Key Takeaways:

• Teenagers with eligible earned income can contribute to a Roth IRA.
• For 2026, contributions are limited to the lesser of $7,500 or 100% of taxable compensation.
• A parent or grandparent can fund the contribution if the teenager has eligible compensation.
• For business-owning families, legitimate employment of a child may create tax and income-shifting opportunities.

The first paycheck is an exciting milestone. For families who think intentionally about the next generation, it’s also a natural opening to discuss financial responsibility and long-term planning. A Roth IRA can be where that conversation begins.

Can a Teenager Contribute to a Roth IRA?

Once a child has earned income, they’re eligible to contribute to a Roth IRA. For 2026, their total contribution is limited to the lesser of $7,500 or 100% of taxable compensation.

While most haven’t started thinking about retirement (and understandably so), they have an advantage even seasoned investors can’t replicate: time. The money contributed has the potential to compound for 40, 50, even 60 years. Time is the one input you can’t buy back later.

The dollars funding the account don’t have to be the exact dollars the teenager earned. A parent, grandparent, or other person can gift them the funds, provided the child has sufficient eligible compensation to justify the contribution. This gives families the flexibility to decide how their earned income is used.

For minors, the account would need to be established as a Custodial Roth IRA, opened and managed by a custodian with the minor as the beneficial owner. All funds are required to be used for their benefit. The account would function in the same way and convert to a regular Roth IRA once the child reaches the age of majority.

When a Family Business Is Involved

The strategy becomes more interesting for families who own a business. If a child is hired to do legitimate work – real work at a reasonable rate, the test the IRS applies – the compensation can be deducted as a business expense, shifting income from the owners to the child at a lower rate.

The math is favorable. For 2026, a dependent’s standard deduction is the greater of $1,350 or earned income plus $450, up to the regular standard deduction, so a child may be able to receive a meaningful amount of compensation with little or no federal income tax owed.

There’s also an employment-tax advantage worth noting. Wages paid to a child under 18 working for a parent’s sole proprietorship, or for a partnership in which each partner is the child’s parent, are generally exempt from the combined Social Security and Medicare tax (FICA). Wages paid to a child under 21 in that arrangement are also generally exempt from the Federal Unemployment Tax (FUTA).

This doesn’t apply if the business is a corporation or a partnership with a non-parent partner. Done right, it’s a deductible expense that funds a child’s earned income, which can then be used to fund a Roth IRA, compounding tax-free for decades.

How to Use a Roth IRA to Talk About Money?

The dollars contributed to the Roth IRA often aren’t the most valuable part of the account. What it offers a family is a low-stakes, real way to have conversations that are hard to have otherwise:

• The difference between saving and investing
• Types of investments and the rationale for selecting them
• How compounding works over long periods
• Why volatility is normal and how markets fluctuate
• Designing a wealth plan across family generations

Financial habits aren’t built overnight. They’re often shaped by small experiences and choices over time. An investment account can make the concepts tangible long before someone manages their own finances.

These dialogues tend to stick when they’re tied to a teenager’s own money and future. Waiting until an inheritance to have those conversations is a decade too late.

Thinking Beyond Retirement

A Roth IRA is designed for retirement, but its flexibility can make it useful well before then. Contributions, not earnings, can be withdrawn at any time tax- and penalty-free. That money stays accessible if priorities change, even as the goal remains to leave it invested.

Withdrawals of Roth IRA earnings have more restrictions. Distributed gains are exempt from income tax and the 10% early withdrawal penalty only if applicable requirements are met. The IRS has a comprehensive publication discussing the taxation of Roth IRA earnings, including qualified and non-qualified distributions, the 5-year rule, and applicable exceptions. Some of the rules can be complex. Consider speaking with an advisor or tax professional for guidance and with any questions.

The Roth IRA also doesn’t have to remain exclusively a “retirement” target. Left alone, it can become a multigenerational asset that continues to compound throughout the owner’s lifetime, passing to heirs without the same tax drag as a traditional retirement account. Non-spouse beneficiaries are subject to the 10-year distribution rule. Still, the absence of income tax on those distributions is a significant difference from what an inherited traditional IRA or 401(k) leaves behind.

Does Teaching Investing Early Leave a Lasting Impact?

We often talk about the planning that happens around life’s major transitions, whether a business sale, an inheritance, or retirement, but thoughtful planning doesn’t always begin with a key event. Sometimes the smallest account in the family plan is the most rewarding.

Introducing investing early isn’t simply about the account balance. It’s about teaching discipline, building long-term thinking, and preparing the next generation to understand and ultimately manage what has been built. For families planning for what comes next, that may be the real opportunity.

Contact us. 

July closed as a strong month for corporate fundamentals and a bruising one for market expectations. Second-quarter earnings grew at their fastest pace since 2021, but markets became more volatile late in the month after the Federal Reserve held interest rates steady, while three policymakers dissented, arguing that rates should be raised. Long-term Treasury yields hit multi-year highs, oil surged more than 20% on renewed conflict in the Middle East, and the S&P 500’s eleven-year July winning streak ended by the narrowest of margins.

Q2 Earnings Are Real, But the Headline Number Is Not the Whole Story

Second-quarter earnings growth ranks as the S&P 500’s strongest since the third quarter of 2021, with FactSet’s blended year-over-year growth rate at 47.4% as of July 31.¹ The headline figure reflects both broad-based earnings strength and two outsized contributors. Alphabet recorded a $98 billion mark-to-market gain on equity securities under Generally Accepted Accounting Principles (GAAP), driven primarily by unrealized gains on their holdings in SpaceX and Anthropic, even though they did not sell the underlying investments. Amazon’s stronger-than-expected cloud results provided a further boost when the company reported on July 31.¹ Excluding those two companies, the blended earnings growth rate is 28.8%. Even with these outliers, this is an exceptional result that marks the second consecutive quarter above 20% and the seventh straight quarter of double-digit growth.

