QQQ outperformed the S&P 500 for the fourth consecutive month in June despite a negative headline return, losing 0.14% on an NAV total return basis versus the S&P 500’s 0.95% loss. The month was characterized by tumultuous developments in the US-Iran conflict, the first press conference of a new Federal Reserve Chair, and early-month volatility in artificial intelligence (AI)-related stocks, before strong earnings reports reinvigorated investor interest, at least in the memory segment. The S&P 500 snapped its nine-week win streak in the first week of June, falling 2.5% from the end of May through the first Friday in the month.
Investors mainly favored value over growth and smaller capitalization securities over larger capitalization securities in June. Small cap, represented by the Russell 2000 Index,3 saw strong returns, rising 3.74% in the month, slightly outpacing the 3.59% return posted by the S&P MidCap 400 Index.4 Mega-cap growth, represented by the Nasdaq-100 Index, was roughly flat, with a -0.12% return, while the Russell 1000 Growth Index fell 2.68% in the month. The Russell 1000 Value Index rose 2.27%, indicating investor preference for value over growth in the month.
Volatility was elevated in June compared to May, with the VIX Index,5 a measure of equity market volatility, reaching an intramonth high of 22.22 on June 10th, up from its May closing level of 15.74. Although the VIX ended June at 16.45, it saw two other spikes in the month, although none as extreme. An early-month selloff in artificial intelligence-related stocks – particularly hyperscalers such as Amazon.com Inc and Microsoft as well as some semiconductor and memory-related companies such as NVIDIA and Micron Technology – coincided with escalation in the US-Iran conflict. The combination of souring investor sentiment on the first-order beneficiaries of the AI trade, as well as renewed geopolitical uncertainty, contributed to the month’s volatility.
On June 9th and 11th, US forces launched strikes against Iran after President Trump announced that Iranian forces had shot down a US military helicopter. However, on June 12th, Trump announced that the negotiations had made progress and further strikes were canceled. Although an interim peace deal was signed late on June 17th, Iran announced on June 20th that Israel had violated the terms of the ceasefire and the Strait of Hormuz, a critical global oil shipping lane, would once again be closed. Nonetheless, additional talks between the US and Iran began in Switzerland on June 21st, with both parties apparently making progress towards resolution.
However, there was additional fire exchanged before month-end, with Iran attacking commercial vessels in the Strait and the US responding with strikes on Iranian missile, drone, and radar sites. Despite these developments, Brent crude6 fell from approximately $90 per barrel at the beginning of the month to about $73 at the end of June. US Energy Secretary Chris Wright announced that oil shipping volumes through the Strait had recovered meaningfully, helping to reduce concerns about pressure on global oil supply.
The new Federal Reserve Chair, Kevin Warsh, held his first press conference on June 17th, following the Federal Reserve’s June 16-17 policy meeting. While the Federal Open Market Committee (FOMC)7 voted unanimously to hold rates steady at 3.50% – 3.75%, investors appeared focused on Warsh’s slightly hawkish messaging, which emphasized maintaining price stability and implied possible further rate hikes. 9 of 18 FOMC officials projected at least one rate hike by the end of 2026. 2-Year US Treasury yields rose 13 basis points8 on the day, and Fed Funds futures9 priced in an additional rate hike by year-end. Warsh also emphasized the intentional absence of forward guidance and gave a relatively brief statement compared to those issued by his predecessor, indicating a new philosophy for the Federal Reserve’s communications with market participants.
Macroeconomic data in June showed strength in the labor market and persistent inflationary pressures. In both the June 2nd and June 30th Job Openings and Labor Turnover Survey (JOLTS)10 releases, layoffs were shown to be falling and job openings to be higher than expected, indicating a hotter-than-expected labor market and contributing to investor assessments that the Fed could hike rates sooner than previously expected. The headline Consumer Price Index (CPI)11 rose 0.5% month-over-month (4.2% year-over-year), above investor expectations, but more than half of the gain was driven by energy costs, which have been elevated mainly due to the US-Iran conflict. Core CPI, which excludes food and energy, came in below expectations at +0.2% month-over-month. Personal Consumption Expenditures (PCE), the Fed’s preferred measure of inflation, saw a similar pattern, with headline PCE at +4.1% year-over-year, exceeding investor expectations, and core PCE at +3.4% year-over-year, in line with expectations.
Four of the nine sectors represented in QQQ finished June in positive territory. Basic Materials was the best performing sector, returning 5.47%, followed by Utilities and Health Care, which returned 2.34% and 2.31%, respectively. Energy was the worst performing sector, returning -11.78%, followed by Telecommunications and Consumer Discretionary, which returned -5.13% and -3.54%, respectively.
QQQ’s relative outperformance versus the S&P 500 was primarily driven by its differentiated holdings in and average overweight to the Technology sector. QQQ’s Technology holdings average weight was 67.29% and returned -0.01% in June, while the S&P 500’s Technology holdings average weight was 44.36% and returned -5.47%. QQQ had an average overweight of 22.93% to the Technology sector in the month.
