U.S. equities finished higher last week as healthy second-quarter earnings results helped the major indexes recover from the prior week’s modest declines. The S&P 500, Nasdaq, and Dow all posted gains of roughly 1% to nearly 2%. Investor sentiment was influenced by earnings from several of the largest technology companies, as well as ongoing developments surrounding the Iran war. Mixed reactions to big tech earnings highlighted investors’ growing focus on whether significant artificial intelligence (AI) investments are translating into durable revenue and earnings growth, while uncertainty surrounding the conflict continued to weigh on market sentiment. With nearly two-thirds of S&P 500 companies having reported second-quarter results, analysts now expect blended earnings growth of approximately 47.4% for the quarter, according to FactSet. If realized, it would represent the strongest quarterly earnings growth in five years. Despite the positive earnings backdrop, markets experienced heightened volatility following the Federal Reserve’s policy meeting. While the Fed left interest rates unchanged, three voting members dissented in favor of raising rates, reinforcing concerns that inflation may remain elevated for longer. Treasury yields moved sharply higher in response, with the 10-year Treasury ending the week at 4.71% and the 30-year Treasury climbing above 5.25%, both reflecting persistent concerns about long-term inflation pressures.

U.S. & Global Economy

• With the Federal Reserve’s decision to leave interest rates unchanged widely anticipated, investors focused their attention on the accompanying policy statement and Chair Kevin Warsh’s remarks for clues about the outlook for monetary policy. Economic data released during the week presented a mixed picture, with the Fed’s preferred inflation measure showing further moderation in June as core PCE inflation eased to 3.3% year over year. The recent improvement in inflation was likely aided by lower energy prices during June and much of July, although that trend has reversed in recent weeks as oil prices have moved higher, which could add renewed pressure to inflation readings in the months ahead. Meanwhile, second-quarter economic growth slowed to an annualized 1.5%, below expectations, reflecting weaker government spending and softer business investment, while consumer spending remained a source of support. Consumer confidence also declined modestly in July, suggesting households remain cautious about the economic outlook despite continued resilience in overall economic activity.

Policy and Politics

• Last week’s biggest headline came Saturday night, when President Trump announced he was calling off a planned major strike on Iran after Saudi Arabia, Qatar, and other regional partners pushed for de-escalation. Negotiations are reportedly continuing on a broader agreement that could include reopening the Strait of Hormuz and addressing Iran’s nuclear program. Earlier in the week, a Houthi blockade near Saudi Arabia’s Red Sea shipping route added pressure to global energy markets. Oil prices remained volatile, swinging from above $100 per barrel to the low $80s before rebounding to around $88 by Friday, while U.S. gasoline prices held relatively steady near $4.09 per gallon. On the domestic policy front, President Trump continued promoting his tariff agenda, arguing it has supported U.S. manufacturing and the domestic auto industry. The administration also invoked the Defense Production Act to expand domestic production of critical minerals important to national defense and supply chains. Beyond Iran, U.S. foreign policy remained focused on diplomatic efforts in Gaza and continued military support for Ukraine, both of which continue to contribute to geopolitical uncertainty. Looking ahead, attention is beginning to shift toward the 2026 midterm elections, with tariffs, voting legislation, and the administration’s broader domestic agenda expected to remain key political issues.

For the week ahead, investors will be closely watching the July employment report, which should provide important insight into the health of the labor market and help shape expectations for the Federal Reserve’s next steps on interest rates. The economic calendar is also packed with additional updates on manufacturing and services activity, job openings, factory orders, and consumer credit, offering further clues on the pace of economic growth. On the earnings front, results from several high-profile companies, including SpaceX, SanDisk, Eli Lilly, Disney, and Berkshire Hathaway, will be in focus as investors continue to assess the strength of corporate profits. Geopolitical risks will also remain front and center, as the situation surrounding the Iran conflict remains volatile and fragile, with the potential for renewed escalation continuing to create uncertainty for energy markets and investors. With a busy mix of economic data, earnings reports, and geopolitical developments ahead, markets may continue to experience periods of volatility as investors evaluate the outlook for growth, inflation, and monetary policy.

Economic Numbers to Watch This Week

• U.S. Manufacturing PMI for July 2026, prior 53.9
• U.S. ISM Manufacturing PMI for July 2026, prior 53.3
• U.S. Job Openings and Labor Turnover Survey (JOLTS) for June 2026, prior 7.6M
• U.S. Factory Orders for June 2026, prior -1.3%
• U.S. ADP National Employment Report for July 2026, prior 98K
• U.S. Services PMI for July 2026, prior 51.2
• U.S. ISM Services PMI for July 2026, prior 54.0
• U.S. Preliminary Productivity and Costs for Second Quarter 2026, prior 0.8%
• U.S. Initial Jobless Claims for Week Ended August 1, 2026, prior 197K
• U.S. Employment Report for July 2026, prior 57K
• U.S. Unemployment Rate for July 2026, prior 4.2%
• U.S. Average Hourly Earnings (Month-over-Month) for July 2026, prior 0.3%
• U.S. Average Hourly Earnings (Year-over-Year) for July 2026, prior 3.5%

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