Oil vs Chips. All three major indexes opened solidly higher Monday as oil prices retreated amid a pause in U.S. strikes in Iran. But the gains didn't hold. Instead, the latest worries about artificial intelligence overshadowed the energy market. Chip stocks, in particular, were hammered, pushing the tech-heavy Nasdaq Composite down 0.2% on the day.
The Dow Jones Industrial Average, the relatively tech-light index, managed to still rise 263 points, or 0.5%. The S&P 500 was essentially flat.
The Dow might have done even better if not for what my colleague Naomi Buchanan calls its two "AI stealth" stocks: Goldman Sachs and Caterpillar. The companies, which benefit from financing and constructing the AI buildout, respectively, were down on the day. Caterpillar fell 15.5%, while Goldman shed 3.9%
There was some good news for stock investors in the Treasury market. The 10-year Treasury yield dropped back to 4.6% after last week's surge thanks to oil prices trending lower.
The rest of the week is likely to be dominated by earnings, with nearly one-third of S&P 500 companies reporting results -- including four of the Magnificent Seven
We'll get signals on transportation from Ford and Boeing tomorrow. The AI trade will be back in focus on Wednesday, when Microsoft and Meta Platforms report. Starbucks will offer clues on consumer health when it delivers its own results on Wednesday. Apple and Amazon report on Thursday and energy heavy-hitters ExxonMobil and Chevron close out the week on Friday. We'll be covering it all at Barron's .
The Hot Stock: Workday +9.0% The Biggest Loser: Sandisk -11.0%
Best Sector: Consumer Staples +1.6% Worst Sector: Energy -2.0%
Macro Signals
It's a busy week for those focused on the U.S. economy, as well. The biggest agenda item is Wednesday's Fed rate decision. But we'll also get inflation data and the first estimate of economic growth for the second-quarter.
There's a lot of speculation around what the Federal Open Market Committee will opt to do this week -- keep interest rates steady or implement a hike.
The case for holding the federal-funds rate at its current target range of 3.50%-3.75% looks compelling. Employment conditions are decent, the economy is healthy, and the latest inflation reports showed a deceleration in price growth, notwithstanding the recent resurgence in oil prices. These trends collectively argue for the Fed to stay on hold for now, even though inflation has been running above the central bank's 2% annual target for the past five years.
Yet, traders are still pricing in a 38% chance of an interest-rate hike as of Monday afternoon, up from 16% a week ago, based on the CME FedWatch tool.
Traders' lower confidence in predicting the Fed's next move may be the new normal under Fed Chair Kevin Warsh, who has disavowed forward guidance, along with public commentary on the Fed's economic and interest-rate outlook.
Evercore's Krishna Guha is betting on a continued pause, saying it would be "odd" to hike right after the better June inflation print. "Hiking now with no obvious preparation or context would invite rate overshooting," Guha says.
But in the absence of an articulated strategy, you can't be totally sure -- hence the rising odds of a hike.
On Thursday, after the Fed meeting wraps up, the Bureau of Economic Analysis is set to release the personal consumption expenditures (PCE) price index. Like the June print of the consumer price index, lower gasoline prices are expected to drive a decline in the latest reading -- though not by as much. PCE inflation is expected to fall by 0.1% month over month in June. CPI was down 0.4% on the month.
Compared with a year ago, headline PCE inflation is projected to be just 3.6%, a notable pullback from a 4.1% advance in May.
Core PCE, which excludes food and energy costs, is expected to be more steady. Economists surveyed by FactSet expect core inflation was up 0.2% month over month, translating to a gain of 3.3% year over year.
The preliminary estimate of second-quarter gross domestic product growth, adjusted for inflation, is also due out from the BEA on Thursday. And economists are expecting a robust reading. FactSet's consensus estimate is that real GDP grew at an annualized rate of 2.5% in the second quarter, surpassing the first quarter's 2.1% growth.
Consumer spending has been solid throughout the last three months, likely adding to the growth. But much of the second-quarter GDP momentum is expected to come from investments in the buildout of artificial intelligence.
The Calendar
American Tower, Barclays, Boeing, BXP, Carrier Global, Centene, CenterPoint Energy, Coca-Cola, Corning, CoStar Group, Ecolab, Expand Energy, Ford Motor, GSK, Hilton Worldwide Holdings, Hubbell, Incyte, Illinois Tool Works, Invesco, KLA, Mondelez International, Omnicom Group, Paccar, PayPal Holdings, PPG Industries, Royal Caribbean Group, Seagate Technology Holdings, Sherwin-Williams, S&P Global, Skyworks Solutions, Teradyne, Textron, United Parcel Service, Visa, Waste Management, and Xylem report quarterly results tomorrow.
S&P Cotality releases the Case-Shiller U.S. National Home Price Index for May. Home prices posted a 0.8% annual increase in April led by Chicago which saw a 6.5% jump year over year. Seattle posted the lowest return, declining 2.3%.
The Conference Board releases its Consumer Confidence Index for July. Economists forecast a 92.4 reading, about one point higher than in June.
What We're Reading Today
-- Quantum Is Coming for Crypto. Wall Street Spends Millions to Stop It. -- Private Markets Are Opening Up. Now They Need to Become More Transparent -- Oil Prices Drop as Trump Delays Iran Operation -- Forget United and Delta Talks, Airline Stocks Are Rising for a Different Reason -- SpaceX Stock Struggles After 13th Starship Test -- Inside China's Blockbuster $484 Billion Memory Chip Debut
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(END) Dow Jones Newswires
July 27, 2026 19:55 ET (23:55 GMT)
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