• Ten of the eleven sectors are reporting year-over-year growth: Of those ten sectors, eight are reporting double-digit earnings growth, led by Energy, Communication Services, Consumer Discretionary, Information Technology, and Materials. Health Care is the lone sector reporting a decline. Revenue growth is 12.8%, the highest since Q2 2022 and the second consecutive quarter of double-digit top-line growth. Guidance for the second half remains constructive, with more S&P 500 companies issuing positive third-quarter EPS guidance than the historical average.¹
• Market breadth remains a concern despite the earnings strength: The Nasdaq-100 fell roughly 7% in July, its steepest monthly decline since March 2025, as investors questioned elevated AI-related valuations even while the underlying earnings kept beating expectations. The broader Nasdaq Composite declined 3.2% for the month, its worst monthly performance since March 2025.²

Implications for Investors: The Q2 numbers are strong on any honest reading. The 28.8% excluding Alphabet and Amazon is more representative of what the median S&P 500 company is doing and is an encouraging figure. Investors should read the headline earnings growth rate with the same care they would read a headline inflation number that includes one large volatile component. The underlying trend is what matters for portfolio construction, and by that measure earnings continue to justify constructive positioning in high-quality equities, though not at any price.

The Warsh Fed Delivers Its First Contentious Meeting

The Federal Open Market Committee held the federal funds rate at 3.50 to 3.75% at its July meeting, but the 9-3 vote was the least unified decision in years. Three regional Fed presidents dissented in favor of a 25 basis point hike, marking the first time since September 2016 three policymakers dissented in the same direction against the majority.³ The dissenters were Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari, and Dallas’s Lorie Logan. Their concerns are the ones markets have been debating for months: inflation has sat above the Federal Reserve’s 2% target for more than five years, oil prices have surged more than 20% in July as the June ceasefire with Iran collapsed, and the labor market remains solid enough that a rate hike would not immediately threaten employment.⁴

• The dissents came from the most hawkish members of the committee: The following chart shows each FOMC member’s positioning on a hawk-to-dove scale (measuring the degree to which each policymaker favors higher rates to contain inflation, versus lower rates to support employment) compiled by ITC Markets Research. Crestwood clients who tuned into our July Webinar about the Warsh Fed will note that this chart is similar to one we covered.
• As we noted in the webinar: The three July dissenters are in the hawkish camp of the committee. Their vote for a hike is consistent with their published views over the past year and not a sudden shift in their thinking. What has shifted is the willingness to publicly break with the majority. Chair Warsh has explicitly encouraged this kind of dissent, telling reporters after the meeting, “I asked for a good family fight and I got one.”⁵

Source: ITC Markets Research, FOMC Hawk/Dove Analysis, last updated June 26, 2026. Voting rotations reflect Federal Reserve Board records. Bar length indicates policy positioning on a scale from most dovish (blue) to most hawkish (red); gold dots indicate voting years for regional Fed presidents. *Venable is interim Atlanta Fed president following Bostic’s February 2026 resignation.

• Long-term yields rose sharply on the outcome: Chair Warsh’s press conference triggered a swift repricing in the bond market. The 30-year Treasury yield hit 5.25%, its highest mark since 2007. The 10-year yield topped 4.7%, its highest since January 2025. The Dow dropped approximately 1,150 points during the press conference as investors reassessed the Fed’s path.⁶ Warsh addressed the market reaction directly, saying he views it as healthy that the bond market responds to economic data rather than the Fed’s forward guidance. This is consistent with his stated philosophy that the Fed should communicate less about future policy and more about the conditions under which action would occur.⁶
• The market is now pricing a real chance of a hike, not just an extended pause: The CME FedWatch tool showed the probability of a September rate hold rose immediately after the July meeting. The move higher does not reflect increased confidence that the Fed will hold, but rather an increase in uncertainty. Investors are increasingly pricing in a rate hike by year-end, particularly if inflation data continues to run above target and oil prices stay elevated. The next FOMC meeting is September 15-16, following the July and August inflation reports.³ Chair Warsh will speak at the Jackson Hole Economic Policy Symposium on August 27-29, and markets will read that address carefully for any signal on how his approach may evolve heading into September.³

Implications for Investors: The hawk-dove chart is a useful reminder that the FOMC is a committee with twelve voters, each with distinct views, not a single voice. The three July dissents did not come out of nowhere; they came from members whose positions on inflation have been consistent and public for months. What is new is a Chair who welcomes public disagreement rather than suppresses it. For investors, this means Fed communication will be noisier than under the prior Chair, and the September meeting outcome is genuinely uncertain rather than telegraphed in advance. Duration risk in fixed income portfolios warrants ongoing monitoring and alignment with each individual investor’s financial goals.

