F.N.B. Wealth Management Fast Five

2. Was the July Federal Reserve meeting just a repeat of June's?

At first glance, it may have seemed like a copy and paste of the June statement, and Chairman Warsh even noted that the decision “sounds familiar.” However, there was a notable difference in the way the Committee voted and how the markets responded:

• For the fifth time in a row, the U.S. Federal Reserve chose to keep the Fed Funds Target Range at 3.50% to 3.75%, and the reason for holding rates steady again was elevated inflation.
• The biggest difference from June’s meeting was a split 9-3 vote instead of a unanimous decision. All three dissenters voted in favor of a rate increase, implying they believe monetary policy is not tight enough to address current inflationary pressures.
• Given the current inflation readings, a split vote was not unexpected, but the lack of any forward guidance from the Committee has not helped investor confidence.
• Complicating matters further was Chairman Warsh’s comments regarding the bond market moves since the June meeting that pushed yields up notably across the Treasury curve, with some of those moves ranking in the top decile of historical moves. As Mr. Warsh put it, “markets are learning to play the ball and not the referee.” This essentially implies that the bond market has done a lot of heavy lifting for the Fed (i.e. higher interest rates help to bring down inflation).
• The bond market’s response was to steepen the curve by selling the long end. In fact, the 30-year yield jumped 12 basis points (bps), hitting 5.20% for the first time since 2007 (ending the month at 5.26%).
• The markets will likely get used to the Fed’s new communication style, but it may take some time.

3. Did the S&P 500 earnings reports in July keep up with expectations? 

Prior to the kick-off of the Q2 earnings season on July 14, consensus expectations were for earnings per share growth for the S&P 500 to be +22.7% year-over-year (as of June 26, 2026). Investors were looking closely to see if corporations could meet those lofty goals. Here is what we saw in July:

• As of July 31, 311 S&P 500 companies have reported earnings for the quarter with 85.5% of them beating expectations, and the earnings per share growth rate currently stands at 29.0% year-over-year (y/y).
• All 11 of the S&P 500 sectors have had at least 72% of their companies beat their earnings estimates and 8 of 11 sectors have had increases in their 12-month forward earnings per share expectations.
• Y/Y earnings growth expectations as of July 31 were 2Q26 +29.0%, 3Q26 +23.0%, 4Q26 +25.5% and 1Q27 +15.9%.
• The sectors that are seeing the biggest y/y growth in earnings are information technology, energy, health care and consumer discretionary.
• With inflation staying elevated, higher for longer interest rates and new tariff impacts, the question for equity investors is whether the S&P 500 has hit peak earnings for this cycle. We will have to wait and see, but we suspect they haven’t, given all the capex spending.

4. What were the key economic data points reported in July? 

July had several important economic reports that pointed to a U.S. economy that continues to show its durability, despite the global rise in energy prices. Here are a couple that caught our attention:

• The advanced reading of U.S. Q2 GDP came in weaker-than-expected at 1.5% annualized (below the long-term average). However, personal consumption (which is two-thirds of U.S. economic activity) was much stronger at +3.2% quarter-over-quarter. Net exports subtracted approximately 1% from overall GDP in Q2.
• Personal Consumption and Expenditures (PCE), the Fed’s preferred measure of inflation moderated a bit in June to +0.11% month-over-month (m/m) to 3.7% y/y. Core PCE (ex-food and energy), slowed to +0.13% m/m from May’s +0.33% m/m (3.3% y/y vs. 3.4% y/y in May). 
• Real personal spending increased +0.4% m/m, in line with consensus estimates, driven by a +0.7% m/m jump in goods spending. 
• Retail sales for June were up +0.2% m/m, slowing from May’s +1.0% m/m. However, the control group, which excludes cars, gas, building materials and food service, was stronger at +0.5%.
• U.S. manufacturing as measured by the ISM Manufacturing Index expanded for the sixth straight month, coming in at 53.3 for June (longest streak since 2022). Good news for the manufacturing sector.
• Weekly initial unemployment claims were 187,000 at one point in July, the lowest level since 1969.

5. What is the Chief Investment Office monitoring in August?

It doesn’t look like financial markets are going to take a vacation from potential volatility this August. Here is what we are watching:

1. Corporate earnings reports for Q2 continue, and our Research Team will be looking for any material changes in the direction of earnings per share and/or revisions to the future estimates.
2. Economic data related to the U.S. consumer and the overall strength of the U.S. economy. Some of the notable releases will be July’s Nonfarm Payrolls Report, The Conference Board’s Consumer Confidence Index, ISM Services Index and ISM Manufacturing Index.
3. The Federal Reserve’s meeting in Jackson Hole, Wyoming, August 27^th-29^th will be important because markets will be watching for any adjustments their communication style and/or inclination of forward guidance.

Charts of the Month

U.S. Momentum Shift?

Looking into the aggressive rotation in equity markets during July, which included the Nasdaq 100 entering correction territory (-10% or more), we can see in the accompanying chart that the “momentum” stocks experienced more than just a summer seasonal sell-off. But should investors be concerned? Probably not, because two things happened during the sell-off. First, valuations for a lot of those momentum names improved, given the expectations for strong earnings. Second, history suggests that equity markets tend to pull back in the first year of a new Federal Reserve Chair (-17% on average since 1914). Markets could simply be following a historical trend. It is too early to tell on that one. The key for investors is to stay diversified and maintain a long-term view. 

Treasury Buyers are Questioning the Fed

As noted in item No. 1, the 30-year Treasury has reached levels not seen since 2007. In fact, the 30-year Treasury has now traded at a yield 5.0% or higher for the greatest number of days this year since 2007. The move up in long-term Treasury yields since the July Fed meeting suggests that bond market participants are frustrated with the Fed’s lack of forward guidance. There may be some truth to that. However, what caught our attention is that the U.S. 30-year Treasury yield is now one of the highest yielding amongst developed economies. This likely reflects global investors’ concerns around the U.S. debt levels, as the U.S. deficit continues to grow at approximately 6% of GDP. U.S. monetary and fiscal policy will need to work together to solve that problem.

Global 30-year Bonds