Capital Compass | Weekly Market Update — July 27th, 2026

CAPITAL COMPASS

WEEKLY INVESTMENT NEWSLETTER

Week of July 27, 2026  |  Capital Investment Advisory Services, LLC

Markets ended the week lower for a second straight week. The Nasdaq took the biggest hit, dropping 2.1% on continued weakness in technology stocks. The S&P 500 and Dow each slipped a fraction of a percent, and small-company stocks pulled back about 1%. Oil stayed elevated on Iran tension, and bond yields climbed to their highest level since January of last year on inflation and tariff concerns.

The story underneath the surface was more nuanced. Weekly jobless claims fell to their lowest level since 1969, new home sales beat expectations, and corporate earnings generally came in strong. What spooked investors was not the current state of the economy but the future cost of the artificial intelligence race that a handful of large technology companies are running against one another, combined with the possibility that a still-strong economy may keep the Federal Reserve tougher on rates for longer.

Iran also stayed in the headlines. U.S. strikes on Iran continued, tanker traffic through the Persian Gulf was disrupted, and the White House announced new tariffs of 10 to 12.5% on several countries Friday. Late in the day, Pakistan stepped in to mediate between the United States and Iran, and oil prices eased on hopes of another de-escalation. It was a week where a lot happened, and much of it pointed in different directions.

Data sources: Yahoo Finance, CNBC, Reuters, Investing.com, as of July 24, 2026 close. Past performance is not indicative of future results.

Three cross-currents defined the week. Technology weakness pulled the tape down, bond yields spiked to a new high for the year, and Iran continued to add uncertainty to the mix. Here is how each played out:

Beneath these three cross-currents, the economic data was actually encouraging. Weekly jobless claims fell to their lowest level in more than 50 years. New home sales came in ahead of expectations. And the Conference Board raised its 2026 GDP growth forecast to 1.9% from 1.8%. Ironically, that strength is exactly what has bond investors worried. A resilient economy plus tariff-driven inflation plus elevated oil prices adds up to a Federal Reserve with less reason to cut rates and potentially more reason to raise them. That is the tension the market is trying to price in right now.

One of the biggest weeks of the year is ahead. Four of the Magnificent 7 report earnings, the Federal Reserve meets on Wednesday, and Thursday brings both Q2 GDP and the Federal Reserve’s preferred inflation gauge (Core PCE). The market will have plenty to react to.

Wednesday is the centerpiece. The Federal Reserve is widely expected to hold rates steady, but our new Chair’s tone will matter enormously. With bond yields at year highs, oil elevated, and new tariffs adding to the inflation picture, markets are increasingly pricing in a possible rate hike this fall. Any signals about the path ahead will move markets. After the closing bell, Microsoft and Meta report, and Meta especially is under scrutiny for the same capital spending concerns that hit tech names last week.

Thursday piles on. Q2 GDP will offer the first read on how the economy performed in the second quarter, with economists expecting growth of about 2.3%. Core PCE, the Federal Reserve’s preferred inflation measure, follows the same morning. Then after the close, Apple and Amazon report. Any single one of these events could move markets on its own, and they are all landing within about 32 hours of each other. Be ready for volatility.

There is an old Wall Street saying, “sell in May and go away.” It is not quite that simple, but the pattern behind it is real. Since 1990, the S&P 500 has averaged about a 1.4% gain in July, then delivered its two weakest months of the year in August and September before rebounding sharply in the fourth quarter. What we are watching unfold right now is a fairly normal seasonal setup: a summer pullback in an otherwise-solid year, driven by a mix of geopolitical noise, valuation concerns in the hottest sector, and the annual thinning of trading volume as investors take vacation. It is not comfortable, but it is not unusual either.

The technicals reinforce that framework. The S&P 500 is still holding well above its 200-day moving average, a key long-term trend line that has separated healthy markets from broken ones for decades. Market breadth has weakened over the last few weeks, which is worth watching, but the VIX at 18.58 is still in a normal range, well below levels that historically signal panic. Semiconductor weakness has been the epicenter of the pullback, and until that group finds a floor, technology is likely to remain under pressure. But the other 10 sectors of the S&P 500 have generally held up, which is a sign that this is a rotation within the market rather than a broad-based selloff.

Historically, summer weakness in an otherwise-solid market has been a setup, not a warning. Since 1950, when the S&P 500 has finished the first half of a year up 5% or more, as it did this year, the fourth quarter has produced positive returns roughly 80% of the time, with an average gain of about 5%. Currently, the S&P 500 is still up more than 8% on the year, the Dow is up 8%, and small-company stocks are up 18%. Nothing about that scoreboard says the year has gone off the rails. Combined with a strong labor market, continued earnings growth, and companies investing heavily in the future, the underlying setup remains constructive. There are risks worth watching: Iran, tariffs, higher yields, and the Federal Reserve’s tone this week. But summer volatility is not new, and history suggests patient investors are usually rewarded for staying the course through the seasonally weak months.

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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