Trends We Are Watching

• Small caps had their strongest first-half relative to the S&P 500 since 2001, but that lead unwound in July: The Russell 2000 led through the early part of July before giving back its gains on the Fed decision, finishing the month down roughly 3%. Small caps typically benefit from expectations of rate cuts and a broadening of market participation beyond mega-cap technology; a hawkish Fed pivot removes both tailwinds. The July reversal is a reminder that the small-cap rally is highly rate-sensitive.²
• June inflation data cooled, but the details tell a nuanced story: On July 30, the Bureau of Economic Analysis released the June reading for the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge. Headline PCE fell 0.1% month-over-month, with the year-over-year rate slowing to 3.7% from 4.1% in May. Core PCE rose just 0.1% month-over-month, with the year-over-year rate easing to 3.3% from 3.4% in May.⁷ June PCE moved in the right direction, but core PCE at 3.3% remains well above the Federal Reserve’s 2% target, and the June cooling was driven primarily by energy prices tied to the temporary Iran ceasefire, which has since unraveled.⁷
• The S&P 500’s July winning streak has ended: The S&P 500 had posted gains every July from 2015 through 2025, an 11-year streak that made July statistically the market’s strongest month over the past two decades. That streak ended last month with the S&P 500 closing down 0.1% for the month, driven by the late-month volatility around the FOMC decision and the sharp rise in long-term yields. The Nasdaq Composite fell 3.2% while the Dow gained 0.3%, its fourth consecutive monthly gain.⁸

The Takeaway

July’s data confirmed two things portfolio construction has been anticipating for months: corporate earnings remain strong enough to justify equity exposure, and the path of Federal Reserve policy is more contested than at any point in the current cycle. Chair Warsh explicitly said at his July 29 press conference that cooler June inflation data did not factor significantly in the decision to hold rates. This can be seen as a signal that the FOMC will need more than one favorable data point to consider easing, and a hint that July’s oil rally is likely to make the next round of CPI and PCE releases look worse rather than better. In the meantime, the case for balanced positioning across duration, quality, and geography is stronger than it was three months ago, and the case for concentrated exposure to any single theme, including AI, is more nuanced than the market has been pricing. Patience and discipline remain the right posture heading into the fall.

Returns of Market Indices  |  July 2026

Global equities and U.S. large caps were nearly flat for the month (MSCI ACWI +0.1%, S&P 500 -0.1%).⁸ International developed markets (MSCI EAFE) fared better, returning +1.98%.⁹ Emerging market equities and U.S. small caps both declined by 3% for the month (MSCI EM Equity and Russell 2000, respectively). Fixed income sold off as long-term yields rose to multi-year highs, with the 30-year Treasury yield reaching 5.25%, its highest level since 2007, and the 10-year Treasury reaching 4.7%. The bond market finished down 1.3% for the month (Bloomberg US Aggregate Total Return Index).⁶ Year-to-date returns are shown in the chart below.

Past performance is not indicative of future results.

Sources

1. FactSet Earnings Insight, S&P 500 Earnings Season Update: July 31, 2026, John Butters. Blended (year-over-year) Q2 2026 earnings growth rate 47.4 percent; excluding Alphabet and Amazon.com, 28.8 percent. Alphabet Q2 2026 GAAP EPS included a $98 billion mark-to-market gain on equity securities, driven primarily by unrealized gains on holdings in SpaceX and a private company (Anthropic), per Alphabet Q2 2026 filing (“primarily related to unrealized gains in our equity securities portfolio from SpaceX and a private company”). Revenue growth 12.8 percent, highest since Q2 2022. Eight of ten sectors reporting year-over-year growth are reporting double-digit growth; Health Care is the only sector reporting a decline.
2. CNBC, “Stock market news for July 30, 2026,” July 30, 2026 (cnbc.com); CNBC, “.RUT Russell 2000 Index quotes and news,” accessed August 1, 2026. Nasdaq-100 declined approximately 7 percent in July 2026, the steepest monthly decline since March 2025. Russell 2000 first-half 2026 outperformance vs. S&P 500 the largest since 2001 (Charlie Bilello, Creative Planning; Franklin Templeton).
3. CNBC, “Fed rate decision July 2026: Divided Fed holds interest rates steady,” July 29, 2026 (cnbc.com); Fox Business, “July FOMC: Fed holds interest rates steady,” July 29, 2026 (foxbusiness.com). FOMC voted 9-3 to hold the federal funds rate at 3.50-3.75 percent. Dissenters: Beth Hammack (Cleveland Fed), Neel Kashkari (Minneapolis Fed), and Lorie Logan (Dallas Fed), each voting for a 25 basis point hike. First time three FOMC members dissented in the same direction against a hold since September 2016. CME FedWatch: 41.9 percent probability of a September hold post-meeting, up from 24 percent one day earlier. Next FOMC meeting September 15-16, 2026.
4. TradingEconomics, “Brent Crude Oil,” July 31, 2026; TradingEconomics, “Crude Oil,” July 31, 2026. Brent crude closed July 31 at approximately $88 per barrel; WTI approximately $85 per barrel. Both benchmarks rose more than 20 percent in July on renewed U.S.-Iran hostilities following the collapse of the June ceasefire.
5. ITC Markets Research, FOMC Hawk/Dove Analysis, last updated June 26, 2026. Chart data: Bar length indicates each FOMC participant’s positioning on a hawk-to-dove scale, with red indicating hawkish and blue indicating dovish. CNN Business, “Two key takeaways from the Fed’s unusually unpredictable meeting,” July 29, 2026. Chair Warsh quoted: “I asked for a good family fight and I got one.”
6. CNN Business, “Fed holds interest rates steady after cliffhanger meeting, but three officials dissent,” July 29, 2026. 30-year Treasury yield reached 5.25 percent (highest since 2007); 10-year Treasury yield reached 4.7 percent (highest since January 2025). Dow Jones Industrial Average declined approximately 1,150 points during Chair Warsh’s press conference on July 29, 2026. Bloomberg US Aggregate Total Return Index July 2026 return approximately -1.3 percent (Bloomberg terminal data, accessed August 1, 2026).
7. U.S. Bureau of Economic Analysis, Personal Income and Outlays: June 2026, released July 30, 2026 (bea.gov). PCE price index declined 0.1 percent month-over-month in June 2026; year-over-year PCE increased 3.7 percent, down from 4.1 percent in May 2026. Core PCE (excluding food and energy) rose 0.1 percent month-over-month; year-over-year core PCE increased 3.3 percent, down from 3.4 percent in May 2026. Real personal consumption expenditures increased 0.4 percent month-over-month. Chair Warsh’s comment on the June PCE release was reported in Quartz, “June 2026 PCE inflation falls 0.1%, consumer spending up 0.3%,” July 30, 2026 (qz.com).
8. TradingEconomics, “United States Stock Market Index,” July 31, 2026 (tradingeconomics.com); Bloomberg via Yahoo Finance, “S&P 500 Historical Data,” accessed August 1, 2026. S&P 500 closed July 31 at 7,489.72, down approximately 0.1 percent for the month. Nasdaq Composite closed at 25,373.85, down approximately 3.2 percent for the month. Dow Jones Industrial Average closed at 52,485.03, up approximately 0.3 percent for the month, its fourth consecutive monthly gain. S&P 500 had risen in every July from 2015 through 2025 (11-year winning streak); July 2026 was the first negative July since 2014.
9. MSCI Inc. and Bloomberg terminal data, accessed August 1, 2026. MSCI EAFE Index July 2026 monthly return +1.98%; trailing 12-month total return 25.06%. MSCI EM Index trailing 12-month total return 37.04%. YTD returns as of July 31, 2026 (per embedded chart, Bloomberg terminal data): MSCI ACWI +11.61%; S&P 500 +10.12%; MSCI EAFE +12.08%; MSCI Emerging Markets +20.25%; U.S. Bonds (Bloomberg U.S. Aggregate) -0.69%; U.S. Small Caps (Russell 2000) +18.98%.

