Market Recap - Week of July 13 - 17, 2026

Gordon Achtermann
Jul 20
4 min read

The S&P 500 index fell 1.6% this week, led by technology stocks, amid concerns about whether excitement over artificial intelligence has been overdone in the US.

The S&P 500 ended the week at 7,457.69 and is down 0.6% for July but up 8.9% for the year.

Worries about the U.S. technology sector flared as China's Moonshot AI, which is backed by Alibaba (BABA), released an AI model that it says outperforms some US-based systems.

Continued conflict in the Middle East also weighed as crude oil futures climbed. Iran said it had targeted US military forces in Syria and Bahrain in a broadening of the scope of its attacks in the Middle East.

Economic data showed US consumer prices declined by more than expected in June while producer prices unexpectedly fell. The drop in producer prices came amid a steep decline in the cost of energy products.

US industrial production rose by less than expected in June as manufacturing output stalled, Federal Reserve data showed Friday.

The technology sector fell 3.8%, followed by a 2.4% loss in communication services and declines of 1.4% each in industrials and materials. Consumer discretionary and utilities also edged lower.

In communication services, shares of Netflix (NFLX) shed 6%. The streaming company's second-quarter revenue missed Wall Street's estimates while Q3 guidance lagged market expectations. The company also said it will switch to releasing its engagement report annually, rather than semi-annually, which may indicate pessimism.

Last Few Weeks of Economic Reports

Headline CPI cooled sharply, rising 3.5% y/y
Core CPI ticked lower to 2.6% y/y
Core retail sales declined 0.2% m/m
The June Employment report showed non-farm payrolls increased 57,000, about half the forecasted number.
The unemployment rate dropped to 4.2%, not because of more jobs, but because workforce participation plunged to 61.5%, its lowest level since March 2021.
Economist Dean Baker highlighted that job growth is concentrated in healthcare and social assistance, wage growth is lagging inflation, and there’s no sign of an AI-driven productivity boom.

Up Next

June new home sales
July US Flash Manufacturing PMI, a gauge of the manufacturing sector's health.

S&P 500 Stylebox and Sector Returns

Once again, I'll note that so far this year, value has outperformed growth across the board, and it's not even close for large or midsize companies.

How to read the stylebox: The horizontal axis represents investment style, which can be value, blend, or growth for stocks and mutual funds. The vertical axis represents stock market capitalization, categorized by company size as large, medium, and small. The number in each box represents the percentage growth of the category at the intersection of the column and row. For example, large-cap value is in the top-left corner box of the 9 boxes, so the large-cap value category is up (or down) by the percentage shown in that box.

Thought of the Week

Last week kicked off the 2Q26 earnings season, and two shortages appear to have driven much of the growth: disrupted Middle East oil supply and scarce AI hardware. Analysts expect S&P 500 earnings to rise 23% y/y, which, if realized, would mark a second straight quarter of 20%+ growth—a feat seen only once in the past two decades, in 2018, when earnings had not declined the year before.

Looking across sectors, Energy EPS is expected to grow fastest, at around 120% y/y, buoyed by higher oil prices after the war disrupted Middle East supply. However, IT is yet again doing most of the heavy lifting: EPS is expected to rise 61%, driving two-thirds of S&P 500 EPS growth. Within IT, though, the profit pool is shifting. As this week’s chart shows, earlier in the AI cycle, hyperscalers drove more growth, whereas in 2Q, semiconductors are expected to generate nearly half of S&P 500 earnings growth. As these hyperscalers race for AI dominance, demand for chips and memory has outpaced supply, allowing suppliers to charge more and expand margins. Put simply, chip buyers are funding an earnings boom for chip sellers.

Looking ahead, the pace of earnings growth is likely near its peak. Energy’s outsized earnings growth should prove short-lived as oil prices ease and supply normalizes. The AI imbalance may take longer to resolve, but it cannot persist indefinitely. With hyperscaler margins already contracting, either AI monetization catches up with spending or AI capex growth eventually slows, cooling semiconductor earnings growth as well. Therefore, the earnings outlook from here rests on how quickly hyperscalers can show the receipts from their AI spending.

Thank you to all who attended this month's market Update webinar!

You can watch the replay here:

Alan Greenspan Dies & Fox Buys Roku – Monthly Market Update Webinar – July 2026

The episode is also available wherever you listen to podcasts!