Welcome to our monthly briefing, where we provide a comprehensive analysis of recent economic events and their implications for the financial markets. July’s commentary highlighted a meaningful shift beneath the surface of market returns, as leadership rotated away from many of the year’s strongest performers while dispersion across stocks, industries, and sectors remained unusually elevated. Despite a relatively low VIX, stock-level volatility persisted, highlighting a growing divergence between headline index performance and underlying market breadth.
Highlights from July’s Briefing:
- Large-cap growth stocks declined during the month as semiconductor-related names pulled back, while large-cap value stocks advanced, aided in part by additions to the Russell Value Index. Small-cap and emerging market equities also posted weaker July results, though emerging markets remain well ahead of developed markets on a year-to-date basis.
- Leadership shifted meaningfully across sectors and industries. Industrials and information technology were among the weaker-performing sectors in July despite remaining strong performers year-to-date, while software stocks outperformed during the month.
- Treasury yields rose to their highest levels since 2023 as bond investors reacted to the Federal Reserve’s decision to leave short-term interest rates unchanged and sought greater clarity from new Federal Reserve Chair Kevin Warsh.
- The gap between the VIXEQ, an equally weighted volatility measure, and the traditional market-cap-weighted VIX reached its widest level on record.
- A growing divergence between the S&P 500 and measures such as the advance-decline line indicates that a relatively small group of stocks has continued to drive index-level returns, creating an environment in which company-specific outcomes may matter more than broad market movements.
Read the July 2026 Monthly Commentary for insights from Chief Market Strategist Julie Biel, CFA
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