After several weeks of gains, stocks took a step back last week as renewed geopolitical tensions in the Middle East and growing questions surrounding Artificial Intelligence outweighed an outstanding start to second-quarter earnings season.
While market pullbacks are never enjoyable, they are a normal part of investing. The encouraging news is that the underlying economy remains resilient, inflation is showing signs of moderation, and Corporate America is once again demonstrating its ability to generate impressive profits.
As we move deeper into earnings season, investors will continue balancing strong corporate fundamentals against higher oil prices, geopolitical uncertainty, and questions surrounding future economic growth.
Market Performance: Last Week & Year-to-Date
| Index | Last Week | YTD |
|---|---|---|
| Dow Jones Industrial Average | (0.83%) | +8.60% |
| S&P 500 | (1.45%) | +9.06% |
| NASDAQ Composite | (2.78%) | +9.92% |
| Russell 2000 | (0.65%) | +19.20% |
| Foreign Stocks | (1.09%) | +7.45% |
| Emerging Markets | (5.25%) | +15.87% |
| Bloomberg U.S. Aggregate Bond | +0.08% | +0.11% |
| Bloomberg Municipal Bond | (0.35%) | +1.55% |
The 10-Year U.S. Treasury yield ended the week at 4.551%, down slightly from 4.561% the previous week.
WTI crude oil surged to $82.47 per barrel, climbing nearly 15% from the prior week’s close of $71.51 as investors reacted to escalating tensions in the Middle East. Higher oil prices are always worth watching, as they can eventually place upward pressure on inflation and consumer spending.
Inflation Continues Moving in the Right Direction
One of the week’s most encouraging developments came from both the Consumer Price Index (CPI) and Producer Price Index (PPI) reports.
Consumer Price Index (CPI)
Headline consumer prices declined 0.4% during June, helped significantly by lower energy prices. Year-over-year inflation now stands at 3.5%.
Core CPI, which excludes the more volatile food and energy categories, was unchanged for the month and currently stands at 2.6% year-over-year.
While inflation remains above the Federal Reserve’s long-term target, these numbers suggest price pressures continue moving in the right direction.
Bureau of Labor Statistics July CPI Report
Producer Price Index (PPI)
Wholesale prices also provided encouraging news.
PPI declined 0.3% during the month, driven primarily by a 1.4% drop in goods prices.
Year-over-year Producer Prices remain elevated at 5.5%, while Core PPI increased just 0.1% during the month and currently stands at 5.1% from a year ago.
Although inflation has not been completely defeated, both reports suggest progress continues. That’s welcome news for consumers, businesses, and the Federal Reserve alike.
Moderating inflation also reduces pressure on the Federal Reserve to raise interest rates further, something both stock and bond investors have been hoping to see.
Bureau of Labor Statistics July PPI Report
Bank Earnings Once Again Impress Wall Street
Second-quarter earnings season got off to an outstanding start.
Goldman Sachs, JPMorgan Chase, and several other large financial institutions reported results that hit the ball out of the park.
Ordinarily, earnings reports of this magnitude would have been enough to propel markets higher.
Instead, investors focused on rising oil prices and increasing geopolitical uncertainty.
This serves as another reminder that markets rarely focus on just one issue at a time. Even excellent corporate profits can occasionally take a back seat when investors become concerned about broader economic or geopolitical developments.
The good news is that Corporate America continues demonstrating remarkable resilience despite higher interest rates and an uncertain global environment.
Artificial Intelligence: The Next Chapter Begins
Artificial Intelligence remains one of the most important investment themes of this decade.
Over the past two years, technology companies have invested hundreds of billions of dollars building AI infrastructure. Investors enthusiastically rewarded those companies as they raced to become leaders in what many believe will be the next technological revolution.
Today, however, Wall Street is beginning to ask a different question:
When will these enormous investments begin producing meaningful returns?
Many technology companies initially funded AI development using their own cash flow. As competition intensified, several began issuing additional shares of stock and, more recently, record amounts of corporate debt to continue expanding their AI capabilities.
At the same time, competition continues to increase.
Chinese AI developer Moonshot was recently reported to have technology capable of competing with offerings from both OpenAI and Anthropic. As more companies enter the market, investors naturally wonder whether the industry could eventually experience oversupply, forcing consolidation among weaker competitors.
History suggests these concerns are perfectly normal.
The internet, smartphones, cloud computing, and countless other technological breakthroughs were all met with skepticism during their early years. Yet many ultimately transformed the global economy.
I continue to believe Artificial Intelligence has tremendous long-term potential. The companies that successfully convert today’s enormous investments into tomorrow’s profitable products and services are likely to become the next generation of market leaders.
The challenge for investors is determining who those winners will ultimately be.
Week Ahead: Earnings Take Center Stage
While this week brings a relatively light economic calendar, Wall Street’s attention will shift squarely toward corporate earnings.
Approximately 86 companies within the S&P 500 are scheduled to report, including several of the market’s largest and most influential businesses.
Among the companies reporting this week are:
- Alphabet (Google)
- Tesla
- Intel
- AT&T
- Verizon
- General Motors
- American Express
- GE Vernova
- Honeywell
- Lockheed Martin
With stock prices having reached near-record highs earlier this month, expectations remain elevated. Investors are no longer looking for companies to simply report good earnings—they’re looking for companies to exceed expectations while also providing optimistic guidance for the second half of the year.
This earnings season will likely provide valuable insight into consumer spending, corporate investment, labor costs, and perhaps most importantly, how businesses are beginning to monetize their investments in Artificial Intelligence.
What to Watch This Week
Several themes continue to dominate the investment landscape.
First, geopolitical developments in the Middle East remain fluid. While markets have generally looked beyond overseas conflicts over the past several years, a sustained increase in oil prices could eventually place upward pressure on inflation and slow consumer spending.
Second, I will continue watching inflation trends closely. Last week’s CPI and PPI reports were encouraging, but one month does not establish a long-term trend. Investors will want to see continued evidence that inflation is gradually moving toward the Federal Reserve’s long-term objective.
Finally, earnings guidance may prove more important than earnings themselves. Investors want to know whether corporate America remains confident heading into the second half of 2026. Future expectations often carry more weight than what companies have already accomplished.
Final Thoughts for Retirement Investors
Markets have enjoyed an impressive run over the past year, and occasional pullbacks should not come as a surprise.
Periods of volatility often feel uncomfortable in the moment, but history reminds us they are a normal and healthy part of long-term investing. In fact, some of the strongest market advances have followed periods of uncertainty.
Today, investors are balancing several competing forces. Corporate earnings remain strong, inflation appears to be gradually moderating, and businesses continue investing heavily in future growth through Artificial Intelligence. At the same time, higher oil prices, geopolitical uncertainty, and elevated market expectations have created reasons for investors to become more cautious.
Rather than attempting to predict every short-term market move, successful retirement investing is built on something much more reliable—a disciplined financial plan, proper diversification, and the patience to stay focused on long-term goals.
One of the greatest advantages retirees have is perspective. Markets have navigated wars, recessions, inflation, financial crises, and technological revolutions. Through each challenge, patient investors who remained committed to their plan have historically been rewarded.
As always, thank you for taking a few minutes each week to read our Retirement Report. I sincerely appreciate your continued confidence and the opportunity to help you navigate your retirement journey.
Until next week, stay informed, and enjoy the journey to and during retirement.
Thank you for reading!
Paul Levin, CFP®, ChFC®, RICP®, TPCP®
Managing Principal
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All market data sourced from The Wall Street Journal, July 17, 2026.
