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Weekly Market Commentary - Week Ending August 7, 2026

by Fortem Financial August 4, 2026

Three major releases landed in the past five trading days, and in each one the headline number and the underlying composition told different stories. Second-quarter GDP missed badly. Corporate earnings beat estimates by the widest margin on record. Manufacturing hit a four-year high this morning while survey respondents sounded miserable. Don’t let the headlines distract you from the data — the composition is where the useful information sits.

 

Growth: A Weak Headline Over the Strongest Domestic Demand of the Cycle

Real GDP grew at a 1.5% annual rate in the second quarter, below the 2.1% economists expected and down from 2.1% in the first quarter. Read alone, that looks like a meaningful deceleration.

Read the composition and it isn’t. Real final sales to private domestic purchasers — consumer spending plus private fixed investment, stripped of inventories, trade, and government — rose 3.9%, a cyclical high. Most of the shortfall traces to a wider trade deficit tied to imported AI infrastructure and to lower federal spending that the BEA attributes largely to Strategic Petroleum Reserve crude sales, an accounting entry it notes has no direct net effect on GDP.

The catch is on the price side. The gross domestic purchases price index accelerated to 5.7% from 3.6%, though quarterly core PCE cooled to 3.4% from 4.4%. Growth held up better than the headline suggested. Inflation looked worse.

Source: Bureau of Economic Analysis, advance estimate, released July 30, 2026

 

Earnings: A Record That Needs an Asterisk

With 61% of the S&P 500 reported, blended second-quarter earnings growth stands at 47.4%, up from 23.2% at the June 30 quarter-end. Companies are beating estimates by 31.4% in aggregate — the largest surprise since FactSet began tracking the metric in 2008, against a five-year average near 7%.

Two companies account for most of it. Alphabet’s reported EPS included a $98 billion gain, and Amazon’s included $53.4 billion of non-operating, pre-tax other income. Excluding both, earnings growth is 28.8% and the aggregate surprise is 9.2%. The blended net profit margin falls from 16.7% to 14.7% — still the second-highest in FactSet’s history.

That is the honest version, and it is still very good. Growth of 28.8% would mark a second straight quarter above 20% and a seventh consecutive quarter of double-digit growth, with revenue growth of 14.1% the strongest since late 2021. We raised peak-margin risk last week; the data has not confirmed it. But the quality of a beat matters as much as its size, and valuation gains on equity stakes are not operating income.

Source: FactSet Earnings Insight, July 31, 2026

 

Manufacturing: A Four-Year High, Grudgingly

The ISM Manufacturing PMI rose to 55.6 in July from 53.3, the highest since May 2022 and well above the roughly 54 forecasters expected. New orders climbed to 56.7, and the employment index reached 52.8 from 49.7 — the first expansion in factory payrolls in 33 months. Fifteen industries grew; only chemical products contracted.

Yet 62% of respondent comments were negative. Price volatility, the conflict with Iran, lengthening lead times, and tariffs dominated, and prices paid remained elevated at 71.1 even after easing from 73.0. Supplier deliveries slowed further to 58.9.

Both things are true. Demand is strong enough to pull factory employment back into growth after nearly three years, and input costs and supply chains are genuinely difficult. Front-loaded orders, the AI buildout, and inventories that have fallen for five straight quarters leave manufacturing room to keep expanding.

Source: Institute for Supply Management, July 2026 Manufacturing Report on Business

 

The One Headline That Is the Story

The long end of the Treasury curve is where we would spend our attention. The 30-year finished the week near 5.27%, its highest in roughly 19 years, and the 10-year ended near 4.72% — a second consecutive week of yields rising while equities rallied. The Federal Reserve held its target range at 3.50% to 3.75% on July 29, with three regional bank presidents dissenting in favor of a quarter-point increase.

That is not a headline concealing a better story underneath. Long rates are pricing sticky inflation, war-driven energy costs, and persistent deficits — and a higher discount rate applies to every asset.

Source: U.S. Department of the Treasury; Federal Reserve

 

Our View

The weight of the evidence still describes an expanding economy with exceptional corporate profitability: private domestic demand at a cycle high, manufacturing in its strongest expansion in four years, factory employment growing again, revenue growth at a four-year high, and a forward 12-month P/E of 19.6 that sits below its five-year average because earnings have risen faster than prices.

We are watching two things rather than reacting to them. The first is the long end of the curve. The second is earnings quality — whether operating results can carry the next two quarters now that estimates call for 27.4% and 25.2% growth. Geopolitical headlines will keep moving oil and, through oil, the inflation narrative. This morning is a fair example: crude fell roughly 4% to 5% on reports that U.S.–Iran talks would resume, even as Tehran’s position remained unclear. We would not build a portfolio around any single day of that.

 

Key Dates to Watch

  • Tuesday, August 4 — International Trade Balance (June); Factory Orders (June)
  • Wednesday, August 5 — ISM Non-Manufacturing Index (July)
  • Thursday, August 6 — Initial Jobless Claims; Q2 Non-Farm Productivity and Unit Labor Costs
  • Friday, August 7 — July Employment Report; Consumer Credit (June)
  • Wednesday, August 26 — Q2 GDP second estimate with corporate profits; July PCE

 

Friday’s payroll report is the week’s main event. Consensus looks for roughly 80,000 jobs against 57,000 in June, with the unemployment rate holding at 4.2%. Given three dissents in favor of a hike at the last meeting, a firm number would sharpen the debate rather than settle it.

This represents our current view and is subject to change without notice. Actual results may differ materially.

 

Market and Index Changes for the Week Ending 7/31/2026

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. Data provided by Refinitiv.

 

Sincerely,

Fortem Financial
(760) 206-8500
team@fortemfin.com

 

 

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Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

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The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
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Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.

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