Many parents are surprised to learn that when their child turns 18, most of their legal authority ends.  You’ve handled every doctor’s visit and signed every school form for years.  But if your college freshman ends up in an emergency room far from home, the hospital might not be able to share any information with you.  It’s not that the staff is unhelpful, the law now considers your child an adult.

There are a few simple documents that can help:

• Health care proxy (sometimes called a medical power of attorney): This lets your student choose someone they trust to make medical decisions if they are unable to speak for themselves.
• HIPAA authorization: This gives doctors and hospitals permission to share medical information with the family members your student selects.
• Durable financial power of attorney: This allows a trusted person to take care of banking, bills, or housing issues if the student can’t do it themselves.
• FERPA waiver: This lets the college share educational records with parents or other people your student names. Most schools have their own form, so check with the registrar’s office.

Will you ever need these documents?  Probably not, and that’s what everyone hopes.  But emergencies can happen at any time, and the last thing you want is to find out you’re locked out of important information during a crisis.

So, while you’re shopping for twin XL sheets and discussing the mini fridge, add these documents to your checklist.  Spending an hour on paperwork now can save your family a lot of stress later.

At Crestwood, we believe simplifying wealth includes getting ready for milestones like this and the surprises they can bring.  If your child is turning 18 or going to college, we’re here to help you begin the conversation with your attorney.

Contact us. 

June delivered the largest IPO in the history of the U.S. equity market. On June 11, SpaceX priced 555.6 million shares at $135 per share, raising $75 billion. Shares began trading the next day, June 12, opening at $150 and closing at $160.95, a 19% first-day gain that pushed its market capitalization above $2 trillion.¹ The size of the offering is only part of the story. The mechanics of the deal, and more importantly the rule changes that surround it, will affect portfolio construction for the next several years. The three big index providers each drew a different line on whether SpaceX belongs in their benchmarks, and OpenAI and Anthropic are widely expected to follow with similar sized offerings.

Mega IPOs and What Investors Actually Get

SpaceX’s IPO valued the company at $1.77 trillion which is close to 100x its 2025 revenue of $18.67 billion while also showing a Net Loss of $4.94 billion. ¹ Approximately 4.2% of the company’s total shares were sold to the public, of which roughly 30% were allocated to retail investors, an unusually high proportion for an IPO. ²  The stock hit an intraday high of $225.64 on June 16, a 67% gain from the IPO price in three trading sessions, before selling back to $147.11 on June 23, a 34% drop from the high. It closed the month around $170 and traded around $150 at the time of publication.³  Fig. 1 illustrates an observable pattern across 25 US Mega IPOs of the past 15 years.^{4 5}

Fig 1:

Source: Bloomberg terminal. Crestwood Advisors analysis of daily closing prices for 25 US large IPOs from 2011-2021, indexed to each company’s IPO offering price = 100 and computed empirically across the sample at each trading day. SpaceX actual path shown for reference only and is not intended to predict future performance. 

• Post-IPO volatility is a documented pattern, not a SpaceX-specific phenomenon: Academic research on IPO price behavior spanning four decades finds that newly listed stocks trade with meaningfully higher volatility than seasoned stocks. Renaissance Capital data shows 30-day post-IPO volatility is approximately 45-50% higher for recent IPOs compared to seasoned stocks in the same market. A remarkable 41% of 2023 IPOs delisted within five years, with 29% attributed to poor performance.
• The lockup expiration effect is real and measurable: The standard IPO lockup which prevents insiders and pre-IPO investors from selling for the first 180 days after listing, is nearly universal. The seminal peer-reviewed study of IPO lockups, covering 2,529 firms from 1988 to 1997, found a statistically significant negative abnormal return in the trading days surrounding lockup expiration, with the effect concentrated in venture-backed technology firms.⁶
• The float matters more than the headline valuation: A stock’s float refers to the number of a company’s shares available for investors to trade and does not include restricted stocks held by insiders. A low float amplifies the price impact of both buying and selling pressure. With only 4.2% of SpaceX’s shares in the public float at issuance, and 30% of that allocation directed to retail investors, the available supply for institutional buyers is thin. When lockups expire, the float can expand by several multiples in a single window which could exacerbate volatility.¹

