Market Commentary
for the week ending 7/31/2026

An overwhelming number of significant headlines resulted in one of the busiest weeks of the year on Wall Street, but the net result was mildly positive for the U.S. equity markets as all three major indices ended the week ahead.

The Federal Reserve’s press conference led to a midweek dip, but a massive rally on Thursday and Friday, led by Microsoft, Amazon and semiconductors, pulled the markets into positive territory.

On the geopolitical front, escalations in the Iran War heavily influenced market sentiment. Both the U.S. and Iran had paused strikes, as President Trump said he was “giving talks some space.” However, skepticism remained regarding the prospects of a lasting ceasefire. The skepticism was well placed, as Tuesday night Iran launched a ballistic missile attack on a U.S. base in Jordan, ending the pause of the prior few days. U.S. and Saudi Arabia responded by launching joint strikes against Iranian-backed militia groups in Iraq (that had carries out the attacks). The U.S. then restarted its heavy waves of airstrikes on Iran. The Iran-backed Houthis also escalated attacks on Saudi Arabia near the Red Sea. Even Ukraine got involved by striking an Iranian cargo ship last week. As a result, crude oil, which had begun the week drifting lower, spiked higher on Wednesday as concerns mounted about curtailed traffic through the Strait of Hormuz and Red Sea. The supply chain disruptions and higher oil prices stoked fears of higher inflation in the future.

Meanwhile, June inflation numbers moderated, but U.S. GDP slowed. June headline PCE was 3.7% year-over-year, in-line with expectations and down from May’s 4.1%. June’s Core PCE came in at 3.3% year-over-year, also in-line with consensus and down from May’s 3.4%. The latest numbers brought some mild relief to the inflation outlook. U.S. Gross Domestic Product (GDP) grew at an annualized rate of 1.5% in the second quarter, which fell short of the 1.8% anticipated by economists and down from 2.1% in the first quarter. While consumer spending and business investments remained resilient, a surge in imports—particularly AI equipment and semiconductors—dragged down the final GDP calculation. Additionally, July’s consumer confidence came in lower than expected as consumers remained worried about food prices and the labor market.

On Wednesday, the Federal Reserve kept its benchmark interest rate unchanged at a target range of 3.5% to 3.75%, as was widely expected. An unusual 9-3 split marked the policy decision under the leadership of Chairman Kevin Warsh. Three regional Fed presidents voted in favor of a 25-basis-point rate hike to target sticky core inflation. Warsh’s subsequent press conference triggered immense market volatility, as he avoided providing any sort of forward guidance. Warsh’s lack of color raised doubts about the Fed’s credibility and willingness to curb inflation, sending the market briefly higher and then swiftly down to new lows of the day Wednesday. The Dow Jones slid more than 1,100 points on Wednesday. Bond markets reacted sharply, driving long-term Treasury yields to multi-decade highs, with the 30-year yield to as high as 5.23%.

Corporate earnings reports drove sharp divergence across tech giants. Microsoft anchored a monumental market turnaround on Thursday, with its stock surging 15.5%—its biggest single-day jump since 2008. Microsoft based its exceptional quarterly report on better-than-expected 43% growth in its Azure cloud unit. Microsoft also raised its revenue guidance for the next quarter. Amazon also rose 15.3% on Friday after it beat expectations and posted strong results across each segment, especially its AWS cloud division. Conversely, Meta Platforms (Facebook) fell 8% on Thursday after reporting 28% revenue growth and yet missing earnings expectations. The company continues to scale up its artificial intelligence capital expenditures. While Microsoft and Amazon’s AI spending seems to be starting to pay off, Wall Street remains uncertain on Meta’s path to a return-on-investment (ROI). Apple shares set a new all-time high early in the week but then slipped 7% on Friday after its strong quarterly results. However, the company cautioned that it expects supply constraints to increase significantly and that semiconductors cost pressures will continue to rise, hurting its guidance for the next quarter.

Semiconductors remained volatile throughout the week. While the higher global demand and significant price increases of semiconductors has been a concern for many companies like Apple, it has led to massive gains for semiconductor stocks in the first half of 2026. However, these semiconductor stocks have experienced a substantial pullback in the past month or so. The volatility continued throughout last week, as several of these chip manufacturers reported their quarterly results. Semiconductors led the stock market lower on Tuesday and Wednesday, only to have a massive rally on Thursday to offset the early-week losses. The extent of Thursday’s rally seemed to display a meaningful return to the AI trade.

Next week Wall Street will continue to focus on another big round of corporate earnings, however the significance of reports begins to taper down a bit. We will also be watching the developments in the Middle East, oil prices as a component for inflation, and a wave of employment data.

For the week, the Dow rose 1.0% to 52,485. The S&P 500 climbed 1.1% to 7,490 and Nasdaq closed up 1.6% to 25,374.

Oil dipped 5.2% to $84.67/bbl. Gold inched up 1.3% to $4,107/oz. and the yield on the Ten-Year Treasury rose to 4.75%.

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