Market Update: July 30, 2026
Markets have continued their impressive climb since our portfolio adjustments in late May, with U.S. equities remaining near record highs despite ongoing geopolitical tensions and continued uncertainty surrounding monetary policy. While headlines have remained volatile, the fundamental backdrop has generally continued to support our long-term investment outlook.
Economic & Market Perspective
Several of the concerns that unsettled investors earlier this year, including inflation, geopolitical conflict, and Federal Reserve policy — have not disappeared. Instead, investors have largely learned to navigate these risks while focusing on the continued strength of corporate earnings and the resilience of the U.S. economy.
The ongoing conflict involving Iran and broader Middle East tensions have continued to create uncertainty in energy markets, contributing to periods of higher oil prices and short-term inflation pressures. While these developments deserve attention, we continue to believe much of the recent inflation pressure reflects supply-related events rather than a broad resurgence of underlying inflation across the economy.
The Federal Reserve reinforced this cautious approach by leaving interest rates unchanged at their meeting on July 29th. Notably, this was the first meeting in 2026 where voting members were in favor of raising interest rates. Of the twelve votes, three voted for a hike and it was also the first time since 2016 that three Federal Open Market Committee members dissented in the same direction on a rate decision.While expectations for future rate cuts have become more measured than they were earlier this year, we continue to believe that advances in productivity, supported by AI adoption and ongoing business investment, provide a constructive backdrop for longer-term economic growth.
One area we continue to monitor closely is market valuation. After a significant rally, portions of the market are trading at more demanding valuations than they were several months ago. While earnings growth has helped support much of this appreciation, higher valuations can also make markets more sensitive to unexpected economic data, policy developments, or geopolitical events.
Portfolio Positioning
After a strong market recovery last quarter, we modestly reduced the equity exposure in all our models to capture gains (they remain slightly overweight). This was not a prediction that markets were about to reverse, but rather a disciplined portfolio management decision. As markets increase, future returns often become more dependent on earnings growth than expanding valuations, making it prudent to gradually rebalance risk while maintaining meaningful exposure to equities.
Our Highest-Conviction Investment Themes:
- U.S. equities continue to be our preferred market, supported by resilient economic growth, healthy corporate earnings, and a business environment that continues to outpace many developed international economies.
- Artificial intelligence and innovation remain powerful long-term drivers of productivity and corporate investment. While semiconductor stocks have experienced a healthy pullback in mid/late July following an exceptional run, we view this as a normal part of the investment cycle rather than a change in the long-term AI narrative. Periodic corrections often help reset expectations and can create opportunities within durable secular growth trends.
Looking Ahead
Our investment philosophy remains consistent: stay invested, remain disciplined, and focus on long-term fundamentals rather than short-term headlines. We continue to position portfolios toward areas where we have the highest conviction while making incremental adjustments to manage risk as market conditions evolve.
Although periods of volatility are inevitable, history has consistently shown that patient, diversified investors are rewarded over time. We believe our portfolios remain well positioned to participate in future growth while maintaining flexibility to navigate an environment that is likely to continue presenting both opportunities and challenges.
Disclosures
*Data sourced from BlackRock
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