Implications for Investors: Mega IPOs are not an asset every investor needs to own on day one. The academic and empirical record is consistent: first year post-IPO price divergence is wide, the lockup expiration window is associated with selling pressure, and the median mega IPO trades below its listing price for much of its first two years. For investors considering direct participation in future mega listings, patience typically rewards more than speed. Getting in early is not a guarantee of excess returns. The relevant question is not whether the company is fundamentally worth its market capitalization, but whether the current price reflects the mechanical supply-demand dynamics of a low-float IPO or the underlying business.

Index Inclusion: Who Buys, When, and How Does This Impact the Market?

The passive investing ecosystem is now large enough that index inclusion materially moves stock prices. S&P Dow Jones Indices estimated that approximately $20 trillion of investment assets were benchmarked to the S&P 500 as of December 2024, with roughly $13 trillion in passively managed assets.⁷ When an index adds a stock, funds tracking that index must buy it, regardless of price. The mechanics of this forced buying have become a distinct market phenomenon, and the divergence between how the major index providers approach mega IPOs will create meaningfully different exposures across benchmarks.

• Index inclusion rules diverged sharply this year:
• • S&P Dow Jones chose to preserve its existing eligibility criteria for the S&P 500. New additions must meet a 12-month seasoning requirement, must be GAAP-profitable in the most recent quarter and cumulatively over the trailing four quarters, and must satisfy minimum public float requirements. SpaceX, which posted a $4.94 billion net loss in 2025, is not eligible for the S&P 500 until at least mid-2027, and only then if it achieves GAAP profitability.
  • Nasdaq, revised their methodology to allow any newly listed company in the top 40 by market capitalization to enter the Nasdaq-100 after just 15 trading days, with no minimum float requirement.
  • FTSE Russell also revised their rules and confirmed SpaceX will enter the Russell 1000 at the September or December 2026 quarterly reconstitution.
  • MSCI, which has had a 10-trading-day inclusion rule since 2007, kept its existing methodology and likewise CRSP allows fast-track IPO inclusion after just 5 trading days.^{7 8 9}
• The Tesla precedent shows the mechanics of forced buying: The most relevant recent template is Tesla’s addition to the S&P 500 on December 21, 2020. On November 16^th, S&P announced Tesla would be added to the index on December 18^th. Because Tesla’s weight at inclusion was approximately 1.7% of the index, passive funds tracking the S&P 500 needed to buy an estimated $50 billion to $80 billion of shares to align their portfolios with the new index composition. The actual buying was heavily concentrated in the last trading day before inclusion. Over 200 million Tesla shares traded that day, including roughly 69 million shares, worth approximately $50 billion, in the electronically managed closing auction alone. The stock’s price gyrated wildly in the final minutes as active traders who had front-run the passive buying looked to sell into the mandatory demand. The Tesla mechanic shows a pattern: an announcement, a five-week preparation window, front-running by active investors, and a concentrated buying surge on or near the effective date.¹⁰
• The buying is funded by proportional selling across the index: Index funds run essentially fully invested, with cash balances typically under 1% of assets. When a new name is added, the required purchases are funded primarily by proportional trimming of every other constituent, not by simply selling the specific name being removed to make room. When SpaceX enters the Nasdaq-100 at an estimated 0.47% to 0.70% initial weight, index funds tracking the Nasdaq-100 must reduce their positions in each of the other 100 constituents by that same proportional amount to fund the SpaceX buy. On a rough estimate, if the Nasdaq-100 tracking ecosystem needs to allocate approximately $7 billion of new capital to SpaceX at inclusion, that same $7 billion is distributed across the other 100 names as proportional selling pressure, equating to roughly $70 million of selling per constituent. Individually, that is a rounding error for the largest names, but it can be more meaningful for smaller constituents. When SpaceX eventually qualifies for the S&P 500, the same mechanic applies on a much larger scale: an estimated $50 billion or more of forced buying, funded by proportional selling across all 499 other index constituents. The forced buying story is really two stories at once: mechanical demand for the incoming name, and mechanical selling pressure diffused across everything else the index owns.^{7 9}
• The Facebook precedent shows how long the S&P is willing to wait: Facebook went public in May 2012 at a valuation of approximately $104 billion, at the time the largest US technology IPO in history. It was not added to the S&P 500 until December 2013. The delay was partly a function of the seasoning requirement, partly the stock’s post-IPO price weakness (Facebook traded below its $38 IPO price for most of its first year), and partly the S&P Index Committee’s judgment that the social media sector did not yet require dedicated representation. S&P’s willingness to make the Facebook cohort wait is the same posture it has now taken with SpaceX, and by extension with Anthropic and OpenAI when they list.¹¹
• Estimated forced buying: near-term and delayed: Bloomberg Intelligence estimates that passive funds tracking the Nasdaq-100 and Russell 1000 will ultimately need to acquire shares equal to approximately 24% of SpaceX’s public float, with a subsequent S&P 500 inclusion adding demand for another 19% of the float. Once actively managed funds benchmarked to those indexes are included, more than half of SpaceX’s public float becomes mechanical demand. Goldman Sachs estimates that the Nasdaq-100 inclusion alone could trigger as much as $60 billion of forced buying. The precise amounts vary across methodologies, but the broader pattern is consistent: multiple waves of mechanical buying associated with the Nasdaq-100 and Russell 1000 in 2026, followed by a substantially larger and more concentrated buying event once SpaceX becomes eligible for inclusion in the S&P 500.^{12 13}

Implications for Investors: The Tesla precedent is instructive. In the five weeks between S&P’s November announcement and the December effective date, Tesla shares rose appreciably, reflecting both investor enthusiasm and positioning ahead of the anticipated wave of passive index buying. If similarly large companies such as SpaceX, Anthropic, or OpenAI ultimately become eligible for inclusion in the S&P 500, comparable market dynamics may emerge. Investors should expect volatility across equity markets both immediately following a mega IPO as well as during the time when each new leviathan is being purchased by index funds.

