June 30, 2026 | US Market Briefing: Nasdaq closes Q2 with a massive 21% gain; yet 80% of long positions are underwater.

The Nasdaq closed at 26,213.72 (+1.52%), posting its strongest quarterly performance since 2020—up 21% in Q2 alone. The S&P 500 hit 7499.36 (+0.79%), also marking its best quarter since 2020, while the Dow Jones reached 52,319.20 (+0.26%) for H1’s strongest showing since 2021. The VIX dropped 6.80% to 16.45.

But what really matters isn’t just the index levels—it’s market structure. XLK surged 2.76%, leading the rally as chips and semis jumped across the board, while defensive plays like XLP (-1.54%), XLU (-1.48%), and XLRE (-1.98%) tumbled in unison. The rotation clearly signals a shift back to tech from defensives. Yet here’s the catch: Citigroup strategist David Chew points out that nearly 80% of current long positions are still underwater, meaning most traders aren’t profiting despite the rally.

The market is celebrating its best quarter since 2020, but most holders haven’t made a dime.

On policy front, the U.S. lifted export bans on Anthropic’s advanced AI tools—signaling slight easing in AI trade controls. This boosted sentiment for software firms and parts of the AI ecosystem, with chip stocks reacting positively too.

Geopolitics remain shaky: Iran refused to meet with U.S. envoys, dimming hopes for a Middle East ceasefire. WTI crude fell 1.43% intraday, but rising geopolitical risks still threaten energy prices—if tensions escalate enough to disrupt shipping lanes, inflation expectations could flare up again.

Corporate highlights include Tesla’s Cybercab starting engineering tests in Austin, Texas—marking the first real-world step for Robotaxis beyond concept slides. BridgeBio secured $1 billion in preferred equity financing from Sixth Street and KKR; even amid high rates, this deal signals capital remains flowing into biotech. In China A-shares: Taiji Industrial and Shikong Technology hit limit-ups to new highs, while Puya Semiconductor surged over 10% as the storage chip rally accelerates.

Back to the core question: Q2’s gains look great on paper, but with 80% of longs underwater, entry points were scattered and cost bases uneven—no broad-based profit surge here. July hinges on two things: first, whether big tech earnings season can sustain valuations via strong AI capex guidance; second, if rising expectations from earnings will help lift those submerged positions. If guidance beats estimates and triggers valuation re-ratings, trapped longs could unwind into a positive feedback loop. But miss the mark? That same pent-up need to break even turns into fresh selling pressure.