Timestamp: June 22, 2026 | 7:10 PM EST

The Bull Market Is Still Alive. The Fed Just Changed the Rules.

Stocks rallied again last week.

The S&P 500 has now risen in 11 of the last 12 weeks, helped by the ceasefire agreement with Iran and the reopening of the Strait of Hormuz. Lower oil prices and strong economic data have given investors another reason to stay optimistic.

But while the market celebrated, something important changed.

The Federal Reserve just turned more hawkish.

And that may matter more than the ceasefire.

Good News Has Powered Stocks

Investors have had plenty to cheer:

• Retail sales surprised to the upside.

• Employment growth continues to improve.

• Consumer confidence exceeded expectations.

• Earnings estimates for 2026 have risen more than 17% since the start of the year.

That combination has kept the bull market alive despite war, inflation, and higher interest rates.

So far, corporate profits have continued to do the heavy lifting.

The Fed Is Sending a Different Message

For much of the past year, markets focused on when the Fed would cut rates.

That conversation has changed.

The Fed removed its easing bias and offered very little forward guidance. More importantly, Chairman Warsh made it clear that restoring inflation to 2% remains the top priority.

In March, many expected rate cuts.

Today, markets are debating rate hikes.

That's a remarkable shift.

Inflation Isn't Going Away

Headline and core inflation have remained above the Fed's target for five consecutive years. Meanwhile, economic activity has surprised to the upside.

Normally, that's good news.

But strong growth combined with stubborn inflation creates a difficult challenge for policymakers.

The Fed now finds itself trying to slow inflation without slowing the economy too much.

That's never an easy balancing act.

Peace Agreement or Temporary Truce?

Markets clearly welcomed the U.S.-Iran agreement.

Energy prices have fallen and risk appetite has returned.

But there is one problem.

Both sides appear to have very different interpretations of what was actually agreed to, and history suggests lasting peace in the region rarely comes without setbacks.

The market may be pricing in more certainty than the facts currently support.

My Perspective

For most of this year, I've described this as a "high-risk bull market."

Strong earnings and an accommodative Fed helped justify that view.

Now one of those pillars is beginning to shift.

Corporate profits remain strong, but the Fed is becoming less friendly.

That doesn't mean the bull market is over.

It simply means the path higher is becoming more difficult.

Bottom Line

• Earnings remain strong.

• Economic growth remains healthy.

• Lower oil prices are supportive.

But:

• Inflation remains persistent.

• The Fed has turned more hawkish.

• A great deal of good news has already been priced into stocks.

The first half of 2026 rewarded investors handsomely.

The second half may require more selectivity—and a bit more humility.

About Gary Hager

Gary K. Hager, CFP®, CBEC, CTFA is the founder of Integrated Wealth Management. He advises business owners and families on exit planning, estate strategies, asset protection, and long-term wealth structuring.