August 2026

July 2026 saw the continuation of meaningful undercurrents of bi-directional volatility as sentiment shifted with the shredding of the Iran MOU. As the quarterly earnings season kicked off mid-month, companies were often handsomely rewarded for beating estimates or cruelly punished for misses. As Standard & Poor’s put it:



July sectoral performances marked a sharp reversal from Q2, as rising oil prices propelled Energy equities upwards, with the Select Sector Energy up 12%. Meanwhile, Information Technology stocks faced headwinds from AI-related concerns, with the Select Sector Technology down 8%. Energy led and Technology lagged across the capitalization spectrum.



The sectors that this quote references are the 11 sectors of the Standard & Poor’s 500 Index that make up the U.S. corporate economy. Visually, you can see in the accompanying graphic the dispersion of outcomes across those sectors in the July, Year to Date, and trailing 12-month periods.



Please also see Disclosures at end of presentation.

Generally, the sectors that had worked so well since the MOU was signed with Iran in April to drive U.S. stocks to new high prices reversed course in July, giving back some of their gains.

We view this broadening out process in the stock market as constructive, potentially leading to a healthier ability to sustain the rally based on earnings rather than sentiment.

Earnings growth within the S&P 500® for 2026 continues the trend of accelerating, from 24.1% at the end of June to 30.2% at the end of July.

Earnings for S&P 500® as of 6/29/2026

Source: Factset

Earnings for S&P 500® as of 7/31/2026

Source: Factset

Factset’s S&P 500 Earnings per Share (“EPS”) Consensus aggregates the median earnings forecasts of all the active equity analysts submitting estimates to its platform for companies in the S&P 500 Index. It is typically used as a baseline for gauging the future of corporate profitability for the broader market. The consensus estimates in the charts are forward-looking therefore data is subject to change and revision.

Driven largely by AI, the growth in earnings contains a not insignificant amount from marking Amazon’s, Google’s, and Microsoft’s ownership in Anthropic, OpenAI, and SpaceX to fair market value, as shown in this graphic dated July 31:

Please also see Disclosures at end of presentation.

Of the 27% growth experienced in the first quarter of this year, 7% was mark to market and 20% was actual earnings. Currently in the midst of earnings season for the second quarter, the new marks to market have already kicked in an additional 19% to the ultimate growth number.

The total return for the S&P 500® in July was slightly negative at -0.06%: grinding violently to nowhere. Why violently? The number of stocks within the index that did NOT move more than 5% in either direction over the month of July was 231 by our count: over HALF the entire index in a single month ⁱ   had price changes of 5%. Venerable IBM’s stock lost 25% in value after reporting slowing commitments in their mainframe and attendant services units on July 14, while Microsoft gained +15.5% on July 30 and Amazon added +15.3% on July 31 after accelerating growth in their respective cloud businesses, just as examples.

For the year through July 31, the S&P 500® was up +10.14%. Widening the lens out globally, the stocks’ benchmark we use for comparison to our models, the MSCI ACWI (All Capitalization World) Index, gained +0.20% for July and stands at +11.27% for the year, remaining ahead of the S&P 500®.

As noted, the shredding of the IRAN MOU caused the price of oil to spike higher again, elevating fears of inflation. However, the continued strength of the U.S. economy set aside concerns about near term stagflation where a weak economy experiences persistent inflation. Yet the fears of inflation that will persist together with a Fed Chair who has not much to say other than the FOMC will reduce inflation to its target of 2% with no stated plan as to how, woke the debt markets up to demand more yield for greater risk and uncertainty. The Investment Grade U.S. bond benchmark index (commonly known as the “AGG”), lost -1.15% net in July, now sitting at -0.54% for the year. Longer dated debt fared worse: the 30-year U.S. Treasury bond lost -3.76% in July to make the return now -3.41% for the year.

July, perhaps more than many, welcomed diversification as your friend. The greater variety of different kinds of stocks, debt, and strategies that you owned during the month, the likely better outcome. Over the past couple of years as AI surged to the forefront of not just consciousness, but now our everyday work and leisure, momentum has frequently been the dominant theme. What was working, continues to work. July was a reminder that momentum can move in the opposite direction as well. For the present we go back to and affirm our earlier statement that we view this broadening out process in the stock market as constructive, potentially leading to a healthier ability to sustain the rally based on earnings rather than sentiment.

As always, please contact your advisor to discuss your investment performance and financial plan.

1. https://tickersweep.com/heatmap?i=custom&start=2026-07-01&end=2026-07-31
   

DISCLOSURES:

Past performance does not guarantee future results.

There are no guarantees that a strategy will achieve its investment objective. All investments involve risks that you will lose value including the amount of your initial investment. Investments that offer the potential for higher rates of return generally involve greater risk of loss. Clients should review carefully reports or statements produced by us, such as for performance and cash flows, and compare the official custodial records to any such that we provide. Information we provide could vary from custodial statements based on accounting procedures, reporting dates, or valuation methodologies of certain securities.

Clients’ actual return experiences will vary given the clients’ unique respective needs and circumstances. Your investment returns may differ due to length of time invested, additional cash contributions, or distributions. Clients’ actual returns will be reduced by the investment advisory fees and any other expenses incurred in the management of their portfolios. While Advocacy Wealth maintains an annual standard fee schedule for services as disclosed in its Form ADV Part 2A Brochure, the Firm reserves the right to negotiate fees, so not all clients have the same fee schedule and clients’ net returns experiences will not be uniform. 

All indices cited are unmanaged indices and the reinvestment of dividends, interest, and/or other distributions is assumed. Indices used as benchmarks cannot be directly invested in by you. Index performance is for illustration only. Index performance does not reflect any management fees, transaction costs or expenses. The S&P 500® Index measures return performance of the 500 or so largest companies in the U.S. by market capitalization (said another way, the higher the company is valued in the market relative to other companies, the higher its percentage share in the index). References to the S&P 500 Select Sectors is a reference to the 11 sector groups which organize all of the Index's underlying stock categories into broad groups (sectors) of businesses based on what they do. The S&P 500 Ex-Sectors Index is a sub-set of the S&P 500 that removes certain of the 11 broad sector groups to minimize volatility introduced by cyclical or heavily fluctuating market sectors. The S&P MidCap 400 Index is an unmanaged index that tracks a diverse basket of 400 mid-sized U.S. firms ranging from approximately $2 billion to $10 billion in market cap. The S&P MidCap 400 Capped Sectors are subsets of the S&P MidCap 400 Index, each tracking mid-sized U.S. companies in the respective sector group but having a limit/cap on the maximum weight that any single company can comprise to minimize the influence of any one company. The S&P 600® is a common benchmark for small-sized companies in the U.S. equities market, and includes 600 companies and represents approximately 3% of the U.S. market. The S&P SmallCap 600 Capped Sectors are subsets of the S&P SmallCap 600 Index, grouping small-cap stocks by their respective business sectors and having a limit/cap on the maximum weight that any single company can comprise to minimize the influence of any one company. The small cap market segment is typically known for less liquidity and potentially less financial stability than large caps. The ACWI, which is the MSCI All Capitalization World Index and is our primary stock benchmark because it best fits our investment opportunity set in the asset class, is roughly 62.5% U.S., 25% Developed markets outside the U.S, and 12.5% Emerging markets. The Bloomberg Aggregate Core Investment Grade US Bond index, as well as the ETF mirroring that Index (Ticker: AGG) includes U.S. Investment-grade taxable bonds. The index is weighted according to amount outstanding; thus, U.S. Treasuries comprise around half the holdings as the Treasury is the largest debtor in the U.S. 

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