Written by Amaury de Barros Conti, Partner | Vice President Investments
WHAT MOVED MARKET LAST WEEK
Markets ended July on a stronger footing, with equities recovering from recent volatility despite a continued rise in long-term interest rates. The S&P 500 gained 1.1% for the week, while the Nasdaq Composite advanced 1.6% and the Dow Jones Industrial Average rose 1.0%, as per Bloomberg data. The rebound capped a strong month for U.S. equities and marked a notable recovery for technology and AI-related sectors following several weeks of heightened volatility.
Source: Bloomberg Finance as of July 31, 2026.
- The major market development of the week was a powerful rebound across AI and semiconductor equities. Bloomberg reported that AI-focused hedge fund Situational Awareness had become a significant forced seller during the recent drawdown, and that the sale of a substantial portion of the fund’s portfolio to Citadel Securities may have reduced a key source of market pressure. The development coincided with the strongest one-day rally in U.S. technology shares in roughly four months.
- Recent volatility serves as a reminder that sectors benefiting from strong momentum and investor enthusiasm can experience significant swings even when investors continue to view underlying fundamentals as constructive.
- With approximately 61% of S&P 500 companies having reported results, earnings have generally exceeded expectations by a wide margin. Even the median S&P 500 company is on pace for approximately 12% earnings growth, compared to expectations of roughly 9% entering the reporting season.
- The Federal Reserve left its policy rate unchanged at 3.50% to 3.75%, marking a fifth consecutive meeting without a rate adjustment. However, the decision was not unanimous. Three policymakers dissented in favor of an immediate rate increase, highlighting ongoing concern regarding inflation and reinforcing that the debate around additional tightening remains active.
- Markets interpreted the meeting as modestly hawkish. The 30-year Treasury yield jumped to approximately 5.21%, its highest level in nearly two decades, while the 10-year Treasury yield continued to trade near multi-year highs.
- Economic data released during the week pointed toward moderating but still-positive growth. Advance estimates showed second-quarter GDP expanding at a 1.5% annualized rate, down from 2.1% during the first quarter. While growth has slowed, the economy continues to expand despite restrictive monetary policy and elevated borrowing costs.
- Inflation also showed modest improvement. Core PCE, the Federal Reserve’s preferred inflation measure, eased to 3.3% year-over-year from 3.4% in May. Although directionally positive, inflation remains above the Fed’s 2% target and continues to support a cautious policy stance.
LOOKING AHEAD
- This week will provide several important tests for investors. The July employment report will likely be the most closely watched economic release, with economists expecting approximately 88,000 jobs added and unemployment remaining at 4.2%. Labor market data will be critical in shaping expectations for the Federal Reserve’s September meeting.
- Earnings season also remains in full swing. Investors will focus on results from AMD, Palantir, Disney, Uber, Shopify, Eli Lilly, Novo Nordisk, and ConocoPhillips. Particular attention will be paid to AMD’s outlook as an important gauge of AI-related semiconductor demand.
- Additionally, upcoming ISM manufacturing and services data may provide further insight into business activity and economic momentum as markets enter the second half of the year.
Amaury de Barros Conti
Partner | Vice President Investments
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