HOTLINE
Hotline Archive
July 31, 2026
This is John Bonnanzio with a Fidelity Monitor & Insight Hotline update for Friday evening, July 31.
There are no model portfolio trades advised.
Once again, market volatility was in clear view this week with the Dow Jones Industrial Average falling more than 2% on Wednesday. Though there was some recovery the next day, today closed out the month on a sloppy note.
As has been the case in recent weeks and months, investor enthusiasm for AI infrastructure buildouts has alternatively been embraced and disavowed. According to Goldman Sachs and others who track retail investors and their institutional counterparts, the former have been unloading their highly appreciated tech stocks whereas institutions have been using dips to buy.
This past week was also notable for the Fed taking a pass on hiking interest rates, though there are now some voting members of the rate-setting committee favoring higher rates. (PCE, the Fed’s preferred inflation gauge, dipped 0.1% for June, though it remains at an elevated level of 3.7% year over year.)
Separately, second-quarter earnings season has left tech investors with some reasons to cheer, though as noted, many are questioning future ROIs and growing balance sheet indebtedness. Market-moving earnings were reported this week by Microsoft, Apple, Amazon and Meta – with very mixed investor reactions. Energy giants Exxon and Chevron also reported; their earnings growth was propelled more by a global shortage of refining capacity than by higher oil prices, a situation that stands to persist even if tanker-traffic in the mid-East returns to normal at some point.
On the economic front, the government’s preliminary real (inflation-adjusted) economic growth for the second quarter fell to an unexpectedly slow annualized pace of 1.5% as increased imports of data-center components weighed on growth. That number was below the market’s 1.8% forecast and last year’s pace of 2.1%.
Geopolitically, the U.S.-Iran war broadened and, to a certain degree, appeared to intensify, though oil prices on the futures markets cooled. (More on that later.)
For the week through Friday’s close, the Dow and S&P 500 gained 1.0% and 1.1%, respectively. For its part, the Nasdaq Composite managed to advance 1.6% (though it ended July in the red).
Investors in interest-rate-sensitive small- and mid-cap stocks appeared to focus on the Fed’s three members who voted for a rate hike, or perhaps they didn’t like a recent PCE report showing inflation rising faster-than-expected: the Russell 2000 was basically flat this week while mid-caps rose just 0.3%.
In Europe, the 600-stock barometer managed a rise of 0.7% versus London’s FTSE 100 gain of 1.2%. At the same time, France’s CAC 40 gained 1.6%; investor sentiment was up owing to better-than-expected second-quarter earnings, strong forward guidance, and improved market sentiment. In Japan, the Nikkei slumped 0.4% as investors were literally rattled by a damaging earthquake. Tech valuations were also a concern.
Elsewhere, the MSCI Emerging Markets index tumbled 6.5% this week as it is highly exposed to Asian tech companies like TSMC and Samsung. Unlike U.S. institutional investors who have been buying on tech dips, Asian financial institutions have recently shown themselves to be more sensitive to valuations.
Perhaps most surprising this week was oil’s precipitous drop even as the Persian Gulf war heated up and more state actors became involved. To that latter point, U.S. allies in the region appear to be forming a coalition against Iran, while demand for crude itself may now be declining somewhat due to a global shortage in refining capacity. That said, West Texas Intermediate ended today at $84.57 a barrel – a drop of 6.6% from last week.
In the bond market, yields on shorter-term bills and notes pulled back while yields on intermediate and longer-dated notes rose amid longer-term inflation concerns. For its part, the yield on the benchmark 10-year Treasury finished the week at 4.57%, an increase of 6 basis points. (Bond prices move inversely to their yields.)
| Our model performance as of Friday's close is listed below: | ||
|---|---|---|
| Week | YTD | |
| S&P 500 | + 1.1% | + 10.1% |
| Barclays US Aggregate Bond | - 0.1% | - 0.6% |
| Income Model | + 0.3% | + 4.2% |
| G&I Model | + 0.9% | + 8.7% |
| Growth Model | + 0.4% | + 11.7% |
| Select System | 0.0% | + 14.3% |
| Unique Opportunities Model | + 0.7% | + 9.9% |
Some housekeeping…
We executed trades in both our Select and Annuity Sector model portfolios on Monday July 27. (We announced them last week and will report them in the August newsletter.)
The August newsletter will be posted on our website Monday evening August 3; the printed version will be mailed later in the week.
We posted a Special Hotline update on Wednesday July 29 as the Dow Jones Industrial Average ended that day more than 1,000 points lower. (A 1,000-point upswing also triggers a Special update.)
And, finally, our next regularly scheduled Hotline Update is Friday evening August 7.
Fidelity Monitor & Insight's Hotline is updated on Friday evenings or whenever the Dow moves 1,000 points or more in either direction.