Capital Compass | Weekly Market Update — August 3rd, 2026

CAPITAL COMPASS

WEEKLY INVESTMENT NEWSLETTER

Week of August 3, 2026  |  Capital Investment Advisory Services, LLC

Markets ended the week higher despite one of the wildest three-day stretches we have seen this year. Wednesday brought a sharp selloff that pushed the Dow down more than 1,100 points after the Federal Reserve struck a more hawkish tone than expected. Then Thursday and Friday brought a powerful rebound, with the Nasdaq snapping a six-day losing streak and Amazon surging 15% on blockbuster earnings. When the dust settled, the S&P 500 gained about 1%, the Dow rose 1%, and the Nasdaq climbed 1.6%.

The story of the week was a tug-of-war between two forces. On one side, a Federal Reserve that appears less inclined to cut rates than the market had been hoping and a Q2 GDP report that came in weaker than expected at 1.5%. On the other side, extraordinary earnings from the largest technology companies and a commitment to spend a staggering $720 to $745 billion on artificial intelligence infrastructure this year alone. In the end, the corporate story won out.

Iran also stayed in the mix. U.S. strikes on Iranian targets continued, oil prices climbed back near $85 per barrel, and the 10-year Treasury yield hit its highest closing level since January of last year. It was a week that tested investor patience but ultimately rewarded it, exactly as John Bogle predicted.

Data sources: Yahoo Finance, CNBC, Reuters, Investing.com, as of July 31, 2026 close. Past performance is not indicative of future results.

A week that felt like three different weeks. The Federal Reserve, a slower-than-expected GDP report, and blockbuster earnings from four of the Magnificent 7 combined to produce dramatic price swings but ultimately positive results. Three stories captured the action:

The other important development this week was the confirmation, if any was still needed, that the largest technology companies are all in on artificial intelligence. When four companies commit three-quarters of a trillion dollars to a single technology category in a single year, that is not speculation. That is corporate America placing a coordinated bet on the future of computing. The question over the next several years will be whether the returns justify the spending. But the commitment is now unmistakable.

A quieter week is ahead relative to what we just went through, but Friday brings the July jobs report, the most closely watched economic release of the month. Earnings season broadens out to industrials, healthcare, and consumer names now that the Magnificent 7 have mostly reported.

Friday’s jobs report is the main event. Economists are expecting somewhere around 100,000 to 120,000 jobs added in July, a modest number that would be consistent with the cooling but not collapsing labor market picture. The unemployment rate is expected to hold near 4.2%. If the number surprises to the upside, expect bond yields to push even higher and September rate hike odds to climb further. A softer number would take some of the pressure off the Federal Reserve.

Before we get to the jobs report, Wednesday’s ISM Services PMI will provide an important read on the broader economy. The ISM Services PMI is a monthly survey of purchasing managers at services companies (banks, restaurants, healthcare, retail, and more) that measures whether business activity is expanding or contracting. A reading above 50 signals expansion, below 50 signals contraction. Services make up the largest part of U.S. economic activity, so any surprises in that number, particularly on the prices-paid component, could move markets. Iran developments and any further moves in oil prices remain the wild card in the background.

The Bogle quote at the top of this letter has probably saved more retirement accounts than any single piece of investment wisdom ever written. Last week was a live demonstration of why. On Wednesday afternoon, impulse said to sell everything, because the Federal Reserve was going to be tougher than expected and growth was slowing. By Friday afternoon, patient investors who did nothing were rewarded with a rally that recovered most of the week’s losses and then some. This is not a coincidence. It is the pattern that has repeated across nearly every difficult market moment in modern history.

The bigger picture underneath the week’s volatility is worth spending a moment on. The four largest technology companies just committed to spending three-quarters of a trillion dollars on artificial intelligence infrastructure this year. Amazon’s cloud business is growing so fast that the stock jumped 15% in a single day. Core inflation is cooling, from 4.4% at the start of the year to 3.4% now. The consumer is still spending. The labor market is stable, though softer. These are not the fundamentals of an economy in trouble. They are the fundamentals of an economy in transition, absorbing higher interest rates, geopolitical stress, and a technology revolution all at once, and still delivering earnings growth.

Of course, there are still things to keep an eye on that could impact the narrative. The Federal Reserve’s tone has shifted meaningfully in the last month, and if the September jobs and inflation data come in hot, a rate hike is now a real possibility. Bond yields at 4.75% are the highest since January of last year, and continuing higher yields will eventually pressure both housing and corporate debt. Iran remains a wild card. But the underlying picture heading into August is still constructive. Currently, the S&P 500 is up nearly 10% on the year, the Dow is up 9%, the Nasdaq is up 10%, and small-company stocks are up 18%. Volatility is a feature of investing, not a bug. The best investors are the ones who understand that time and patience are their most reliable allies.

If you have any questions about your portfolio or what any of this means for your specific situation, please don’t hesitate to reach out to your CIAS Investment Adviser Representative. We are here to help you navigate these markets with confidence.

Edward J. Sabo

Chief Investment Officer

Capital Investment Advisory Services, LLC

Important Disclosures:

Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The statements contained herein are solely based upon the opinions of Edward J. Sabo and the data available at the time of publication of this report, and there is no assurance that any predicted or implied results will actually occur. Information was obtained from third-party sources, which are believed to be reliable, but are not guaranteed as to their accuracy or completeness.

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