Markets In Focus: The Week That Was and What’s On Tap
THE WEEK THAT WAS
U.S. equity markets endured a turbulent week ending July 24, as two competing forces pulled the tape in opposite directions and left investors with more questions than answers. The S&P 500 declined 0.6% for the week, while the Nasdaq Composite bore the heavier burden, falling 2.1% as mega-cap technology absorbed the bulk of the selling pressure. Small caps, as measured by the Russell 2000, shed 1.1%, while the equal-weighted S&P 500, tracked here via The ETF RSP, eked out a gain of 0.1%, a divergence that speaks to where market stress was concentrated and where it was not.
The week’s defining moment arrived Wednesday evening, when Alphabet and Tesla reported second-quarter results that unsettled investors despite otherwise solid revenue growth. Alphabet raised its 2026 capital expenditure guidance to $195–205 billion, up from a prior range of $180–$190 billion, and flagged even higher spending in 2027. Tesla reported its first quarter of negative free cash flow in over two years, with capital expenditures surging 142% year over year. Markets responded sharply. Alphabet fell roughly 7% and Tesla dropped 14% on Thursday, the Nasdaq’s worst single-day performance in a month. The central concern is familiar but now more prevalent: the four hyperscalers are collectively on pace to spend $650 billion on AI-related infrastructure in 2026, a 67% increase from 2025, and the market remains unconvinced that returns will arrive on a timeline that justifies current valuations.
Compounding the technology selloff was a renewed escalation in the Middle East, where Houthi attacks on Saudi oil tankers sent Brent crude briefly above $100 per barrel for the first time since late May. Rising energy prices pushed the 10-year Treasury yield briefly above 4.7% during the week, reigniting rate hike speculation and applying additional pressure on risk assets.
Against that backdrop, the earnings season scorecard offered a meaningful positive. Of the roughly 95 S&P 500 companies that had reported through week’s end, 88% beat consensus estimates, with blended Q2 earnings growth running at 24.7%, above the 23.2% estimate entering the season and on pace for the second consecutive quarter above 20%. The equal-weighted index posting a modest gain even as the cap-weighted benchmark sold off reinforced that the week’s damage was concentrated, not broad.
THE WEEK AHEAD
The week ending July 31 (OMG, where has the summer gone!!) delivers the densest catalyst calendar of the summer. The FOMC decision Wednesday afternoon headlines, with Chair Warsh’s press conference the swing factor for rates markets given his more hawkish reputation relative to Powell. Consensus expects a hold, but any signal on the pace of cuts into year-end will move both duration and rate-sensitive equity cohorts. Thursday brings the Q2 GDP advance estimate alongside June PCE, the Fed’s preferred inflation gauge, in immediate succession to the Fed decision, a sequencing that raises the risk of a two-day volatility cluster rather than a single-day event. Tuesday’s Conference Board Consumer Confidence print offers an early read on household sentiment amid tariff-driven price pressure.
Earnings intensify further. Microsoft and Meta both report Wednesday after the close, putting Azure growth, Copilot monetization, and Meta’s AI capex trajectory directly against the Fed statement in the same 24-hour window. Apple follows Thursday after the close, with services growth and holiday-quarter guidance in focus. Amazon rounds out the hyperscaler cohort later in the week, with AWS margins the key swing variable for the AI infrastructure narrative even absent an NVDA print. Given the breadth of S&P 500 names reporting alongside the Mag 7, this print cluster will set the tone for capex-driven AI positioning into August.
Geopolitically, the Iran conflict remains the dominant tail risk. Strikes on Iranian infrastructure continue, and Houthi threats to Strait of Hormuz shipping keep an energy risk premium embedded in crude, a genuine stagflationary complication for the Fed’s Thursday data. Layer on fresh reciprocal tariffs on Canadian goods and looming pharmaceutical tariffs, and cross-asset volatility should stay elevated.
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The S&P 500 generally represents performance of 500 large companies listed on exchanges in the U. S. It is one of the most commonly followed equity indices. The Nasdaq Composite Index is a market-weighted index that measures the performance of more than 3,000 common equities listed on the Nasdaq Composite Market. The Russell 2,000 Index is a market-cap weighted index that measures the performance of approximately 2,000 of the smallest companies in the Russell 3,000 Index. The MSCI ACWI captures Large and Mid-Cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries. With 2,921 constituents, the index covers approximately 85% of the global investable equity opportunity set. FactSet Research System is a financial data and software company that provides research for Wall Street professionals and individual investors.
