The Markets (as of market close July 17, 2026)
Stocks retreated last week as investors balanced encouraging inflation data against renewed geopolitical tensions and continued weakness in many of this year’s market-leading technology and artificial intelligence stocks. Escalating conflict involving Iran pushed oil prices higher and revived concerns that rising energy costs could slow progress on inflation. At the same time, the second-quarter earnings season began with generally solid results from several large financial institutions, helping limit broader market losses.
Technology shares led the decline as investors continued to reassess lofty valuations following months of strong gains. The NASDAQ posted the largest weekly loss among the major indexes, while the S&P 500 and Dow also finished lower. In contrast, more defensive sectors—including real estate, consumer staples, financials, and health care—held up relatively well. Energy stocks outperformed as crude oil prices climbed on supply concerns tied to the Strait of Hormuz. Treasury prices strengthened following softer-than-expected inflation reports, pushing longer-term yields modestly lower.
Last Week’s Economic News
- Inflation cooled meaningfully in June. The Consumer Price Index declined 0.4% for the month—the largest monthly decrease since April 2020—bringing the annual inflation rate down to 3.5%. Lower energy prices accounted for much of the improvement, while core inflation also moderated.
- Producer prices also surprised to the downside. Wholesale prices declined during June as falling energy costs helped ease inflationary pressures throughout the supply chain. The softer inflation data reinforced expectations that the Federal Reserve will likely keep interest rates unchanged at its July meeting while continuing to monitor incoming data.
- Consumer spending remained resilient. June retail sales exceeded expectations, suggesting households continue to spend despite elevated borrowing costs and ongoing inflation concerns. Strong consumer demand remains an important pillar supporting overall economic growth.
- The labor market remained healthy. Initial unemployment claims stayed near historically low levels, indicating employers continue to retain workers even as hiring has moderated from earlier in the year.
- Second-quarter earnings season began on a solid footing. Several major U.S. banks reported better-than-expected earnings, reflecting healthy consumer spending, resilient credit conditions, and improving capital markets activity.
- Oil prices moved sharply higher. Renewed tensions in the Middle East and concerns over shipping through the Strait of Hormuz pushed crude oil prices higher during the week, lifting energy stocks while renewing concerns about future inflation pressures.
- Housing remained mixed. Elevated mortgage rates continued to weigh on affordability, although improving inventory levels suggest conditions may gradually become more balanced heading into the second half of the year.
Eye on the Week Ahead
Investors will be watching one of the busiest weeks of earnings season, with several major technology companies—including Alphabet, Tesla, Intel, and others—scheduled to report quarterly results. Markets will also receive updates on manufacturing activity, jobless claims, and new home sales. With inflation showing signs of moderating but geopolitical risks remaining elevated, investors will continue looking for evidence that the economy can maintain steady growth while the Federal Reserve keeps monetary policy on hold.
Have a nice week!
Sincerely,
Robert G. Carpenter