The next two weeks could be a bumpy ride for U.S. stocks. Buy any dip, this strategist says.

By Barbara Kollmeyer

Citadel Securities' strategist sees path of least resistance for equities as upward

Temporary hurdles for stocks are on the horizon, but an equities and equities-derivatives strategist at Citadel Securities says investors should expect gains after July.

Stocks look ready to bounce on Thursday, as the shock of a more hawkish than expected Kevin Warsh at the Federal Reserve's helm may be wearing off just a little.

Brushing that aside, at least for now, seems worthwhile given that markets have bigger fish to fry in the near term that have nothing to do with the Fed, based on our call of the day from Citadel Securities' head of equity and equity-derivatives strategy, Scott Rubner.

One of the "most technically important periods of the year" lies dead ahead, and, within that window, flows will matter much more than fundamentals, Rubner told clients on Wednesday.

"The market is set to absorb the largest options expiration in history, significant quarter-end pension rebalancing flows, and a broad reset in positioning across major investor cohorts," he said.

While that could bring with it some immediate bumpiness, the strategist's recommendation is to view any volatility "through a technical lens" and to use stock dips as buying opportunities. Once we're past the next two weeks and quarter- end, "the setup remains favorable."

"Retail demand is at record highs, ETF inflows continue to accelerate, corporate buybacks remain robust, and the market is entering one of its strongest seasonal periods of the year. We continue to believe the path of least resistance is higher as markets transition into the second half of the year," Rubner said.

That bumpy two weeks kicks off Thursday with the massive simultaneous expirations of stock options, stock-index futures and stock-index options, coming a day earlier than usual due to the Juneteenth holiday on Friday.

Rubner said $8.3 trillion of U.S. options are set to expire - an 18% larger tranche than the prior record of $7.1 trillion set last December. Those will mark a reset of Wall Street hedging, and resulting orders hitting markets could cause sharp if short-term market wobbles, he said.

The next big event will be quarter-end portfolio rebalancing at the end of June. The top 100 pension funds are currently 110% funded, their highest level since 2001, and some of those will likely de-risk portfolios and try to lock in gains, Rubner said. Mechanical selling of stocks and buying of bonds could happen. But, again, don't panic, he said.

Once investors get past these events, the calendar gets more supportive for stocks, said Rubner. July 1 marks the date when retirement contributions, target-date funds, passive allocations, mutual funds and systematic strategies all start putting fresh money to work. That massive pool of assets can also "drive new market leadership," he noted.

That midyear cycle of flows has historically been tied to a strong July for the major equity indexes, specifically in the first half of the month, the strategist said. In each of the last 11 Julys, the S&P 500 has advanced, while the Nasdaq-100 has finished higher in 17 of the last 18. Another flow source is ETFs, which have already added more than $1 trillion in inflows to date in 2026, and that's 45% ahead of last year's record pace, he said.

An additional tailwind are retail investors themselves. Participation by that group has been historically high in July, and it's already at record levels of activity this year, according to Citadel data. July is the second most active month behind January for that cohort, Rubner said. Citadel executes roughly 35% of all retail volume in the U.S., Rubner said earlier this year.

He said those individual investors are getting more sophisticated. "Rather than only chasing speculative corners of the market, retail investors are increasingly concentrated in the same companies driving benchmark returns and institutional positioning," he said.

Importantly, retail activity is not out of steam, with households holding "record cash balances, waiting to deploy capital on market dips. This dynamic only changes when the [Cboe's volatility index] VIX rises above 30. Today, the VIX is approximately 16," he said.

Record cash balances in U.S. households waiting to buy the market dip, says Citadel's Scott Rubner

Robust corporate buybacks are a final tailwind investors can keep counting on. More than $925 billion in stock buybacks has already been authorized so far in 2026, which represents "the strongest pace ever recorded through this point in the year," said Rubner.

Financials and technology have made up 57% of all buybacks so far this year, "reinforcing demand in many of the same sectors benefiting from strong retail participation and passive flows."

The markets

U.S. stocks DJIA COMP SPX are higher at the open, led by tech. Oil prices (CL.1) (BRN00) are falling, along with the 10-year Treasury yield BX:TMUBMUSD10Y gold (GC00) and silver (SI00).

 
Key asset performance                                                Last       5d       1m       YTD     1y 
S&P 500                                                              7420.1     2.11%    -0.17%   8.39%   24.06% 
Nasdaq Composite                                                     26,021.66  3.39%    -0.95%   11.96%  33.13% 
10-year Treasury                                                     4.462      -1.00    -11.10   29.00   6.60 
Gold                                                                 4284.7     1.20%    -5.71%   -1.10%  26.49% 
Oil                                                                  74.52      -13.77%  -23.96%  29.80%  0.96% 
Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Weekly jobless claims came in at a roughly as expected 226,000, a.m., and the Philadelphia Fed's manufacturing survey was also largely on target with a reading of 11.

Intel shares (INTC) are rallying after President Donald Trump said the company will produce chips for Apple in the U.S.

A day earlier, Apple (AAPL) warned prices would rise as the AI boom is driving up memory costs.

Iran's President Masoud Pezeshkian published the memorandum of understanding reached between his country and the U.S. on X.

Smith & Wesson shares (SWBI) are climbing as surging handgun sales drove a higher profit.

Accenture stock (ACN) is dropping after mixed results from the consulting group, and a paring down of its growth outlook.

How Pizza Hut fell from stuffed-crust glory to corporate castoff.

The chart

The chart from Bank of America economist Shruti Mishra shows a narrowing gap in total credit-card spending, excluding gas, between higher- and lower-income households. That adds to a recent report from the bank showing rising after-tax wage growth for lower- and middle-income households. While it's too soon to confirm whether the persistent "K shape" of consumer-spending charts - dominated by wealthy households - has shifted, "the data bear watching," she said.

Top tickers

These were the most searched ticker symbols as of 6 a.m.:

 
Ticker  Security name 
SPCX    SpaceX 
NVDA    Nvidia 
INTC    Intel 
TSLA    Tesla 
MU      Micron 
AMD     Advanced Micro Devices 
META    Meta 
GME     GameStop 
AMC     AMC Entertainment 
AAPL    Apple 

The owl behind the 'devil-bird' howl.

-Barbara Kollmeyer

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06-18-26 0933ET