Equities lead asset-class returns

What happened: Equities have been the top-performing asset class in the first half of 2021, with strategic asset-allocation models from a financial institution showing strong returns across Conservative, Growth, and Aggressive portfolios. Notably, U.S. equity holdings have surpassed real estate as a share of net financial wealth for the first time since World War Two, according to Goldman Sachs.

Market impact: This shift has significant implications for consumer spending and household wealth. Companies with substantial equity holdings or those benefiting from increased consumer spending, such as retailers and consumer discretionary stocks, are likely to see positive effects. Conversely, real estate investment trusts (REITs) and real estate-related companies may face headwinds.

What to watch next: Investors should closely monitor the upcoming earnings season, particularly for companies in the consumer discretionary sector, to gauge the impact of equity market performance on corporate earnings. Additionally, the release of Q2 GDP data and the Federal Reserve's monetary policy decisions in July and September will provide insights into the broader economic outlook and potential market trends.