Market Recap: July 2026

Market commentary

• Second-quarter GDP rose a modest 1.5%, yet rising prices pushed the total value of the economy up nearly 8%, underscoring that inflation did much of the heavy lifting.
• Although household sentiment weakened again in July, actual spending held up as consumers have benefited from rising asset values.
• Employers added a slower 57,000 jobs for the month, though the unemployment rate edged down to 4.2%, its lowest in a year.
• Continued tensions between the U.S. and Iran pushed oil back above $90 a barrel, reviving a key risk that feeds through to gas prices and the broader cost of living.
• Mortgage rates stayed stubbornly high and homebuilding activity kept slipping, leaving the housing sector effectively frozen.

Select economic and market data

Equities

• Despite elevated volatility beneath the surface, strong earnings growth, renewed leadership from energy stocks, and continued year-to-date outperformance by small caps and emerging markets highlighted market strength and investors' ongoing willingness to embrace risk.

Fixed income

• Bond prices fell in July as investors raised expectations for additional Fed rate hikes, driving long-term Treasury yields to their highest levels since 2007 and increasing concerns over defaults among lower-rated corporate borrowers.

Strategic outlook

• Near-term caution toward equities is advisable, given heightened risks from geopolitical instability, trade uncertainty, and the potential for renewed inflationary pressures alongside an economic slowdown.
• Near-average expected returns projected for fixed income with the Fed on pause and rates reflective of economic conditions.
• Above-average volatility is likely given central bank involvement and geopolitical uncertainty.