|
|
- Escalating shipping disruptions and new tariff announcements added to near-term investor uncertainty last week, even as the broader fundamental backdrop for equities remained intact.
- Initial jobless claims dropped to a 50-year low, reinforcing a picture of broad stability in the U.S. labor market.
- New home sales exceeded expectations last week despite elevated mortgage rates, supporting consumer demand.
1. Trade Measures and Middle East Tensions Add to Near-Term Market Uncertainty
Oil prices moved higher last week as diplomatic efforts between the U.S. and Iran showed limited progress.¹ A newly announced blockade of the Bab al-Mandeb Strait compounded supply concerns, removing an alternative export route that Saudi crude producers had been using to avoid disruptions at the Strait of Hormuz.¹
Several trade developments also drew attention. The 10% global tariff implemented under Section 122 of the Trade Act of 1974 expired on Friday, and was replaced overnight with new levies ranging from 10% to 12.5% under Section 301 of the same statute.⁴ The replacement tariffs apply to 60 U.S. trading partners, with exemptions for oil, gas, and fertilizers. Existing duties on steel and aluminum imports and USMCA-compliant goods are unaffected.⁴ Because the new rates largely preserve the prior tariff baseline, we expect little change to the near-term economic outlook. That said, ongoing Section 301 investigations into industrial overproduction across 16 countries and economies, including China, Japan, and the European Union, leave the door open for further action.⁴
The administration also announced a 50% tariff on roughly $20 billion of Canadian goods, effective in August,² along with a 100% tariff on imported generic drugs beginning in 2028, citing a goal of expanding domestic pharmaceutical production.³
History offers useful perspective for long-term investors. After falling nearly 19% from February through early April 2025, the S&P 500 Index recovered fully by June and finished the year with a total return of 17.9%.⁵ A first-quarter 2026 correction of nearly 10% has similarly been recouped. In our view, the fundamental backdrop continues to support equities, and a disciplined investment approach remains appropriate.
2. Jobless Claims Hit 50-Year Low
New unemployment insurance claims totaled 187,000 for the week, well below the forecast of 215,000 and marking the lowest reading in more than 50 years.⁶ The result reinforced the trend of subdued layoff activity seen throughout much of 2026. Continuing claims, which measure the total number of individuals actively receiving unemployment benefits, held near 1.8 million, slightly below expectations of 1.82 million.⁶ The reading suggests that workers who have lost jobs are finding new employment without extended delays.
The broader picture points to a labor market operating near full employment. The unemployment rate stands at 4.2%,⁷ and job openings of 7.6 million continue to outnumber the 7.1 million Americans counted as unemployed.⁸ With labor conditions stable and inflation above the Federal Reserve’s 2% target, we expect the central bank to hold rates steady at its meeting next week.
3. New Home Sales Top Forecasts as Housing Demand Holds Firm
Sales of newly built single-family homes reached an annualized rate of 628,000 units in June, topping the consensus forecast of 609,000 and coming in above the prior month’s pace of 618,000 units.⁹ The result was a positive surprise for analysts, who had expected a modest pullback given mixed signals from other parts of the economy.
New home sales is a closely tracked leading indicator, often setting the tone for market expectations ahead of existing home sales data.⁹ The stronger-than-anticipated reading adds to a run of recent data pointing to consumer resilience. Favorable mortgage conditions and sustained buyer confidence appear to have supported demand, suggesting the housing sector remains on solid footing.
Looking Ahead
- Consumer Confidence – Tuesday, July 29th
- Federal Reserve Rate Decision – Wednesday, July 30th
- Q2 GDP Advance Estimate and Core PCE Inflation – Thursday, July 31st
- Michigan Consumer Sentiment Final – Friday, August 1st
Why It Matters
Tuesday’s consumer confidence reading will test how households are processing elevated prices and ongoing geopolitical uncertainty. The week’s main event arrives Wednesday, when the Fed is expected to hold rates steady at 3.75%, with investors closely watching the post-meeting press conference for signals about the path ahead. Thursday will deliver the advance estimate of second-quarter GDP alongside June core PCE, the Fed’s preferred inflation gauge, offering the most complete read yet on economic momentum and price pressures heading into the second half of the year. Friday’s final sentiment reading will close out the week.
For the period ending 7/24/26.
* Small-cap stocks are represented by the Russell 2000® Index. International stocks are represented by the MSCI EAFE. Bonds are represented by the Bloomberg US Aggregate Bond Index. Oil is represented by WTI Oil (West Texas Intermediate Oil), a benchmark for light, sweet crude oil and a primary measure for pricing oil contracts and futures in the U.S.
