HOTLINE
Hotline Archive
July 24, 2026
This is John Bonnanzio with a Fidelity Monitor & Insight Hotline update for Friday evening, July 24.
On Monday July 27, we will make the following Model Portfolio trades:
In the Select Model, we will sell our entire 9% stake in Select Consumer Discretionary [FSCPX]; with the proceeds of the sale we will buy Select Energy [FSENX].
In the Annuity Sector Model, we will sell our entire 9% stake in VIP Consumer Discretionary [FVHAC]; with the proceeds of the sale we will buy VIP Energy [FJLLC].
These changes reduce overall risk by about 10% in both portfolios, thanks to low correlation between the energy group and other sector holdings. We also think consumer spending may slow due to higher liquid fuel costs and rising interest rates, while the energy sector could deliver higher-than-expected earnings growth due to an ongoing shortage in global refining capacity.
There are no other model portfolio trades advised.
As was the case last week, market sentiment and, correspondingly, price swings, were exaggerated.
The key driver was, once again, renewed fighting between the U.S. and Iran. Coupled with new hostilities by the Houthis striking a tanker off Saudi Arabia’s Red Sea, roughly 25% of the world’s oil supply could now be at risk. That realization drove crude to just over $100 a barrel on Thursday (as measured by Brent futures which are most affected). In turn, bond yields rose (their prices fell), and growth-stock prices shuddered. (West Texas Intermediate spiked 10.1% this week to finish Friday at $90.54 a barrel.)
Second-quarter earnings season is also in high gear. Last week, Big Banks reported big earnings. (Some analysts expect quarterly earnings for the S&P 500 to climb 25% year-over-year.) This week, however, Tesla disappointed investors, not so much on revenue or earnings, but rather due to heavy capex spending which caused free cashflow to turn negative.
For its part, Alphabet’s Google continues to print money, exceeding earnings expectations, but here too Wall Street was cool to the good news and instead focused on the hyper-scaling spending spree, which will increase to $195-205 billion for 2026, up from the previously forecasted range of $180-190 billion.
Note that tech will remain in the forefront of investor interest next week when Amazon, Meta and Microsoft report, followed by Apple and Qualcomm. In addition, the Fed meets next week. Given recent favorable inflation data, a tightening move seems unlikely. But with the Strait of Hormuz back in play and sustained higher oil prices threatening to reinflame inflation, the odds of a rate hike later this year have risen to 36%, up from 25% at the time the Memorandum of Agreement was being hashed out.
Finally, on Friday, markets responded favorably to rumors that US-Iran talks may resume, while President Trump replaced temporary tariffs that followed an earlier Supreme Court ruling with permanent tariffs of 10-12.5% on more than 80 countries.
For the week through Friday’s close, the Dow Industrials slipped a modest 0.4% and the S&P 500 was off a comparable 0.6%. But the tech-enriched Nasdaq Composite declined 2.1% and is now down 4.7% month-to-date.
Small- and mid-sized stocks were off 1.1% and just below breakeven, respectively, as measured by Russell indexes.
Overseas markets typically fared better than our own owing largely to their smaller tech exposures. The Euro 600 eked out a gain of 0.5%, while London’s FTSE 100 (up 1.3%) got an emotional boost with the appointment of a new prime minister (its sixth since the 2016 Brexit referendum).
In Asia, Japan’s Nikkei 225 gained a modest 0.7% while the Shanghai Composite rose 1.3% on AI optimism and the government’s plans to accelerate economic growth with an infusion of capital.
The prospect of higher U.S. interest rates later this year, along with safe-harbor asset re-allocations, gave a modest lift to both the dollar (up 0.5% in trade-weighted terms) and gold (rising 1% to $4,055.70 a troy ounce).
Bonds struggled this week over increased Mideast hostilities. The most interest-rate-sensitive Treasury, the 30-year Bond, saw its yield briefly spike to 5.19% (its highest level since 2007) before settling at 5.16% today. For its part, the benchmark 10-year Treasury jumped 14 basis points to 4.69%. (Bond yields move inversely to their prices.)
| Our model performance as of Friday's close is listed below: | ||
|---|---|---|
| Week | YTD | |
| S&P 500 | - 0.6% | + 9.0% |
| Barclays US Aggregate Bond | - 0.7% | - 0.5% |
| Income Model | - 0.2% | + 3.9% |
| G&I Model | - 0.4% | + 7.8% |
| Growth Model | - 0.4% | + 11.2% |
| Select System | - 1.1% | + 14.3% |
| Unique Opportunities Model | - 0.9% | + 9.2% |
Finally, our next regularly scheduled Hotline will be Friday evening July 31.
Fidelity Monitor & Insight's Hotline is updated on Friday evenings or whenever the Dow moves 1,000 points or more in either direction.