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Quote of the Week
“In the short run, the market is a voting machine, but in the long run, it is a weighing machine.”
— Benjamin Graham
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Last week was a good example of the market voting machine in action. Iran headlines pulled the tape lower, tech stocks took another hit, and every major U.S. index finished in the red. The S&P 500 gave back 1.5%, the Nasdaq dropped nearly 3%, and the Dow lost close to 1%.
The trigger was renewed Iran tension. U.S. Central Command struck targets in Iran on seven consecutive nights, oil prices surged more than 13% for the week, and volatility jumped. Semiconductor stocks were the other soft spot, with the group extending its recent slide on concerns that the biggest AI spenders may start scaling back.
But beneath the headlines, something important happened. Both June inflation reports came in noticeably cooler than expected, the big banks reported the strongest quarterly earnings in U.S. history, and consumer spending held up. In other words, the vote went one way last week. The weighing, when we get to it, may tell a very different story.
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Number of the Week
$21.2 Billion
JPMorgan Chase’s second-quarter profit, the largest quarterly profit ever reported by any U.S. bank. Every one of America’s five largest banks beat expectations. Goldman Sachs posted its best quarter in history, with earnings nearly doubling from a year ago. These are not the kind of numbers you see when the economy is on the ropes.
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📊 Market Snapshot — Week Ending July 17, 2026
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INDEX / ASSET
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CLOSE
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WK CHANGE
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YTD
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S&P 500
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7,457.69
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▼ 1.55%
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▲ 8.9%
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Dow Jones
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52,146.42
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▼ 0.93%
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▲ 8.5%
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Nasdaq Comp.
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25,520.24
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▼ 2.90%
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▲ 10.1%
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Russell 2000
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2,962.22
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▼ 0.52%
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▲ 19.4%
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Crude Oil (WTI)
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$81.78
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▲ ~13%
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▲ ~14%
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Gold (Spot)
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$4,018.80
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▼ 2.3%
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▲ ~5%
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10-Yr Treasury
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4.44%
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▼ 12 bps
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▲ ~54 bps
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VIX (Fear Index)
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18.77
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▲ 3.74 — Elevated
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Data sources: Yahoo Finance, CNBC, Reuters, Investing.com, as of July 17, 2026 close. Past performance is not indicative of future results.
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📉 What Drove Markets Last Week
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A tug-of-war week. Iran tension and a semiconductor selloff pulled markets lower, while back-to-back cooler inflation reports and historic bank earnings pushed in the other direction. Three stories mattered most:
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⚡ Iran War Reignited
U.S. Central Command struck targets in Iran on seven consecutive nights, effectively ending the interim peace deal. Crude oil surged 13% on the week to about $82 a barrel. The Strait of Hormuz saw fresh disruption, and the ceasefire framework appears to have broken down. Energy stocks rallied while airlines and consumer names took the hit.
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📈 Inflation Cooled on Both Fronts
Both major June inflation reports came in cooler than expected. Consumer prices actually fell 0.4% on the month, with the annual rate dropping to 3.5% from 4.2% in May. Producer prices, which track wholesale costs before goods reach consumers, also fell 0.3%. Both drops were driven mainly by lower energy prices. Core measures were steady rather than falling, but this is exactly the kind of number that gives our new Federal Reserve Chair some room to stay on hold.
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🏦 Historic Bank Earnings
JPMorgan reported a record $21.2 billion quarterly profit, the largest ever by a U.S. bank. Goldman Sachs posted its best quarter in company history, driven by trading and investment banking (with a big assist from SpaceX IPO fees). Bank of America, Citigroup, and Wells Fargo all beat expectations as well. A strong start to earnings season.
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The tech selloff was the other story worth watching. Semiconductor stocks fell for a second straight week, with the Philadelphia Semiconductor Index (SOX) sliding another 1.6% Friday. Investors are seemingly increasingly worried that the largest AI infrastructure buyers, the so-called hyper-scalers, may start scaling back capital spending after several years of aggressive investment. That concern, combined with the Iran-driven jump in oil, put pressure on the highest-priced parts of the market.
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🔭 What to Watch This Week (July 20 – 24)
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Earnings season broadens out considerably. Tesla and Alphabet report Tuesday and Wednesday, two of the Magnificent 7 names we have been watching closely. Iran developments remain a wild card, and Friday brings the first read on second-quarter GDP.
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KEY EVENTS THIS WEEK
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Mon 7/20
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Leading Economic Indicators (June) • Iran developments
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Tue 7/21
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Tesla, Alphabet, Coca-Cola, GM earnings • Existing Home Sales
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Wed 7/22
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IBM, AT&T earnings • New Home Sales
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Thu 7/23
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Honeywell, Union Pacific, Intel earnings • Jobless Claims • S&P Global PMI
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Fri 7/24
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Q2 GDP (advance estimate) • Durable Goods Orders • Michigan Consumer Sentiment (final)
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Tesla and Alphabet on Tuesday are two of the earnings to watch. These are the first two Magnificent 7 names to report, and their results could shape the tech narrative heading into the rest of the season. Tesla’s numbers may get particular attention given the stock’s recent volatility, and Alphabet’s AI story will likely be scrutinized for signs of whether the capex (capital expenditures) concerns weighing on chip stocks are justified.
Friday’s Q2 GDP report will offer the first comprehensive read on how the economy performed in the second quarter. Economists are expecting growth of around 2%, which would be a solid result given the war, the inflation scare, and the Federal Reserve’s current tougher stance. A stronger number could confirm the resilience story. A weaker one might reinforce the case for the Federal Reserve to cut rates later this year. The Iran situation also remains active, with tanker traffic disrupted and no clear resolution in sight.
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🌎 The Big Picture — Our Take on the Markets
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Benjamin Graham’s reminder at the top of this letter has stood the test of a full century of market history. In the short run, markets are a voting machine, driven by emotion, momentum, and whatever story is on the front page. In the long run, they are a weighing machine, driven by earnings, cash flow, and the fundamental strength of the underlying businesses. Last week was a perfect demonstration of the voting machine at work.
Consider the split screen. The headlines said stocks fell because of Iran. But under the surface, the largest banks in the country just posted the best quarterly earnings in American banking history. Both consumer and producer prices actually declined on the month, the first back-to-back drop since the COVID pandemic. Wages continued to grow. Unemployment stayed low. The economy has not gotten weaker. If anything, it has strengthened. And yet the market seemingly voted lower on Iran headlines and semiconductor worries. That is the voting machine in action, and it happens more often than most investors realize.
Of course, there are still things to keep an eye on. The Iran situation is genuinely worse than it was two weeks ago, and if oil stays elevated, it could feed back into inflation and complicate the Federal Reserve’s path. The AI capex concerns are real, and if hyper-scaler spending truly slows, the technology sector could see more pain. Second-quarter GDP on Friday will offer an important read on whether the underlying economy is holding up. But the bigger picture heading into the second half remains a constructive one. Currently, the S&P 500 is up nearly 9% on the year, small-company stocks are up more than 19%, and the fundamentals underneath the market are stronger than any point since the Iran war began. The weighing machine, given time, tends to get it right.
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A week that felt worse than it actually was. Currently, the S&P 500 gave back 1.5%, but is still up nearly 9% on the year. The Nasdaq lost nearly 3% but is up more than 10%. Small caps slipped half a percent but remain up more than 19%. The best week in U.S. banking history was drowned out by Iran headlines, but it happened. Sometimes the loudest news may not be the most important news.
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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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