Sources
1 Bloomberg, Oil Markets and Geopolitical Developments, July 2026
2 Office of the United States Trade Representative, Section 338 Tariff Action on Canadian Goods, July 2026
3 White House, Executive Order on Pharmaceutical Import Tariffs, July 2026 (confirm final title)
4 Office of the United States Trade Representative, Section 301 Trade Action Announcement, July 2026
5 FactSet, S&P 500 Index Historical Returns, July 2026
6 U.S. Department of Labor, Employment and Training Administration, Unemployment Insurance Weekly Claims News Release, July 17, 2026
7 U.S. Bureau of Labor Statistics, The Employment Situation, June 2026
8 U.S. Bureau of Labor Statistics, Job Openings and Labor Turnover Survey News Release, May 2026
9 U.S. Census Bureau, New Residential Sales, June 2026
Disclosures
Cary Street Partners is the trade name used by Cary Street Partners LLC, Member FINRA/SIPC; Cary Street Partners Investment Advisory LLC and Cary Street Partners Asset Management LLC, registered investment advisers. Registration does not imply a certain level of skill or training.
Any opinions expressed here are those of the authors, and such statements or opinions do not necessarily represent the opinions of Cary Street Partners. These are statements of judgment as of a certain date and are subject to future change without notice. Future predictions are subject to certain risks and uncertainties, which could cause actual results to differ from those currently anticipated or projected.
These materials are furnished for informational and illustrative purposes only, to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. Materials have been compiled from sources believed to be reliable; however, Cary Street Partners does not guarantee the accuracy or completeness of the information presented. Such information is not intended to be complete or to constitute all the information necessary to evaluate adequately the consequences of investing in any securities, financial instruments, or strategies described herein.
Cary Street Partners and its affiliates are broker-dealers and registered investment advisers and do not provide tax or legal advice; no one should act upon any tax or legal information contained herein without consulting a tax professional or an attorney.
We undertake no duty or obligation to publicly update or revise the information contained in these materials. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of securities, or information about the market, as indicative of future results.
Nothing contained herein should be considered a solicitation to purchase or sell any specific securities or investment-related services. It should not be assumed that any of the securities transactions or holdings discussed were, or will prove to be, profitable.
The Personal Consumption Expenditures (PCE) Price Index measures the change over time in prices paid by U.S. consumers for goods and services. Published monthly by the Bureau of Economic Analysis (BEA), it is the Federal Reserve’s preferred measure of inflation and is used to assess progress toward the Fed’s 2% inflation target. The PCE Price Index differs from the Consumer Price Index (CPI) in its scope, weighting methodology, and treatment of certain healthcare expenditures; it generally registers a slightly lower inflation rate than CPI.
The Core Personal Consumption Expenditures (PCE) Price Index measures inflation in consumer spending after excluding food and energy prices, which tend to be more volatile. Published monthly by the Bureau of Economic Analysis (BEA) alongside the headline PCE, Core PCE is closely monitored by the Federal Reserve as a signal of underlying, persistent inflation trends. Because it strips out short-term price fluctuations in commodities and fuel, it is considered a more stable indicator of the direction of inflation over time.
The PCE Price Index family includes both the headline Personal Consumption Expenditures Price Index and the Core PCE Price Index, published monthly by the Bureau of Economic Analysis (BEA). The headline index captures price changes across all goods and services consumed by U.S. households; the core variant excludes food and energy to isolate underlying inflation trends. Together, these measures serve as the Federal Reserve’s primary inflation benchmarks in evaluating monetary policy, including decisions regarding the federal funds rate target.
The Consumer Price Index (CPI) measures the monthly change in prices paid by U.S. consumers. The Bureau of Labor Statistics (BLS) calculates the CPI as a weighted average of prices for a basket of goods and services representative of aggregate U.S. consumer spending. The CPI is a measure of inflation and deflation. The CPI report uses a different survey methodology, price samples, and index weights than the producer price index (PPI).
Additional Disclosures: International and Foreign Securities, Fixed Income Investments, the Consumer Price Index, the Producer Price Index.
Comparative Index Descriptions: The Standard & Poor’s (S&P) 500 Index, The Russell 2000® Index, The NASDAQ Composite Index, The MSCI EAFE Index, Dow Jones Industrial Average® (Dow Jones or DJIA), The Bloomberg Barclays US Aggregate Bond Index (US Agg Bond), The CBOE Volatility Index (VIX). CSP2026001_28
