Market View: Week of Jul. 31, 2026
ECONOMIC REVIEW¹
The Federal Reserve (Fed) met on Wednesday to determine the path of interest rates. As expected, the Federal Open Markets Committee (FOMC) left its target range unchanged at 3.50%-3.75%.
Three of the 12 total voting committee members believed rates should move upward, suggesting that if inflation progress stalls, additional rate hikes could remain on the table.
The initial reading of Gross Domestic Product (GDP), which is a measure of economic growth, came in at 1.5% for the second quarter.
This was below the anticipated 2.1% reading, and slightly below the long-term trend of 2.0%.
Despite the slower-than-anticipated reading, the reading was mainly dragged down by a higher number of imports, potentially ahead of tariffs that were implemented in July.
The Personal Consumption Expenditures Price Index (PCE), one of three measures of inflation, came in sharply lower in June.
The figure fell -0.1% for the month of June, but remained at 3.7% on the year, nearly double the Fed’s 2% inflation target despite strong progress being made on the month.
Much of the decline was because of falling oil prices in the month of June
Core inflation, which excludes the volatile food and energy sectors, rose 0.1% for the month, and remains up 3.3% for the year.
The University of Michigan Consumer Sentiment Survey suggested that consumers felt better in July, with the index rising to 55.2 points.
From a record low of 44.8 just two months ago, the survey has climbed more than 10 points.
How does the most recent economic data impact you?
The decline in PCE was welcomed by both the Fed and investors, though as oil prices have risen once again in July, that trend is unlikely to hold.
Economic growth appeared stronger than the headline number would suggest, with consumer spending data from the underlying report remaining durable.
Business investment slowed slightly, but artificial intelligence (AI) spending remained strong.
The Fed is in a difficult position, as a prolonged increased in oil prices driven by the conflict in Iran could delay progress on inflation and keep the door open to additional rate hikes.
A LOOK FORWARD¹
This is a busy week for market data, with investors focused on the jobs report, which will include such information as the number of nonfarm payrolls added to the economy and the unemployment rate.
ISM Services and Manufacturing will also provide key insights into the manufacturing and service sectors.
How does this week’s slate of economic data impact you?
It is the Fed’s job to balance both strong job growth and low inflation. If the job market remains strong, interest rate hikes may be more likely.
MARKET UPDATE²
| Market Index Returns as of 7/31/26 | WTD | QTD | YTD | 1 YR | 3 YR | 5 YR |
|---|---|---|---|---|---|---|
| S&P 500 | 1.06% | -0.06% | 10.14% | 21.50% | 19.42% | 12.86% |
| NASDAQ | 1.60% | -3.19% | 9.53% | 23.62% | 21.94% | 12.40% |
| Dow Jones Industrial Average | 1.04% | 0.38% | 10.17% | 22.41% | 15.85% | 10.57% |
| Russell Mid-Cap | 0.32% | -0.62% | 14.59% | 20.33% | 14.92% | 8.20% |
| Russell 2000 (Small Cap) | 0.05% | -3.03% | 18.85% | 36.96% | 15.26% | 7.11% |
| MSCI EAFE (International) | 2.02% | 1.96% | 11.59% | 24.80% | 16.34% | 9.31% |
| MSCI Emerging Markets | 2.36% | -3.07% | 20.04% | 38.33% | 19.46% | 8.03% |
| Bloomberg US Agg Bond | -0.12% | -1.30% | -0.69% | 1.88% | 3.92% | -0.40% |
| Bloomberg High Yield Corp. | 0.18% | -0.25% | 1.71% | 5.31% | 8.37% | 4.04% |
| Bloomberg Global Agg | 0.63% | -0.53% | -0.75% | 0.86% | 3.23% | -1.91% |
OBSERVATIONS
All major domestic averages rebounded last week, with the NASDAQ leading the way, up +1.60%, followed closely by the S&P 500 (+1.06%) as well as the Dow (+1.04%).
Both mid-cap and small-cap stocks posted positive returns, but underperformed large-cap domestic indices as interest rates moved higher, which tends to adversely affect smaller companies more.
International stocks yielded positive performance for the week, beating out all other indices. Developed international stocks rose +2.02%.
Emerging market stocks were the winner on the week, gaining +2.36% as oil prices declined on the week.
Fixed income indexes were mixed on the week, as yields rose domestically.
The Bloomberg US Aggregate Bond Index (-0.12%) was most impacted by the rise in U.S. interest rates, while US High Yield Corporates (+0.18%) rose slightly, and the Bloomberg Global Aggregate Bond Index (+0.63%) rebounded from a down week as international interest rates moved down.
BY THE NUMBERS
Wildfires Rage Across North America:
In the year 2025, roughly 5.1 million acres burned because of wildfire activity. This year, through the end of July, over 5.4 million acres have already burned ahead of August, which tends to be the driest month for most regions of the country and the most prone to enhanced wildfire activity. Outside of the United States, wildfires in Canada and even across Europe in France and Spain have created higher temperatures and poor air quality, with large masses of smoke carried by wind. So far in 2026, there have been over 45,000 wildfires in the United States alone, as a drier winter for much of the West and Midwest has led to fire-prone conditions, and warmer temperatures, in part attributed to the El Niño weather cycle, have increased the risk of wildfires.³
Tensions Between U.S. and Iran Remain High:
U.S. President Donald Trump said early Sunday he has canceled a planned attack on Iran following a request by Tehran and its regional neighbors. "We have just been asked by Iran, and other Middle Eastern Countries, to hold off any attack in that the perimeters of a deal has been agreed to," Trump said in a Truth Social post. A temporary ceasefire following the signing of a memorandum of understanding between the U.S. and Iran on June 17 has effectively broken down. Neither side has given way on key sticking points, including Iran's nuclear program and control of shipping through the Strait of Hormuz, through which about a fifth of the world's oil supplies moved before the war broke out. Iran has said that there has been no such diplomatic breakthrough as of yet.⁴
Disclosures
The statements provided herein are based solely on the opinions of the Osaic Research Team and are being provided for general information purposes only. Neither the information nor any opinion expressed constitutes an offer or a solicitation to buy or sell any securities or other financial instruments. Any opinions provided herein should not be relied upon for investment decisions and may differ from those of other departments or divisions of Osaic Wealth, Inc. (“Osaic”) or its affiliates.
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1 Data obtained from Bloomberg as of 7/31/26.
2 Data obtained from Morningstar as of 7/31/26.
3 Statistics | National Interagency Fire Center
4 Trump cancels planned attack on Iran, saying he reached an agreement over the 'perimeters of a deal'
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