Fidelity Bank – Wealth Management
Market Recap – July 2026
July produced a mixed investment environment as leadership rotated meaningfully across styles, sectors, and regions. U.S. large-cap equities were little changed overall, masking significant dispersion beneath the surface as value-oriented stocks outperformed growth and cyclical leadership shifted away from several of the market’s previous winners. International developed markets continued to advance, while emerging markets experienced modest weakness following a strong first half of the year. Fixed income markets faced renewed pressure as yields moved higher, resulting in broadly negative returns across most bond sectors. In contrast, real assets delivered some of the strongest performance of the month, with commodity markets rebounding sharply following June’s weakness. Energy prices surged as supply concerns resurfaced, supporting strong gains across energy-related assets, while investors continued rotating toward value-oriented equities, financials, and other sectors with stronger near-term earnings visibility. The result was a market environment characterized by broad style and sector rotation rather than unified directional movement, as investors increasingly differentiated among asset classes based on valuation, earnings outlooks, and sensitivity to changing interest-rate expectations.
Equity
U.S. equities were mixed in July, with headline index performance masking significant style rotation. The S&P 500 declined 0.06%, while the Russell 1000 fell 0.35%. Value dramatically outperformed growth, as the Russell 1000 Value Index gained 3.82%, while Russell 1000 Growth declined 4.76%. Investors continued to shift toward companies with stronger current cash flows, lower valuations, and less sensitivity to changing interest-rate expectations.
Small-cap stocks experienced a different dynamic. The Russell 2000 declined 3.03%, as weakness among speculative growth-oriented areas offset gains in more defensive value segments. Russell 2000 Growth fell 5.86%, while Russell 2000 Value was essentially flat, demonstrating a continued preference for quality and valuation discipline.
Sector leadership shifted notably. Energy surged 11.96%, benefiting from a sharp rally in crude oil prices, while Financials gained 6.16% amid improving earnings expectations and higher rates. Health Care (+2.40%), Consumer Staples (+2.34%), and Real Estate (+2.31%) also posted gains. By contrast, previous market leaders struggled. Technology declined 8.00%, Industrials fell 3.01%, and Utilities lost 2.23%, as investors rotated capital toward value-oriented and economically sensitive industries.
International markets delivered mixed results. MSCI EAFE advanced 1.96%, supported primarily by value-oriented stocks. MSCI EAFE Value gained 5.75%, significantly outperforming MSCI EAFE Growth, which declined 1.70%, as investors continued to favor lower valuations, dividend income, and more cyclical exposures. Emerging markets lagged developed markets during the month, with MSCI Emerging Markets declining 3.07% as investors took profits following substantial year-to-date gains and navigated ongoing currency and commodity-related volatility.
Fixed Income
Fixed income markets struggled in July as yields moved higher and investors rotated toward risk assets. The Bloomberg U.S. Aggregate Bond Index declined 1.30%, marking one of the weaker months for core fixed income this year. Treasury securities also moved lower, with the U.S. Treasury Index falling 1.11%, while TIPS declined 0.68%.
Corporate credit produced mixed results. Investment-grade corporates fell 1.67%, reflecting both rising yields and spread pressure, while high-yield bonds declined only 0.25%, supported by continued strength in credit fundamentals and investor demand for income. Municipal bonds were likewise pressured, with the Bloomberg Municipal Bond Index falling 1.85% and high-yield municipal bonds declining 1.51%.
The strongest fixed-income segment remained short-duration securities, with 1–3 Month Treasury Bills gaining 0.34%, highlighting the continued attractiveness of cash and ultra-short-term investments in a volatile rate environment.
Real Assets
Real assets delivered strong gains during July as commodity markets rebounded meaningfully. The Bloomberg Commodity Index rose 7.54%, driven primarily by energy markets. The broader energy complex gained 15.56%, while WTI crude oil surged 22.61%, reversing much of June’s decline as supply concerns resurfaced and geopolitical risks remained elevated.
Agricultural commodities also performed well, gaining 6.01%, while industrial metals advanced 3.66%, reflecting continued demand tied to infrastructure spending and global manufacturing activity. Soft commodities rose 5.69%, further reinforcing the broad-based nature of the commodity rally.
Precious metals were relatively unchanged. Gold gained 1.70%, while the broader precious metals complex was essentially flat. Real estate-related investments benefited from stable property fundamentals and investor demand for income-producing assets, with the FTSE Nareit All Equity REITs Index rising 2.42%.
Not all areas of the commodity complex participated in the rally. Natural gas declined 13.72%, continuing its volatile performance amid supply and weather-related pressures.
Macroeconomics & Policy
Economic data released during July suggested continued resilience across key areas of the economy. Labor market conditions remained stable, consumer spending trends were generally constructive, and corporate earnings continued to exceed expectations in several sectors. At the same time, higher commodity prices and stronger economic activity contributed to a modest increase in interest-rate expectations, placing pressure on longer-duration assets.
Central banks maintained a cautious stance, emphasizing the need to balance economic growth with inflation objectives. Market participants increasingly focused on the implications of higher energy prices and the potential impact on inflation trends heading into the second half of the year.
By month-end, investors appeared increasingly willing to embrace selective risk-taking while maintaining a preference for value-oriented sectors, commodities, and shorter-duration fixed income exposures. The continued rotation beneath the surface highlighted a market environment driven less by broad macro themes and more by relative valuation and sector-specific fundamentals.
July 2026 Market Review is intended solely to report on various investment views held by Fidelity Deposit & Discount Bank and is distributed for informational and educational purposes only and is not intended to constitute legal, tax, accounting, or investment advice. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. Fidelity Deposit & Discount Bank does not have any obligation to provide revised opinions in the event of changed circumstances. All data is provided by Bloomberg Finance, LP and Morningstar Direct. We believe the information provided here is reliable but should not be assumed to be accurate or complete. Data, if not otherwise noted, is as of 7/31/2026. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security. Past performance is no guarantee of future results. All investment strategies and investments involve risk of loss and nothing within this report should be construed as a guarantee of any specific outcome or profit. Investors should make their own investment decisions based on their specific investment objectives and financial circumstances and are encouraged to seek professional advice before making any decisions. Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index.