Rise Advisors Market Update June 2026
Transcript Below
Hi everybody, this is Zach Harrington from Rise Advisors. And on behalf of all of us at Rise Advisors, I want to thank you all for taking a moment to watch our market update for what is June, 2026. Every time we record these, it feels like I turn around and another month has passed and we need to get back in the studio and do these. And this month's no different. We're sitting here in June of 2026 and what has been a year that flies by. I think part of it is being a parent to a young family. You know, four and a 2-year-old certainly keep you busy, but it has certainly felt like 2026 is flying by and time is just decaying exponentially. Coming out of our last video, going back to May, we spent a lot of time focusing on energy. That was a lot of the conversations we've been having with clients, concerns over gas prices and the consumer and the impact of the Iran conflict.
And as always our message was, be patient, this too shall pass. And that seems to be what's taking place. So I wanted this video to really serve as kind of a mid-year checkup. So we're here in June, we're getting to the heart of the summer, we're getting to the midpoint of the year, closing in on the end of the second quarter. And with that we're going to focus on five kind of key things. We're going to focus on gasoline price trends and follow up from our May conversation. We're going to talk about sector performance, basically all of the sectors within the broad market, talk about sector valuations and provide some historical context around that. And then just have a little discussion around where things go from here. So let's start on the average national gasoline side of things. So we had a conversation during our May market update video where we talked a lot about how the gas price per gallon is incredibly subjective.
And we broke it down a little further focusing on the average price per gallon as a percentage of average hourly wage. And what we noticed is that the data was telling us that the average price as a percentage of wage that we were experiencing throughout this oil shock from the Iran conflict was nowhere near the highs we saw during the Russia, Ukraine invasion in 2022 or the global financial crisis shock that we had in 2008. What we have noticed is that just as we said with this too shall pass, that's what's happened. So right here you're looking at a chart off of the AAA website. And so with that, you're looking at basically the current average, the average yesterday, the average a week ago, the average a month ago and a year ago. I think the year ago is kind of irrelevant, but it gives you kind of some context of where things sat seasonally.
I like to focus on the month ago versus the current average. So a month ago, this is being recorded literally mid-June, a month ago we were sitting in mid-May at $4 and 52 cents a gallon for an average gallon of regular gasoline across the country. Current average as of June 16th is $4 and 6 cents. That's a massive decline. Big part of that is we've had some resolve when it comes to the US Iran conflict, the opening of the Strait of Hormuz and everything taking place when it comes to the oil markets. So that is a good sign that the trend is down when it comes to average gasoline prices, that's going to take some time to work itself out, but that also means that some of the inflation shocks and the worries we had with the May Inflation print should go away.
I want to focus a little bit on sector performance. So a lot of times we get too focused on the broad market and what's taking place from a performance standpoint. We don't really peak under the hood to see what's driving a lot of those returns. So, as we've talked about it at nauseam at this point in 2026, basically the top performing sector is energy. Coming out of energy you have real estate technology materials, industrials. But this chart from a sector performance standpoint not only focuses on what percent of the stocks in the sector are outperforming the S&P 500, but what basically percentage of the stocks are also outperforming of the sector. So how many of these companies are dependent on basically the broad tide raising all ships and how much of the performance is driven by company, by company? So in the energy sector you have 91% of the stocks in the energy sector are outperforming the S&P 500 on a year to date basis. And about 57% of those stocks are outperforming the sector as a whole.
You have some big outliers though where for example, like the utility sector where less than half of them are outperforming the market, about 71% of them are outperforming the sector. So the more are outperforming the sector is more broader participation. The lower that outperform the sector, the more concentrated participation. And so when we look at it right now, you have basically a market where 45% of the companies in the market are outperforming the market. That's kind of average breadth, we're comfortable with that, but some of the sectors that we have an overweight too, like in energy or in industrial names, things like that, you are seeing a broader participation, which is a good sign. I think the other thing is valuation. So when we're looking at performance, performance is one side of the equation, but are these sectors or is the market becoming cheaper or more expensive?
