WEEKLY MARKET RECAP – July 31, 2026

Strong corporate earnings helped lift the major U.S. stock indexes, with all three posting weekly gains of roughly 1% to 2% and recovering most of the previous week’s losses. Even after the rebound, the S&P 500, NASDAQ, and Dow remained below the record highs reached over the past two months.

Markets experienced heightened volatility on Wednesday following the Federal Reserve’s latest policy meeting and Chair Kevin Warsh’s press conference. While the Fed left interest rates unchanged, three voting members dissented in favor of raising rates, sending stocks lower and driving medium- and long-term Treasury yields sharply higher.

Inflation concerns continued to pressure the bond market. The 30-year Treasury yield climbed above 5.20% on Wednesday, approaching its highest level since 2007, and rose further to 5.25% by Friday. The 10-year Treasury yield also advanced, ending the week at 4.71%, its highest level in more than 18 months.

Second-quarter earnings expectations strengthened significantly as several of the largest technology companies reported results. According to FactSet, analysts now expect S&P 500 companies to deliver average earnings growth of 47.4%, up sharply from 38.0% a week earlier. If realized, it would represent the strongest quarterly earnings growth in five years.

Economic growth slowed during the second quarter. The U.S. economy expanded at a 1.5% annualized rate, down from 2.1% in the first quarter and below economists’ expectations. Consumer spending remained positive, but weaker federal government spending and lower inventory accumulation weighed on overall GDP.

Inflation showed signs of easing after accelerating earlier in the year. The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) Price Index, rose at a 3.7% annual rate in June, down from 4.1% in May. Core PCE inflation, which excludes food and energy, held steady at 3.3%.

July was another subdued month for equities. The S&P 500 slipped 0.1%, marking its second consecutive monthly decline, while the NASDAQ fell 3.2%. The Dow, however, managed a 0.3% gain, extending its winning streak to four straight months.

Investors will now turn their attention to Friday’s employment report for insight into whether the labor market softened further in July. June payroll growth came in well below expectations, with the economy adding just 57,000 jobs, while earlier estimates for April and May were revised lower.