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Home>Daily Capital>Investing & Markets>July Market Recap: Stocks Rally on Investor Optimism

July Market Recap: Stocks Rally on Investor Optimism

Investors found sources for optimism to start the second half of 2022, pushing U.S. stocks higher by 9.3% in July. First, quarterly earnings are off to a relatively strong start. S&P 500 earnings are tracking toward 6% year over year growth, according to FactSet. This would be the lowest growth since 2020, but still better than many feared. Mega cap technology companies, which continue to represent an outsized portion of the market, fared well in general this earnings season.

Increased Interest Rates

Late in July, the Fed enacted its second consecutive 0.75% interest rate increase. It spurred a bullish response for both stocks and bonds as many were expecting a full point hike. The month was highlighted by an emerging view that the Fed would “pivot” to a more dovish position and potentially slow rate moves for the balance of the year. As a result, longer term interest rates modestly declined for the month. While not uncommon, it can feel strange when markets seem to be rooting for a slow economy to appease the central bank. Gas prices have declined significantly in recent weeks, but the narrative of high inflation seems to be an increasing focal point among consumers. In our view it is too soon to tell if the Fed will accelerate or decelerate tightening.

Global Markets

The dollar continued to appreciate against almost all other currencies, tempering gains in international stocks when measured in dollars. China was a significant drag on Emerging Markets results as Covid restrictions, property values and regulatory issues all weigh on outlook. While numerous high-profile risks remain, China also presents significant potential upside.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Craig Birk leads the Personal Capital Advisors Investment Committee and serves as Chief Investment Officer. His focus is translating improvements in technology into better financial lives. Craig has been widely quoted in the Wall Street Journal, Bloomberg, CNN Money, the Washington Post and elsewhere. Prior to Personal Capital Advisors, he was a leader within the portfolio management team at Fisher Investments, helping assets under management grow from $1.5 billion to over $40 billion. Craig graduated from the University of California at San Diego and has earned the Certified Financial Planner® designation.
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