Trends We’re Watching

• Oil’s round trip: The June 17 U.S.-Iran ceasefire and reopening of the Strait of Hormuz drove one of the fastest oil price reversals on record. Brent crude peaked at $118 per barrel in April and closed June near $73, a 38% decline in ten weeks. The EIA now projects Brent averaging $70 per barrel by year-end, assuming no resumption in hostilities. There have been multiple rounds of announcements of potential resolutions to the conflict and impacts are still rippling through the global economy.¹⁴
• The Warsh Fed’s hawkish debut: Kevin Warsh’s first FOMC meeting on June 17 held the federal funds rate at 3.50% to 3.75% by a unanimous 12-to-0 vote. The June Summary of Economic Projections (aka the Dot Plot) revised the median 2026 federal funds rate up to 3.8% from 3.4% in March. Nine of 18 committee members project at least one rate hike in 2026. This implies the next move could just as easily be a hike as a cut. The FOMC statement was cut to 130 words from 341, forward guidance was removed, and Warsh announced five task forces to overhaul Fed communications, monetary policy operations, data sources, productivity analysis, and inflation measurement.^{15 16}
• AI capex hits the consumer at the cash register: Apple raised prices on select MacBook and iPad models on June 25, with increases of up to $300 (18% to 25%) on premium configurations. Microsoft followed hours later with Xbox console price increases of $100 to $150 effective August 1. Both companies attributed the increases to memory chip costs, which have more than doubled since 2025 and are expected to double again by fall 2027 as AI data-center demand crowds out consumer electronics. The AI capex cycle we discussed in April is now feeding directly into consumer prices, and this pass-through is likely to continue for at least two more years.¹⁷

The Takeaway

Three practical takeaways emerge from the month:

First, investors should be cognizant that the newest cohort of large listings will be absent from the S&P 500 and many Quality-focused strategies until each achieves GAAP profitability. If these newcomers perform well out of the gate, this could lead to a period of short-term underperformance, particularly as retail investors and those subject to FOMO chase the latest and greatest IPO.

Second, investors considering direct participation in future mega listings should be mindful that the academic and empirical record supports patience: post-IPO paths widen before they narrow, and the median mega IPO trades below its listing price for much of its first two years. This volatile post-IPO period is where Quality investors are more likely to gain ground, favoring the newcomers who demonstrate profitable business models and avoiding companies who struggle to generate positive cash flow.

Third, investors should continue to monitor bond duration and favor higher-quality fixed income while the Fed’s hawkish posture and the additional energy-related inflation risk both remain unresolved.

Returns of Market Indices  |  June 2026

U.S. equities were mixed in June as post-IPO trading, cooling AI leadership, and consumer-price increases from Apple and Microsoft weighed on late-month sessions. The S&P 500 closed the month near record levels, but down slightly for the month (-1%). Global Equities were likewise slightly down (MSCI ACWI -0.8%). Developed International equities were slightly positive (MSCI EAFE +0.1%) while Emerging Market equities were down (MSCI EM Equity -1.4%). U.S. Small and Mid Caps had a strong month (Russell 2000 +3.7%). Bond investors saw a flatter curve on the day of the June FOMC meeting: the Warsh Fed’s hawkish dot plot pushed the 2-year yield higher while long-end yields moved less, though Treasuries recovered ground later in the month as oil prices retreated. Overall, this left bond prices slightly positive for the month (Bloomberg U.S. Aggregate Bond +0.24%). Year to Date returns are shown in Fig 2.

Past performance is not indicative of future results. Index returns represent total return. Source: Bloomberg.

Sources

1. SpaceX S-1 Registration Statement (SEC filing, public May 20, 2026); CNBC, “SpaceX IPO takeaways: SPCX closes at $161, jumping 19% after record debut,” June 12, 2026 (cnbc.com); TechCrunch, “SpaceX officially prices shares at $135 in the largest IPO ever,” June 11, 2026. IPO priced 555.6 million shares at $135 per share; total shares outstanding approximately 13.076 billion; first-day close $160.95 (+19.2%); market capitalization at IPO price approximately $1.77 trillion. 2025 revenue $18.67 billion; 2025 GAAP net loss $4.94 billion. Public float approximately 4.2% of shares outstanding.

2. CNBC, “SpaceX IPO explained: The price is set, but retail allocation still up in the air,” June 9, 2026 (cnbc.com). Approximately 30% of IPO shares allocated to retail investors, roughly $22.5 billion, distributed through Charles Schwab, Fidelity, Robinhood, SoFi, and E*TRADE. Typical retail IPO allocation is 5% to 10%.

3. Yahoo Finance, MacroTrends, and Investing.com historical price data for SPCX, accessed July 2, 2026. SpaceX all-time high $225.64 on June 16, 2026; all-time low $147.11 on June 23, 2026; June 30 close $170.86; July 7 close $149.47. Average daily volume approximately 80 million shares. Nasdaq-100 estimated initial weight 0.47% to 0.70% per Nasdaq index methodology.

