonds, international bonds, preferred securities, and bank loans generally posted gains, with credit-sensitive areas supported by stable fundamentals and continued demand for yield.
Figure 1: Market performance (ranked by Q2 2026 total return)
How did Schwab Intelligent Portfolios do?
All Schwab Intelligent Portfolios advanced in the quarter on positive returns from every ETF in the Intelligent Portfolio's investment universe, though very strong global stock market returns gave more equity-heavy portfolios a clear advantage.
Looking ahead
Schwab Intelligent Portfolios is designed to help our clients pursue their objectives over the long term. While the second quarter saw its share of volatility, we know that creating and sticking to a plan, maintaining a diversified approach to investing, and avoiding overreaction to short-term market moves gives investors the best chance of achieving their objectives.
We have several online resources available designed to help you achieve your investment goals and we're always available by phone to answer any questions you may have.
Thank you—we look forward to continuing to serve you in the coming quarters and years ahead.
1This quarterly commentary is designed to provide you with insight into the market environment during the quarter. How your portfolio performed is dependent upon your asset allocation across the risk spectrum from conservative to aggressive, as well as criteria such as when you opened your account, the timing of any deposits/withdrawals, timing of portfolio rebalances, whether you are enrolled in tax-loss harvesting and other criteria.
Please read the Schwab Intelligent Portfolios disclosure brochure at Schwab.com/transparency/advisory for important information, pricing, and disclosures relating to the Schwab Intelligent Portfolios program.
Schwab Intelligent Portfolios is made available through Charles Schwab & Co., Inc. ("Schwab"), a dually registered investment adviser and broker-dealer. Portfolio management services are provided by Charles Schwab Investment Management, Inc. ("CSIM"). Schwab and CSIM are subsidiaries of The Charles Schwab Corporation.
Schwab Intelligent Portfolios is designed to monitor portfolios on a daily basis and will also automatically rebalance as needed to keep the portfolio consistent with the client's selected risk profile. Trading may not take place daily.
Tax‐loss harvesting is available for clients with invested assets of $50,000 or more in their account. Clients must choose to activate this feature.
Diversification, asset allocation, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.
Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly. For more information on indexes please see https://www.schwab.com/indexdefinitions.
Past performance is no guarantee of future results.
Investing involves risk, including loss of principal.