So right now here in mid-June you have an S&P 500 sitting at a little over 20 times forward looking earnings. Pretty average when you compare things to where they've been over the last few years. But one of the things that stands out to me is looking at forward PDE ratios, one of the most undervalued sectors also happens to be the top performing one. That's the energy sector. So yes, energy stocks and energy sector as a whole has come under a little bit of price pressure since the peak of oil prices at the end of April, early May. But keep in mind that these are companies that are highly profitable at $70 or so barrel oil and that's a real sweet spot for the sector. So when you have oil that's too expensive, yes, it's a higher profit margin, but the volume of purchase may not be as high because consumer trends and consumer behavior comes into play. Where at a $70 oil, a lot of these refiners, a lot of these drillers, a lot of these energy companies can produce at really good margins and consumers aren't necessarily scared away. That should be a really good tailwind for the consumer throughout the start of the third quarter and throughout these summer months where a lot of folks are traveling.
Looking at the basically relative valuations I think is also important. So we talked about sector performance, we talked about where basically sector valuations sit relative to the broad market, but let's look at sector by sector and let's compare where they stand not only to where they are today, but a five year average and a 10 year average of price to earnings ratio. Couple things stand out. There are some sectors that are far overvalued compared to at least where they've sat historically. Industrials basically over the five and 10 years are well overvalued today than where they've sat historically. But there's some names that have really benefited from this massive earnings expansion we've seen. So the tech sector for example, is trading at 11% below its five year average P/E ratio and is at par with its 10 year average. The important thing there is that even though you're seeing the NASDAQ, pretty much feels like on a daily basis reach a new all time high, price is far outpacing where the basically earnings are coming in. Earnings have remained really strong. And so although the prices are higher, the valuations have remained really consistent. It's a really good sign. Energy sector is another crazy one. Energy sector is sitting at 31% below its 10 year average when it comes to P/E ratio. So it's almost a third undervalued to where it sits historically.
So for an investor who may be thinking like, is it too late to allocate to energy markets? It could be a really good opportunity, especially as the system kind of normalizes itself. But overall, when you look at things historically, this is a very broad market that looks pretty undervalued, especially how strong the earnings were for the first quarter. So we wanted to touch on where things go from here. And this is a great chart from duality research. And what does it does is it goes back all the way to January of 2025 and it shows you kind of price trend of the S&P 500 and it provides you some valuation bans. At points the market has traded higher when it comes to a valuation standpoint, meaning the price has outpaced earnings growth. But right now we're at a market that is kind of undervalued when you look at where things have traded over the last year and a half or so.
For example, we look at the fall of last year you had a market trading at almost 23 times earnings. Today you have a market trading at 20 times earnings. A lot of that is based on the fact that earnings growth has outpaced price appreciation. And so I look at this chart here and you look at some of these bans where if the earnings basically continue to do as well as they have, the price has to play catch up here to justify the earnings. If we get to just a 21 times multiple, meaning trading at 21 times forward looking earnings, you have a market closing in on 8,000 on the S&P 500. So there's a lot of upside and coming out of this Q1 earning season, now that it's done and we have a really good understanding of how well it went, it's time for a market to kind of play a little bit of a catch up from a valuation standpoint. So we remain really bullish in US equities and the biggest headwind facing the market right now.
By the time this video comes out, we'll have already basically gotten through Kevin Walsh's first Fed open market committee meeting. We're not going to play guessing games of what they are or aren't going to do because this video will come out after and it likely will be foolish, whatever I say. But what is important is that anybody who thinks he's going to go be super hawkish is probably wrong. And anybody who thinks he's going to be super dovish is probably going to be wrong. I think that this is a Fed chairman who's going to try and establish credibility both with bond investors as well as with the White House, and I expect rates to remain neutral for the foreseeable future. So unless he becomes overly hawkish, which seems unlikely in the next coming months to a year or so, I expect this bull market to keep chugging along.
So with that being said, we sit here in mid-year. It's been a great start to the year. It's been a volatile start to the year. We don't see any major changes necessary in client portfolios. I think it's a great time to go enjoy the summer and enjoy these sunny days up here in the Northeast. For those of you who are watching in other parts of the country, we hope you enjoy the summer as well. And as always, if you have any questions, please don't hesitate to reach out to myself or any of us here at Rise Advisors. Thank you so much. Enjoy your summer.
This presentation is for Informational purposes only.
All investment strategies including rebalancing and diversified asset allocation have risk. Past performance of our investment approach, component holdings and methods does not guarantee future results. Advisory services offered through Rise Advisors, LLC ("Rise") Registered Investment Advisor. While all data is believed to be from reliable sources, accuracy and completeness are not guaranteed.