Our July Perspective
What’s New
The S&P 500 ended July nearly unchanged from where it began the month. This marks the second consecutive month of unspectacular price action for the broad US stock market benchmark.
However, a closer look reveals a market that has been anything but boring. Energy led the way in July, gaining over 10% as a resumption of hostilities with Iran sent crude oil higher. Meanwhile, the tech sector declined nearly 3.5%, with the semiconductor industry plunging over 20% in a single month! Despite this volatility, the tech sector is still up over 15% year to date, and semiconductors are up over 50%.
Equity sector volatility was the big story for most of the month, but the Fed stole the spotlight in the final week of July. The central bank held rates steady at 3.50%–3.75% for a fifth straight meeting on July 29th, but with an unusually contentious 9–3 vote. Three Federal Reserve regional bank presidents dissented in favor of raising rates, citing inflation stuck above the Fed's 2% target for five years running.
Our Perspective
Double-digit monthly performance swings in major areas of the economy, such as energy and semiconductors, are rare. While the energy markets are getting whipsawed by geopolitical risk, investors in the tech sector are starting to question the potential return on investment of the hundreds of billions of dollars being allocated to build out the artificial intelligence (AI) infrastructure. After an extended period of rewarding the most aggressive spenders, a new period of greater scrutiny may be upon us. We believe that AI will remain a significant long-term theme for both the markets and the economy, but it is important not to lose sight of the fact that this is a capital-intensive endeavor fraught with the potential for boom-bust swings in sentiment and equity prices, as observed in recent months.
Our View
Stock Market
The first 7 months of 2026 have illustrated once again the benefits of a diversified approach to equity investing. While the S&P 500 is up 10% year to date, international stocks (MSCI ACWI ex USA) and domestic small caps (S&P 600) have done even better returning 14.4% and 21.5% respectively.
Bond Market
The Bloomberg US Aggregate bond index lost 1.3% in July as rates moved higher on inflation concerns. The 10-year US Treasury Bond yield increased over 0.4% to 4.75%, its highest level since January 2025. Corporate bonds took all this in stride as credit spreads (the additional yield required to take on default risk) barely moved.
In Focus: Private Assets
Private assets can play an important diversifying role within a portfolio. This includes investment opportunities in companies that are staying private longer, the ability to capture additional returns to compensate for illiquidity and complexity, and exposure to niche asset classes that are less correlated to public markets.
Themes Driving Markets
Energy Bottlenecks
Conflict around key shipping chokepoints keeps unsettling oil markets. Even after tensions ease, prices historically take longer than expected to normalize.
Bottom line: Slow normalization could sustain inflation pressure and keep the Fed leaning hawkish.
AI Spending
Spending on AI infrastructure has scaled to rival the largest capital investment cycles in US history.
Bottom line: The size of the bet raises the stakes for the companies funding it and the markets riding its momentum.
Market Sentiment
Investor risk appetite has climbed back toward levels last seen near prior market peaks, with signs of froth building beneath the surface.
Bottom line: A surge in IPO activity and rising margin debt point to a more speculative, later-cycle mood.
Only 1 in 4 Americans have a will.
August is Make-A-Will Month—a good nudge to create or review your estate plan.
If yours is outdated or missing, this is the month to fix it—not for doom and gloom, but for clarity, and less guesswork for the people you love.
Here's what surprises most people: retirement accounts and life insurance skip your will entirely and go straight to your named beneficiary. A stale form can undo your best intentions, especially after a marriage, divorce, or birth.
Draft a will. Name a guardian. Update a beneficiary. Any one step counts, and we're here to help.
Source: S&P Dow Jones Indices LLC., Federal Reserve Economic Data, Federal Reserve Bank of St. Louis, Morningstar, Caring.com.
All investments contain risk and may lose value. This material contains the opinions of Manning & Napier, which are subject to change based on evolving market and economic conditions. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but not guaranteed.
The S&P 500 Total Return Index is an unmanaged, capitalization-weighted measure comprised of 500 leading U.S. companies to gauge U.S. large cap equities. The index accounts for the reinvestment of regular cash dividends, but not for the withholding of taxes. The MSCI ACWI ex USA Index (ACWIxUS) is designed to measure large and mid-cap representation across 22 of 23 Developed Markets countries (excluding the U.S.) and 24 Emerging Markets countries. The Index returns do not reflect any fees or expenses. The Index is denominated in U.S. dollars. Index returns are net of withholding taxes. They assume daily reinvestment of net dividends thus accounting for any applicable dividend taxation. The S&P SmallCap 600 Index is an unmanaged, capitalization-weighted measure of 600 small U.S. companies with market capitalizations between $300 million and $1.4 billion listed on the on the New York Stock Exchange and the NASDAQ stock market. The Index returns assume daily reinvestment of dividends, and do not reflect any fees or expenses. The Bloomberg U.S. Aggregate Bond Index is an unmanaged, market-value weighted index of U.S. domestic investment- grade debt issues, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of one year or more. Index returns provided by Bloomberg. Index data referenced herein is the property of MSCI, its affiliates ("MSCI"), S&P Dow Jones Indices LLC, a division of S&P Global Inc., its affiliates ("S&P"), Bloomberg Finance L.P. and its affiliates ("Bloomberg"), and/or their third party suppliers and has been licensed for use by Manning & Napier. MSCI, S&P, and Bloomberg and their third party suppliers accept no liability in connection with its use. Data provided is not a representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and none of these parties shall have any liability for any errors, omissions, or interruptions of any index or the data included therein. For additional disclosure information, please see: https://go.manning-napier.com/benchmark-provisions.
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