Weekly Market Update for July 24, 2026

by Gavyn Jensen-Schneider, Research Associate

Tensions in the Middle East continue to bubble, increasing the potential for a full-scale reescalation of the Iran conflict. The S&P 500 finished the week down -0.61%, while the Nasdaq fell -2.13%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.68%, up +13 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, rose +12 bps to 4.04%.

For the first time since April, Brent Crude oil has crept above $100, notching an increase upward of 20% month-to-date. Financial markets typically disregard geopolitical developments until they are too big to ignore, and such is the case again with Iran. The Iranian-backed Houthi Rebels, who control southern Yemen, instituted a blockade on Saudi Arabian shipments through the Bab el-Mandeb Strait. Sitting at the mouth of the Red Sea, the Bab el-Mandeb handles 10-12% of international maritime trade, including a quarter of global container traffic. After the closure of the Strait of Hormuz, Saudi Arabia had rerouted much of its oil to Red Sea ports, so the Bab el-Mandeb closure throws yet another wrench into oil outflows.

Unlike the Strait of Hormuz, there is an alternative to the Bab el-Mandeb Strait as a ship can reroute around the Cape of Good Hope at the southern tip of Africa, taking an additional 9 days or so to reach its destination. Likewise, ships departing from the Red Sea can navigate north through the Suez Canal and Mediterranean Sea. President Trump has said the US “will hold Iran responsible, in that the Houthis are a surrogate and/or proxy of Iran, and major military punishment will be inflicted upon Iran and, of course, the Houthis, themselves,” and is seriously considering a “massive attack” on Iran that would be “bigger than ever before.” A resumption of large-scale combat activities could keep oil prices elevated for longer and spur inflation, a fear exemplified by the 10-Year Treasury yield, which hit its highest point since January 2025.

The AI buildout cycle continues to be hot and cold, with growth receiving tepid responses. Alphabet, Google’s parent company, released its earnings report on Wednesday, meeting or beating expectations in nearly every revenue category and notching an +82% revenue jump for its cloud services. The stock fell over 6% on the news, however, as scrutiny centered on increasing capital expenditures. Alphabet plans to spend $200 billion across 2026 to build out data centers and purchase chips to power its growing compute capacity needs. Some investors are getting skittish as returns on AI investment are lagging the immense capital spend.

Weekly jobless claims hit a historic low this week at 187k, the lowest level since 1969. The US labor market remains stable, though not exactly strong; while unemployment remains low at 4.2%, labor force participation—an input used to calculate the unemployment rate—has been steadily declining, reaching a 5-year low of 61.5% in June. The countervailing forces allow for two interpretations of the historically low initial jobless claims, as a smaller pool of laborers could imply fewer individuals are eligible to apply for unemployment, or a sufficient supply of jobs could mean fewer workers require unemployment insurance.

The earnings parade continues next week with Microsoft, Amazon, and Apple leading the high-profile lineup. Economic data are headlined by Thursday’s Personal Consumption Expenditures (PCE) inflation reading, as well as the first preliminary reading of second-quarter gross domestic product (GDP). Rounding out the week is a July 28-29 Federal Reserve meeting to discuss interest rates. According to CME FedWatch, financial markets are anticipating a 36% chance of a 25-bps interest rate hike.