Last week brought a welcome development for investors as stocks enjoyed a strong rally.
The advance was supported by several encouraging developments coming together at once. Corporate earnings remained generally solid, oil prices declined sharply, economic data helped ease concerns about another near-term Federal Reserve rate hike, and optimism increased that tensions in the Middle East could eventually move toward a resolution.
The strength shown last week doesn’t necessarily mean the risks we’ve been discussing have disappeared.
In fact, many of the same questions remain. Treasury yields are still elevated, inflation remains an important concern, uncertainty surrounding AI spending hasn’t gone away, and geopolitical developments continue to influence energy prices and investor sentiment.
There’s also an important story developing beneath the surface. Much of the recent market strength has been concentrated in technology and AI-related companies, while the broader market hasn’t advanced nearly as strongly.
So, while the recent run is certainly encouraging, the more important question isn’t simply where the market is today—it’s whether the underlying evidence continues to support it.
That’s where our focus remains.
🔑 Three Market Takeaways From Last Week
📈 1. A Strong Week for Stocks — But the Rally Wasn’t Equal
The market’s rebound has been impressive. Since late June, the S&P 500 has rallied sharply, helped in large part by renewed enthusiasm surrounding artificial intelligence and technology companies.
But there is an important detail beneath the headline numbers.
Since July 29, the technology-heavy Nasdaq gained roughly 9%, while the market-cap-weighted S&P 500 gained about 5%. By comparison, the equal-weighted S&P 500—where each company receives the same weighting—rose only about 2%.
That doesn’t mean the rally is destined to reverse. It does tell us, however, that a relatively concentrated group of companies has been responsible for a meaningful portion of the recent advance.
That’s worth watching. Healthy markets generally benefit when participation broadens across more companies and sectors rather than depending heavily on a small group of market leaders.
💼 2. The Jobs Report Looked Weak—but Context Matters
Friday’s employment report delivered a major surprise.
The economy reportedly lost 23,000 jobs in July, significantly below expectations for an 88,000 increase. Wage growth also cooled to 3.2% year-over-year.
Normally, a weak employment report might worry investors. Instead, stocks rallied.
Why?
Because markets interpreted the report as reducing the likelihood that the Federal Reserve would need to raise interest rates again in the near future.
Importantly, other employment indicators have not confirmed significant labor-market deterioration. Weekly unemployment claims remain historically low, job openings remain at relatively healthy levels, and other employment measures have generally been stable.
For now, the July jobs report is better viewed as something that needs confirmation rather than evidence that the economy has suddenly fallen into trouble.
That’s an important distinction—and exactly why we prefer evaluating multiple pieces of evidence instead of reacting to a single data point.
🛢️ 3. Lower Oil Prices Provided Some Much-Needed Relief
One of last week’s biggest developments happened outside the stock market.
Oil prices fell sharply, with WTI crude declining more than 11% for the week, as investors grew more optimistic about a potential agreement involving Iran and the Strait of Hormuz.
That’s potentially good news for consumers and financial markets.
Lower energy prices can reduce pressure on household budgets and, perhaps more importantly right now, help ease inflation concerns.
But geopolitical uncertainty hasn’t disappeared. Traffic through the Strait of Hormuz remains disrupted, and negotiations remain fluid.
So, while last week’s decline in oil was encouraging, energy prices remain another important variable we’ll continue monitoring.
🧭 Inside Advance & Protect
Each week we explore one principle behind our Advance & Protect philosophy—and how it helps us navigate today’s markets.
Why New Market Highs Don’t Mean Risk Has Disappeared
Investors often associate risk with falling markets. But some of the most important decisions investors make actually occur when markets are doing well.
When stocks are falling, fear can encourage investors to abandon a sound long-term strategy. When stocks are reaching record highs, optimism can create the opposite problem: complacency.
That’s why our Advance & Protect philosophy isn’t built around how markets feel.
Instead, we evaluate objective evidence to determine whether the environment supporting stocks is improving or deteriorating.
A new market high by itself doesn’t necessarily tell us much about future risk. We want to understand what’s happening beneath the headline index:
- Is market participation healthy?
- Are economic conditions supportive?
- Are market trends strengthening or weakening?
- Are important risk indicators beginning to change?
This approach is designed to help remove emotion from the investment process. Rather than trying to predict when the next correction will occur—or assuming markets will continue rising indefinitely—we allow measurable evidence to guide investment decisions.
Advance & Protect Insight: Market highs aren’t a reason to become complacent, just as market declines aren’t automatically a reason to panic. A disciplined process helps separate market emotion from meaningful changes in the underlying evidence.
👀 What We’re Watching This Week
📊 Inflation Takes Center Stage
Wednesday’s Consumer Price Index (CPI) report is the biggest economic event of the week.
A reading near or below expectations would likely reassure investors that inflation remains contained. A hotter-than-expected report could push Treasury yields higher and revive concerns that the Federal Reserve may need to raise interest rates again.
🏷️ Producer Prices
Thursday brings the Producer Price Index (PPI), another measure of inflation. While it receives less attention than CPI, it can provide clues about inflation pressures working their way through the economy.
🛍️ Consumer Spending
Friday’s Retail Sales report will provide an important look at the health of the consumer.
Consumer spending remains a major engine of economic growth, so continued strength would help reassure markets that the economy remains resilient despite higher interest rates and elevated prices.
📈 Treasury Yields
The 10-year Treasury yield declined only modestly last week despite falling oil prices and the weak jobs report, remaining above 4.60%.
We continue to view Treasury yields as one of the most important variables for markets. A sustained move lower would provide support for stocks, while another significant move higher could pressure valuations.
🧭 Final Thoughts
This week’s rally was great news. The economic backdrop remains generally constructive. Business activity continues to expand, corporate earnings have largely held up, and most labor-market indicators remain healthy.
At the same time, inflation isn’t completely defeated, interest rates remain elevated, geopolitical uncertainty persists, and portions of the market have become increasingly concentrated.
Those realities aren’t reasons to abandon stocks. They’re reasons to remain disciplined.
Markets will inevitably move between periods of optimism and concern. Our job isn’t to predict every twist along the way. It’s to continually evaluate whether the evidence supporting the market has changed—and adjust when it does.
Ready to Explore Advance & Protect?
Every investor’s financial situation—and every financial plan—is unique.
If you’d like to learn how our Advance & Protect investment philosophy combines disciplined market analysis with comprehensive financial planning, we’d be happy to schedule a complimentary consultation.
Our goal isn’t simply to help clients pursue investment returns. It’s to provide a thoughtful, evidence-based process designed to help them navigate changing markets while remaining focused on their long-term financial goals.
The market will always give investors something to worry about—and something to get excited about. Having a disciplined philosophy can help prevent either emotion from becoming the investment strategy.
Warm regards,
The Barzideh & Nadeau Wealth Management Team
Thanks for reading! As always, we’re here to help you navigate these markets with confidence and clarity. Stay sa
