The market environment has shifted meaningfully since our last rebalance. What began as a sharp rebound led primarily by AI-related mega-cap Technology stocks has broadened across styles and market capitalizations. Through August 10, the S&P 500 ETF has gained roughly 14% year-to-date and the Nasdaq 100 ETF more than 17%, but Value and mid-cap stocks have been even stronger: the Russell 1000 Value ETF has advanced nearly 24%, while the Russell Midcap ETF is up more than 18%. The S&P 500 equal-weight ETF has also outpaced its capitalization-weighted counterpart, a notable reversal from the narrow leadership that characterized much of the prior market advance. Strong corporate earnings have helped support that broader participation.
That broader strength does not eliminate the risks we have highlighted; in several respects, they have become more complicated. Inflation remains above the Fed’s target, while renewed pressure from energy prices and geopolitical uncertainty has clouded the policy outlook. Oil has also moved sharply higher amid continued uncertainty surrounding the Strait of Hormuz and the conflict in the Middle East. At the same time, enthusiasm around AI continues to require extraordinary capital investment, leaving questions about which companies will ultimately earn attractive returns on that spending.
L2 Dividend & Income Trade Commentary – August Q3 2026 Rebalance
Table of contents
When
August 20, 2026
Who
Matthew Malgari
Dr. Sanjeev Bhojraj
Nathan Przybylo
ASSET CLASS COMMENTS:
The market environment has shifted meaningfully since our last rebalance. What began as a sharp rebound led primarily by AI-related mega-cap Technology stocks has broadened across styles and market capitalizations. Through August 10, the S&P 500 ETF has gained roughly 14% year-to-date and the Nasdaq 100 ETF more than 17%, but Value and mid-cap stocks have been even stronger: the Russell 1000 Value ETF has advanced nearly 24%, while the Russell Midcap ETF is up more than 18%. The S&P 500 equal-weight ETF has also outpaced its capitalization-weighted counterpart, a notable reversal from the narrow leadership that characterized much of the prior market advance. Strong corporate earnings have helped support that broader participation.
That broader strength does not eliminate the risks we have highlighted; in several respects, they have become more complicated. Inflation remains above the Fed’s target, while renewed pressure from energy prices and geopolitical uncertainty has clouded the policy outlook. Oil has also moved sharply higher amid continued uncertainty surrounding the Strait of Hormuz and the conflict in the Middle East. At the same time, enthusiasm around AI continues to require extraordinary capital investment, leaving questions about which companies will ultimately earn attractive returns on that spending.