4. Renaissance Capital IPO market data, accessed June 2026 (renaissancecapital.com). 30-day post-IPO annualized volatility for 2023 US IPOs approximately 22% vs. 15% for seasoned stocks (approximately 45% to 50% higher on a relative basis). Approximately 41% of 2023 IPOs delisted within 5 years, with 29% attributed to poor performance.

5. 5. Crestwood analysis. Bloomberg terminal, daily closing prices for the first 500 trading days after IPO. Prices indexed to each company’s IPO offering price = 100. Percentile bands and median line computed empirically across the 25-stock sample at each trading day, with light smoothing applied. Final IPO prices rounded to the nearest whole percentage. Groupon prices adjusted for its 1-for-20 reverse split (June 2020); direct listings (Slack, Palantir, Roblox, Coinbase) indexed to exchange reference price. 25-stock group: Groupon (GRPN), Zynga (ZNGA), Facebook/Meta (META), Workday (WDAY), Tableau (DATA), Twitter (TWTR), Hilton (HLT), Ally Financial (ALLY), Alibaba (BABA), Snap (SNAP), Lyft (LYFT), Pinterest (PINS), Zoom (ZM), Uber (UBER), Slack (WORK), Snowflake (SNOW), Palantir (PLTR), DoorDash (DASH), Airbnb (ABNB), Bumble (BMBL), Roblox (RBLX), Coupang (CPNG), Coinbase (COIN), Robinhood (HOOD), Rivian (RIVN).  SpaceX daily closing prices are shown for June 12 through July 2, 2026.  SpaceX path shown for reference only and is not intended to predict future performance.

6. Field, L.C. and Hanka, G. (2001), “The Expiration of IPO Share Lockups,” Journal of Finance, 56: 471-500. Sample of 2,529 firms 1988-1997; lockup expirations associated with significant negative abnormal returns of approximately 1.5% in the immediate event window, concentrated in venture-backed firms. Ofek, E. and Richardson, M. (2000), “The IPO Lock-Up Period: Implications for Market Efficiency and Downward Sloping Demand Curves,” NYU Stern working paper. Bradley, D.J., Jordan, B.D., Roten, I.C., and Yi, H.-C. (2001), “Venture Capital and IPO Lockup Expiration: An Empirical Analysis,” Journal of Financial Research, 24: 465-493.

7. Morningstar, “The SpaceX IPO: How Index Funds Are Adapting,” June 2026 (morningstar.com). S&P Dow Jones Indices consultation results announced June 4, 2026: no changes to S&P 500 eligibility criteria. Nasdaq revised methodology effective May 1, 2026, allowing top-40-by-market-cap fast entry after 15 trading days. FTSE Russell relaxed 5% float minimum. CRSP allows fast-track inclusion after 5 trading days for eligible IPOs. MSCI retained its 10-trading-day inclusion rule (in place since 2007). S&P Dow Jones Indices estimated approximately $20 trillion indexed or benchmarked to the S&P 500 as of December 2024, with approximately $13 trillion in passive assets. Index fund methodology on cash balances and rebalancing mechanics: index funds run at cash balances typically below 1% of assets and fund new-name inclusions via proportional trimming of existing constituents.

8. CNBC, “SpaceX blocked from early U.S. benchmark index entry as S&P reaffirms existing rules,” June 5, 2026 (cnbc.com). S&P Global Ratings statement: exceptions to financial viability, seasoning, and IWF requirements will not be granted solely based on market capitalization. GAAP profitability requirement for S&P 500 inclusion unchanged.

9. Vanguard, “Stay grounded on moonshot IPOs,” June 8, 2026 (corporate.vanguard.com). Comparative summary of index provider approaches to mega IPOs and index fund rebalancing mechanics. Charles Schwab, “Some Indexes Accelerate Entry for Massive IPOs,” June 2026 (schwab.com). Both sources describe the standard practice of funding new-name index inclusions through proportional selling of existing constituents rather than through cash balances or single-name replacement.

10. S&P Dow Jones Indices press release, “S&P Dow Jones Indices Announces Changes to the S&P 500 Index,” November 16, 2020. Forbes, “Will Tesla Break The S&P 500? (Part 2): The Mechanics Of Market Turmoil,” January 4, 2021; Forbes, “Will Tesla Break The S&P500? (Pt 3): Did The Way It Was Added Help Create A Bubble?,” January 10, 2021. Tesla added to S&P 500 effective December 21, 2020 in a single-step addition. Approximately 69 million shares (~$50 billion) traded in the closing auction on December 18, 2020; total daily volume exceeded 200 million shares. Weight at inclusion ~1.7% of index. Front-running dynamics drove Tesla shares up approximately 70% between the November 16 announcement and the December 21 effective date.

11. S&P Dow Jones Indices announcement, December 11, 2013. Facebook added to S&P 500 effective December 20, 2013, approximately 19 months after its May 18, 2012 IPO. Facebook IPO priced at $38 per share; traded below $38 for most of its first year post-listing.

12. CME Group, “The SpaceX Mega-IPO: Why Index Choice Matters,” June 2026 (cmegroup.com) citing Bloomberg Intelligence estimates. Bloomberg Intelligence estimated combined Nasdaq-100 and Russell 1000 fund inclusion would absorb approximately 24% of SpaceX’s public float; subsequent S&P 500 inclusion, when it eventually applies, would add another 19%. Fortune, “If S&P Dow Jones rewrites its listing rules SpaceX and Anthropic will benefit, investors won’t,” June 2, 2026 (fortune.com), citing Goldman Sachs analyst estimates.

