U.S. equities were broadly higher as investors absorbed the Federal Reserve's July policy meeting and a major rebound in selected AI-related technology shares following the liquidation of a major AI hedge fund, Situational Awareness, which sold its portfolio to Citadel after it was unable to meet margin calls. Nasdaq, DJIA, and SPX all advanced by more than 1%, while the S&P MidCap 400 declined by 0.67% and the R2K was little changed. Consumer discretionary led all S&P 500 sectors, up 6.1%, helped by Amazon's late-week rally, while utilities and real estate lagged, down 4% and 2%, respectively. Large cap growth equities rebounded, advancing by 2%, as mega cap growth names MSFT and AMZN both helped swing AI sentiment positive by reporting stronger than expected revenue growth for their respective cloud businesses, Azure and AWS. Results helped quell concerns over elevated AI related capex spend providing evidence that demand for high performance compute remains robust and that all capacity gains are quickly being consumed at still attractive prices and margins.

The FOMC meeting on Wednesday left the target range for the federal funds rate unchanged at 3.625% mid-point, but the commentary was hawkish with three policymakers dissenting in favor of a rate hike to quell inflation. Chair Kevin Warsh's policy of offering limited forward guidance has the market guessing on the next move and adding volatility to the yield curve. The curve steepened after the FOMC meeting as short-term yields eased while the 30-year Treasury yield moved above 5.2% for the first time since 2007. Core PCE prices were 3.3% higher than a year ago and versus 3.4% in May, while headline PCE remained well above the Fed's desired 2% level, at 3.7% annualized. Real GDP (first advanced estimate) increased at a 1.5% annualized rate in 2Q26, below expectations, and down from 2.1% in 1Q26. The deceleration reflected weaker government spending and slower growth in investment and exports, partly offset by stronger consumer spending. The Conference Board Consumer Confidence Index fell to 90.8 in July from 92.2 in June as a weaker business and labor market outlook dragged on sentiment.

Renewed Middle East tensions and concerns about crude supply disruptions pushed oil prices higher mid-week, with WTI crude moving to $84, before prices pulled back on hopes for new peace talks. The USD remained supported by the combination of higher U.S. yields, geopolitical uncertainty, and relative U.S. economic resilience with particular strength coming vs. the Japanese yen, which weakened toward multi-decade lows approaching JPY 164. Gold and other precious metals struggled as the rise in yields reduced the appeal of non-yielding assets.

The dog days of summer enter August with the SPX (~80 companies) wrapping up earnings season while the R2K is in full force with more than 800 companies set to report. Among notable names are PLTR, CAT, SNDK and WDC which were all, to varying degrees, caught up in the "tech wreck" last week owing to the liquidation of the Situational Awareness (SA) hedge fund. They and others hope to assuage investors that AI demand fundamentals, as well as supply in the memory space, remain positive after having bounced off lows later in the week following the SA news and strong MSFT and AMZN earnings. Consumer cyclicals will hope to keep their groove after a strong week with MAR, DASH, PLNT and TXRH all representing various angles of consumer demand that, interestingly, both V and MA called out as remaining strong at all income cohorts last week. Finally, the big kahuna in the healthcare space, LLY, will update investors on not only its remarkable obesity franchise but also detail its moves, both organic and via acquisition, into other therapeutic areas that could help drive both higher earnings growth and durability.

On the economic front, a big week of labor market data may test Fed Chair Warsh's characterization that the labor market is "stable" with an important read through from the reports for fixed income markets which have been on edge as of late. JOLTS data (Tues) will detail job openings which have bounced off the bottom the past two months highlighting labor market resilience while at the same time posting a lower quit rates suggesting that workers are not confident in finding the next job. Job openings have been strongest in the South and Midwest while the Northeast and West have posted declines. ADP employment (Wed) has posted three strong months of gains, averaging over 100K jobs gained in the past three months, after rather anemic results the prior six months. Education and healthcare services have been the strongest verticals. Rounding out the data is non-farm payrolls (Fri) which have been in a 4-month decline since peaking in March at 216K jobs added. June's gain of 57K jobs was led by professional/business services, social assistance and healthcare while leisure and hospitality were weak. Expectations for a rebound approaching 100K jobs added would likely be seen as not too hot, or too cold, and leave the fixed income market searching for additional data.

ISM PMI for Manufacturing (Mon) and Services (Wed) have both been robust with manufacturing now having posted 6 consecutive months above the 50.0 expansion mark while Services has been in expansion territory since mid '24. Finally, US productivity for 2Q26 is timely given the ongoing debate over AI spend and the resultant efficiency gains for the broader economy. Last quarter's (1Q26) 0.3% gain was a marked slowdown from the prior three-quarter average of almost 4%, which has been led by advances in manufacturing.