The Dow Jones Industrial Average (Dow) fell 0.4 percent, the Standard & Poor’s 500 Index (S&P 500) lost 0.6 percent, and the Nasdaq Composite Index (Nasdaq) finished down 2.1 percent for the week ending July 24. Sector breadth was positive with eight of the 11 S&P sector groups closing higher. The energy sector (3.8 percent) was the best performer while communication services (-6.2 percent) was the weakest.

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The S&P 500 finished lower for a second consecutive week as the threat of escalation with Iran sent oil prices higher and inflation worries pushed Treasury yields to the highest levels of the year. A muted reaction to second quarter earnings reports also weighed on investor sentiment, as impressive results were offset by concerns about lofty AI infrastructure spending plans.

Q2 Earnings: Through Friday July 24, 133 companies in the S&P 500 have released second quarter results, with nearly 88 percent beating expectations. While it is still early in the reporting season, aggregate earnings for this group are up over 69 percent from a year ago, solidly ahead of the 23.8 percent projected growth rate at the end of June. On the sector level, communication services and financials have posted the biggest upside surprises, while technology and communication services have delivered the strongest growth rates. According to Bloomberg, 10 of the 11 S&P sector groups are expected to report year-over-year growth, with six of these forecast to deliver double-digit gains. On the flip side, earnings in the healthcare sector are forecast to decline year over year. Full-year expectations call for S&P 500 earnings to grow by 25.6 percent this year, followed by 17.3 percent in 2027.

Economic Roundup: First-time applications for U.S. unemployment benefits fell last week to the lowest level since 1969, underscoring the underlying strength of the labor market. According to Labor Department data, initial claims fell by 22,000 to 187,000 in the week ended July 18, well below the Bloomberg median forecast for 210,000 applications. The low level of claims suggests employers remain reticent to lay off workers. Meanwhile, the Conference Board’s Leading Economic Index (LEI) declined by 0.2 percent in June to 99.1, following a 0.1 percent increase in May. However, the LEI is down only 0.3 percent over the first half of 2026, a much smaller rate of decline than its 1.1 percent contraction over the second half of 2025.

Outlook: While the outlook through the end of the year still remains favorable, we wouldn’t be surprised to see market turbulence through the remainder of the summer. In the near term, worries over the AI buildout, tech stock valuations, and headline risk around Iran are likely to result in choppy trading activity. Even so, based on what we feel is a still favorable macroeconomic environment, we believe the market offers a solid risk/reward profile for longer-term investors, especially on pullbacks. Our focus remains on the building blocks of equity investments—earnings, the economy, and interest rates—all of which we believe will remain supportive in the quarters ahead.

The Week Ahead: The main event of the week will be the Federal Reserve’s (Fed) decision on rates on Wednesday. While the Fed is expected keep rates on hold, investors will be laser focused on the after meeting communique and what Fed Chair Kevin Warsh has to say at the after meeting press conference.

On the data front, reports of interest include the June personal consumption and expenditures report, durable goods orders, the Conference Board’s consumer confidence index, and the second quarter employment cost index on Friday. The second quarter earnings season will also stay front and center with 163 members of the S&P 500 scheduled to release results. Among this group will be tech bellwethers Microsoft, Meta, Apple, and Amazon. Other major U.S. names releasing earnings include Visa and Mastercard in financials, ExxonMobil and Chevron in energy, and Coca-Cola and Procter & Gamble in consumer staples.

— By Michael Schwager, Chief Market Strategist, Managing Director

The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since Oct. 1, 1928.

Standard and Poor’s 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Nasdaq Composite Index is a broad-based capitalization-weighted index of stocks in all three Nasdaq tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of Feb. 5, 1971.

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