13. Goldman Sachs Group research, cited in Fortune (June 2, 2026) and multiple financial press reports. Estimated Nasdaq-100 fast-entry methodology change could trigger up to $60 billion in aggregate forced buying across the Nasdaq-100 tracking ecosystem for large mega-cap IPOs.

14. Capital.com and Reuters coverage of U.S.-Iran ceasefire, June 16-17, 2026; U.S. Energy Information Administration, Short-Term Energy Outlook, June 2026 (eia.gov). U.S.-Iran ceasefire signed June 17, 2026 including 60-day truce and agreement to reopen Strait of Hormuz. Brent crude fell from approximately $118 (April peak) to approximately $73 by end of June 2026, a decline of ~38%. EIA projects Brent averaging approximately $70/bbl by year-end 2026.

15. Federal Reserve, FOMC Statement, June 17, 2026; Federal Reserve, Summary of Economic Projections, June 17, 2026 (federalreserve.gov). Federal funds rate held at 3.50%-3.75% by 12-to-0 vote (unanimous). Median 2026 federal funds rate projection revised to 3.8% (from 3.4% in March). Median 2026 PCE inflation projection revised to 3.6% (from 2.7%). Nine of 18 participants project at least one rate hike in 2026. Statement length reduced to 130 words from 341 in April statement.

16. CNBC, “June FOMC: Fed holds interest rates steady as Warsh era begins,” June 17, 2026 (cnbc.com); Franklin Templeton, “June FOMC recap: It’s task force time,” June 18, 2026. Chair Warsh declined to submit his own dot to the SEP. Warsh announced five task forces to review Fed communications, monetary policy operations, data sources, productivity, and inflation measurement.

17. Bloomberg, “Apple, Microsoft Raise iPad, Xbox Prices as AI Demand Drives Costs Higher,” June 27, 2026 (bloomberg.com); Wall Street Journal interview with Tim Cook, June 17, 2026 (wsj.com); Reuters coverage, June 25-26, 2026. Apple raised MacBook and iPad prices by up to $300 (18% to 25%). Microsoft raised Xbox prices by $100 to $150 effective August 1, 2026. Memory chip costs have more than doubled since 2025 and expected to double again by fall 2027. Apple shares fell approximately 6% on the announcement.

Most of us have a list of people we keep meaning to see.

The friend from years back. The neighbors you genuinely like. The list stays in your head. The plans never quite get made.

We say “We should get together soon”. We mean it. And then another few months go by.

It is not for lack of wanting. It is usually because gathering has started to feel like work. The right food. The right setting. Everything pulled together at the right moment. And when none of that lines up, the invitation never gets sent.

Here is what we have learned: the moment, the menu, and the setting are not what is most important.

People Remember How You Made Them Feel

Think about the gatherings that have stayed with you. The dinner that stretched past midnight. The summer weekend that everyone still talks about years later. Chances are you remember how the evening felt, not what was served or how the table was set.

Etiquette writer Alison Cheperdak makes this point simply: guests remember how they felt.¹ Whether the host was genuinely glad they came. Whether they left feeling more connected than when they walked in. That is what people carry home.

We often think of wealth in terms of what it allows us to acquire. Just as important is what it allows us to create: time together, shared experiences, stronger relationships, and memories that endure long after the evening is over.

That’s one of the quiet luxuries of having resources—not simply owning more, but having the opportunity to bring the people you care about together.

The Underrated Power of Going First

Your friends who are known for bringing others together rarely provide the most elaborate spreads. They are the ones who actually send the invitation. They think ahead about who in the room might enjoy knowing one another. They make the introduction without waiting to be asked. And they follow up afterward because they genuinely meant it when they said they were glad someone came.²

That is it. No elaborate planning. Just a little initiative and genuine care for the people in the room.

Good news: you do not need the perfect moment. Summer is the perfect excuse. Send the text, pick a date, and do not overthink the rest. Getting everyone together is the whole point and honestly, the hardest part is just deciding to do it. The people who show up will be glad you did.

Creating Space for Relationships

The calendar is full. The logistics are real. It is very easy to let the intention sit there indefinitely. But the gathering itself, even when it is imperfect and improvised, tends to be worth it. The people who show up are not thinking about whether everything came together perfectly. They are thinking about whether they will be invited back.

Summer has a way of creating room for this. Longer evenings. A slower pace. A little more space to actually follow through. So here is our friendly nudge: who have you been meaning to have over, and what has actually been stopping you?

At Crestwood, we believe wealth is ultimately about creating the freedom to live intentionally, to spend more time with the people who matter, strengthen relationships, and make room for the moments you’ll remember long after the details have faded.

That’s the perspective we bring to every planning conversation. If you’re ready to build a financial plan around the life you want to live, we’d welcome the opportunity to talk.

FAQ

What actually makes a gathering memorable?

Guests rarely remember what was served or how the table was set. What stays with people is how they felt: whether the host was genuinely glad they came and whether they left feeling more connected than when they arrived.

What do the best hosts do differently?

They send the invitation before waiting for the perfect moment, think ahead about who might enjoy knowing one another, and follow up afterward. It is less about planning and more about genuine care for the people in the room.

Why does entertaining feel harder than it used to?

Social media has made hospitality feel like a production, raising the bar on what a gathering is supposed to look like. Most people find that once they stop trying to make it perfect, it becomes a lot easier to actually do it.

Sources

¹ Alison Cheperdak, Was It Something I Said?, Chapter 6: “Hosting and Attending: What Matters Most”

² Myka Meier, Modern Etiquette Made Easy, Chapter 5