QQQ’s differentiated holdings and underweight in the Industrials sector were the greatest detractor to the fund’s relative performance. QQQ’s Industrials holdings average weight was 3.07% and returned -0.37% in June, while the S&P 500’s Industrials holdings average weight was 10.85% and returned 6.40%. QQQ had an average underweight of 7.78% to the Industrials sector in the month.
On May 1st, 2026, the Nasdaq-100 Index updated its methodology, adding a Fast Entry rule for certain mega capitalization securities and updating its quarterly rebalance process, in addition to several other adjustments primarily affecting the weighting and eligibility of low-float securities.12 The updated quarterly review process can remove and replace constituents that rank outside the top 125 eligible companies by market capitalization, which may increase quarterly name turnover. The first quarterly rebalance under the updated methodology occurred prior to market open on June 22, 2026, and saw the removal of Charter Communications, Cognizant Technology Solutions, Insmed, Verisk Analytics, and Zscaler. Those companies were replaced by Astera Labs, CoreWeave, Nebius Group, Rocket Lab, and Teradyne.
Additionally, after market close on June 26th, Nasdaq announced that Space Exploration Technologies (“SpaceX”) would be included in the Nasdaq-100 Index under the new Fast Entry provisions prior to market open on Tuesday, July 7th. SpaceX held an initial public offering (IPO)13 on June 12th, 2026, offering approximately 555 million shares at a price of $135 per share. The value of IPO shares was approximately $75 billion; however, since only a small portion of total shares were offered, SpaceX’s overall valuation was estimated to be closer to $1.75 trillion. Although only a small proportion of the company’s shares were offered on the IPO date, the transaction was one of the largest IPOs ever by dollar volume. The stock closed at $201.80 on its third day of trading, but fell to $153.23 on June 26th, ultimately ending the month at $170.86. SpaceX was not the only IPO news of investor interest in June: leading artificial intelligence companies OpenAI and Anthropic both filed for IPOs in early June, although in late June the New York Times reported that OpenAI was considering delaying until 2027, possibly due to the elevated volatility that technology sector stocks experienced in June.
All the “Magnificent 7” companies (Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla) saw negative returns in June, with losses ranging from Microsoft’s -17.15% decline to Tesla’s -3.49% drawdown. This performance reflected souring investor attitudes towards major AI incumbents, and especially towards hyperscalers. However, June did not see a full rotation away from the artificial intelligence trade, but rather a pivot towards companies representing different parts of the AI value chain. Companies involved in the production of computer memory products posted strong returns in June, as technologies such as dynamic random-access memory (DRAM), NAND flash, and high-bandwidth memory are critical inputs for AI training and inference at scale. Several companies that are direct beneficiaries of elevated AI-related memory capital expenditures, including Applied Materials, KLA, and Lam Research, posted strong gains in June.
Micron Technology, the leading US high-bandwidth memory company, reported earnings on June 24th and achieved results significantly stronger than analysts’ expectations. Revenues were $41.5 billion, 15.6% greater than consensus expectations of $35.9 billion, and adjusted earnings per share (EPS)14 was $25.11, 20.4% greater than the $20.86 consensus expectation. These strong operational results helped to reassure investors who may have been concerned that the AI memory trade was overdone, and Micron ended June as one of the top ten largest companies in both QQQ and in the S&P 500 by weight.
Source: Bloomberg, L.P., and Nasdaq as of 6/30/2026.
Standardized performance - Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and Shares, when redeemed, may be worth more or less than their original cost. See invesco.com to find the most recent month-end performance numbers. Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times. Fund performance reflects applicable fee waivers, absent which, performance data quoted would have been lower. Returns less than one year are cumulative. Invesco QQQ’s total expense ratio is 0.18%.
For the month of June, shares traded of QQQ increased by 33.02% and notional value traded increased by 35.44% month-over-month. The month saw an average of 52.37 million shares traded each day (vs. 39.37 million last month) for an average daily value of $37.78 billion (vs. $27.89 billion last month). That compares to averages of 64.98 million shares and $7.68 billion over the life of the fund, and 53.64 million shares and $33.09 billion for the past 12 months.
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All data is from Bloomberg, L.P. as of 6/30/2026, unless otherwise noted.
Past performance is not a guarantee of future results.
An investor cannot invest directly in an index. Index returns do not represent Fund returns.
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional/financial consultant before making any investment decisions.
The opinions expressed are those of the author, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.
Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations.
Growth stocks tend to be more sensitive to changes in their earnings and can be more volatile.
The Index and Fund use the Industry Classification Benchmark (“ICB”) classification system which is composed of 11 economic industries: basic materials, consumer discretionary, consumer staples, energy, financials, health care, industrials, real estate, technology, telecommunications and utilities.