As I sat down to write this month’s commentary – today, July 22, 2026 – one word kept coming to mind: resilience.
Despite a month filled with inflation reports, rising oil prices, renewed military escalation in the Middle East, and the start of another corporate earnings season, the stock market has continued to hold up remarkably – or perhaps I should say, surprisingly – well. While we’ve certainly experienced periods of volatility along the way, investors have repeatedly stepped in to buy during market pullbacks, helping keep the broader trend intact.
Earlier this month, much of the market wasn’t necessarily moving sharply higher – it was simply rotating. Some of the year’s biggest winners took a breather while money began flowing into other areas of the market, including smaller companies and financial stocks. Although this can make the market appear to be standing still, it’s often considered a healthy development because it suggests more companies are participating in the rally rather than relying on just a handful of large technology stocks.
One analogy I recently heard from our firm’s Chief Investment Officer really resonated with me. He referred to the broader market as the “soldiers” and the major market indexes -driven largely by the biggest companies – as the “generals.” It comes from an old Wall Street saying: “If the troops lead, the generals will follow.”
Think of it this way: the “generals” are the mega-cap companies – this includes the Magnificent Seven – that carry tremendous weight within indexes like the S&P 500. The “soldiers,” on the other hand, represent the hundreds of other companies that make up the broader market. When only the generals are advancing, the market can become somewhat top-heavy (and it’s not really a good thing if only the biggest companies are holding up the markets). But when the soldiers begin marching alongside them, it suggests participation is broadening beneath the surface. Historically, that’s often been a healthier and more durable foundation for a bull market, and one of the encouraging trends we’ve been seeing recently.
Inflation also returned to the spotlight over the past two weeks. The June Consumer Price Index (CPI), which measures the prices consumers pay, came in at 3.5%1, a little cooler than economists expected. The following day, the Producer Price Index (PPI), which measures the costs businesses pay before products reach consumers, came in at 5.5%1, down from May’s revised 6.0% reading.
While those numbers remain above the Federal Reserve’s long-term goal, they were generally viewed as encouraging because they suggest inflation may still be gradually moving in the right direction.
Then, just as inflation concerns appeared to be easing, renewed tensions involving Iran pushed oil prices higher once again. Because a significant portion of the world’s oil supply travels through the Strait of Hormuz, investors immediately began wondering whether higher energy costs could eventually work their way into gasoline prices, shipping costs, airfare, and other everyday expenses. (I have to admit, that thought crossed my mind too, as I’ve been watching airfare for an upcoming trip and keep wondering whether to book now or wait a little longer!)
One thing I’ve found particularly interesting is how the market has responded to all of this. Despite the headlines, stocks have continued showing remarkable resilience. I think that’s because, at least for now, investors appear to view this as primarily an energy-related issue rather than a sign that inflation is becoming widespread throughout the economy. If oil prices remain elevated for an extended period, that could certainly change. But for now, the market doesn’t seem to believe we’re headed back to the kind of broad inflation we experienced a few years ago.
As we move deeper into summer, I also wouldn’t be surprised to see markets remain somewhat choppy. Historically, trading activity tends to slow this time of year as many investors and traders take vacations. When fewer people are actively trading, even routine headlines can have a greater short-term impact on stock prices. That also brings to mind that midterm election years have often brought periods of increased volatility heading into the fall, so some bumps along the way would not be unusual.
The encouraging part, at least from my perspective, is what we’re seeing beneath the surface. More companies – not just the biggest names – have been participating in the rally, corporate earnings have generally remained solid, and investors seem to be looking beyond the day-to-day headlines. That doesn’t mean we won’t experience pullbacks – we almost certainly will – but over the years I’ve learned that short-term volatility is simply part of long-term investing.
Remember that our goal isn’t to predict every twist and turn in the market. Instead, it’s to remain disciplined, stay focused on the bigger picture, and allow our investment strategies to adapt as conditions change. While the headlines can sometimes feel overwhelming, a lot of them end up being little more than short-term noise that we’ll probably forget about in a week or two. History reminds us that markets have worked through wars, inflation, elections, and countless other challenges before.
As always, we’ll continue monitoring these developments closely, but for now I remain cautiously optimistic as we head into the second half of the year.
1Source: U.S. Bureau of Labor Statistics, Consumer Price Index and Producer Price Index; market data available through July 22, 2026.
