July Market Review 2026
August 3, 2026
July was an eventful month for both domestic and international markets, with US-Iran tensions flaring up, increasing energy prices and changing investor expectations for the Federal Reserve (Fed) cutting rates. Investors turned away from AI-themed stocks amid concerns over the elevated valuations and capital spending, causing technology sectors to lag while energy, financials and real estate surged ahead.
The S&P 500 declined -0.1%, while the Dow Jones Industrial Average gained 0.3% and the technology-heavy Nasdaq Composite lost -3.2%, reflecting weakness among several of the market’s largest growth companies. Small-cap stocks also moved lower, with the Russell 2000 declining -3.1% over the period.
According to Raymond James Chief Investment Officer Larry Adam, “From geopolitical tensions and Fed decisions to inflation reports and tariff uncertainty, investors have had no shortage of headlines to navigate. Yet the market’s resilience reinforces a timeless lesson. While macro events can drive short-term sentiment, growth, earnings and fundamentals ultimately drive long-term returns. The encouraging news is that earnings continue to grow at a double-digit pace, extending a remarkable streak of corporate profit growth, while the US economy remains resilient. In the end, fundamentals matter most.”
Job growth slowed while the unemployment rate held steady throughout the month. Inflation improved slightly, aided by falling energy prices. Consumer spending was resilient, and housing activity showed modest improvement.
This week’s Federal Open Market Committee (FOMC) meeting saw the Fed hold interest rates steady for now, with three dissenting members in favor of a hike. Treasury yields had pushed higher leading into the meeting, which didn’t offer much clarity. Chair Kevin Warsh left all possibilities open and dependent on data, likely spurring some of the subsequent volatility.
We’ll dive into more details below, but first, let’s look at how July wrapped up.
| 12/31/25 Close | 7/31/26 Close* | Change Year to Date |
% Gain/Loss Year to Date | |
| DJIA | 48,063.29 | 52,485.03 | 4,421.74 | +9.20% |
| NASDAQ | 23,241.99 | 25,373.85 | 2,131.86 | +9.17% |
| S&P 500 | 6,845.50 | 7,489.72 | 644.22 | +9.41% |
| MSCI EAFE | 2,892.71 | 3,164.43 | 271.72 | +9.39% |
| Russell 2000 | 2,481.91 | 2,931.3 | 449.39 | +18.11% |
| Bloomberg Aggregate Bond | 2,348.85 | 2,339.24 | -9.61 | -0.41% |
Healthy consolidation within a churning market
Since its last major surge in March, the tech sector has taken a bit of a breather. But performance in sectors like health care, industrials and financials have strengthened the overall market and kept it pushing sideways even as the momentum of AI-driven tech stocks begins to lessen. Performance being spread out to include companies beyond mega-cap tech stocks represents a positive trend and reinforces the resilience of the market at large.
Trade policy made headlines
The Trump administration announced 50% tariffs using Section 338 on a targeted list of Canadian goods in response to alleged discrimination in autos, dairy and alcohol. In addition, Section 301 forced labor tariffs were finalized on imports from roughly 60 different global partners in an effort to replace the IEEPA reciprocal tariffs that had been previously stricken down by the Supreme Court.
Treasury yields climbed
Oil prices climbed with renewed hostilities in the Middle East. Treasury yields followed suit, as rising oil prices have proven a reliable driver of headline inflation. Treasury yields across most of the curve ranged 16 to 20 basis points higher than when the month began.
Consumer sentiment on shaky ground
Although the final reading of the Consumer Sentiment Index came in better than expected, the index remained close to all-time lows, a reminder that consumers are still downbeat about the economy’s performance. Although inflation expectations softening should have a positive impact, the impact that the war with Iran has on energy prices and interest rates is likely to result in a downward revision.
Multiple conflicts moving commodity prices
The US-Iran conflict wasn’t the only source of global turmoil to impact commodities this past month. Russia’s war with Ukraine is in its fifth year, and Ukraine is increasingly successful in targeting Russia’s energy infrastructure as well as cargo ships. Russia’s exports of fuel and agricultural products are facing disruptions, which raises the risk of food scarcity in parts of the Middle East and Africa. Fertilizer supply has also been curtailed by both conflicts.
Russia’s energy sector under attack
Stemming partly from advances in drone technology and capabilities, Ukraine has become quite successful in targeting Russia’s energy infrastructure as they continue fighting their war, significantly crippling refining capacity. With Europe adding another round of sanctions against Russia, it’s speculated that the US may begin to allow more Russian oil into global markets.
The bottom line
A host of external factors, including geopolitical developments, inflation readings, tariff concerns and uncertainty surrounding Fed policy, kept investors on their toes in July. But market resilience continues to demonstrate that temporary shifts in sentiment don’t negate the positive effects of longer-term drivers. The US economy continues to show durability and, in the long run, strong fundamentals are on track to prevail.
We hope this update finds you well. If you have any questions, please reach out at your earliest convenience.
Sincerely,
Gratz Park Private Wealth