Market Commentary July 20, 2026

July 20, 2026

The Markets

Rethinking expectations for inflation and artificial intelligence (AI).

It was a rough week for Wall Street. The Standard & Poor’s 500 Index (S&P 500) fell about 1.5 percent, the Nasdaq Composite dropped 2.8 percent, and the Dow posted its weakest weekly performance since late March, reported Naomi Buchanan of Barron’s. Here’s what happened:

Price increases slowed. The week started with encouraging news. Price pressures eased in June, in part because of lower energy costs, according to the Consumer Price Index report released by the Bureau of Labor Statistics. Inflation was up just 3.5 percent year over year in June, which was significantly lower than May’s 4.2 percent. Investors welcomed the news because lower inflation made it less likely the Federal Reserve will raise rates to bring prices lower, reported Jeff Cox of CNBC.
The U.S.-Iran conflict resumed. Inflation relief was short-lived as hostilities between the United States and Iran ramped up, causing oil prices to rise significantly last week. “The average price of diesel fuel in the U.S. has increased again to more than $5 a gallon, according to the AAA, and the average price of gas is almost $4, returning to their highs before the June memorandum of understanding between the U.S. and Iran,” reported Aram Roston of The Guardian.
Investors reassessed AI. Last week, a Chinese start-up company introduced a new AI open-weight model that was said to outperform even the most advanced models offered by American companies and do the work at a lower cost. That led investors to re-evaluate the outlook for AI. Nate Wolf of Barron’s explained, “Enterprises have increasingly used cheap open-weight models for simple tasks to save on token prices. But if [the Chinese AI model] can mimic advanced U.S. models at a fraction of the cost per token, it begs questions about the sustainability of the entire AI investment boom…”

While many investors have been laser-focused on all things related to AI, other sectors of the market have been performing well. You don’t see it in the performance of the capitalization-weighted S&P 500 Index because technology stocks are very large and have an outsized impact on the Index. However, you can see it in the performance of the equal-weighted S&P 500 Index, which assigns an equal weight to every company. Joel Leon of Bloomberg reported:

“Even as chip stocks dragged the S&P 500 lower on Thursday, a majority of stocks in the benchmark rose, signaling healthy market breadth. The S&P 500 Equal Weighted Index finished at an all-time high on Thursday.” It’s a reminder of the value of diversification.

Last week, major U.S. stock indexes finished lower, and U.S. Treasuries gained value as yields declined. The yield on the 30-year Treasury bond moved lower to end the week at 5.06 percent.

Data as of 7/17/26	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor’s 500 Index	-1.6%	8.9%	18.4%	18.1%	11.9%	13.2%
Vanguard Total Intl Index (Foreign Stocks)	-2.0	11.2	23.9	16.7	8.4	9.3
Total Bond Market (U.S. Dollar Bonds)	0.1	0.3	4.2	3.9	-0.2	1.5
S&P GSCI Gold Index	-1.8	-6.1	19.8	26.9	17.6	11.8
Bloomberg Commodity Index	3.6	19.8	25.8	8.2	7.4	4.3

S&P 500, Vanguard Total International Stock Index, Vanguard Total Bond Market Index, Gold, and Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized. Sources: Yahoo! Finance; MarketWatch; morningstar.com; djindexes.com; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

BLUE RIBBONS, BUTTER SCULPTURES, AND BIG MONEY. State fairs are famous for giant pumpkins, prize-winning livestock, and all kinds of deep-fried food on a stick. They’re also big business, drawing millions of visitors, supporting local economies, and celebrating American agriculture. See what you know about state fairs by taking this brief quiz.

In 2025, the Texas State Fair said “howdy” to about 2 million visitors, but that was about 20 percent fewer than had attended in 2024. What reason did Fair officials say was responsible for the change?
1. The Texas-Oklahoma football game was on one of the Fair’s busiest days.
2. The popular greased pig contest wasn’t scheduled for 2025.
3. Fair officials no longer allowed food to be served on skewers.
4. Corn dogs were limited to one per customer.

Since 1911, the Iowa State Fair has featured the famous Butter Cow statue. “The Butter Cow starts with a wood, metal, wire and steel mesh frame and about 600 lbs. of low moisture, pure cream Iowa butter,” according to the Fair’s website. The cow could butter more than 19,000 slices of toast. How much is all that butter worth?
1. About $10,000
2. About $20,000
3. About $30,000
4. About $40,000

One state fair sold more than 330,000 cream puffs during its 2025 run. Which state has turned this dessert into a signature fair attraction?
1. Minnesota
2. California
3. Pennsylvania
4. Wisconsin

One of America’s oldest state fairs traces its roots to 1841. “There an assembled 10,000-15,000 people heard speeches by notables and viewed animal exhibits, a plowing contest, and samples of manufactured goods for the farm and home,” according to the history of the Fair. Which state held the fair?
1. New York
2. Massachusetts
3. Wyoming
4. Nebraska

State fairs may be known for funnel cakes and Ferris wheels, but they also showcase people, products, and traditions that shape local communities. What’s your favorite part of your state’s fair?

WEEKLY FOCUS – THINK ABOUT IT

“Farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field.”

– Dwight D. Eisenhower, Former U.S. President

Answers: 1) a; 2) c; 3) d; 4) a

Best regards,

Waterford Advisors

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* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.

* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.

* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.

* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.

* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

* Asset allocation does not ensure a profit or protect against a loss.

* Consult your financial professional before making any investment decision.

Sources

https://www.barrons.com/livecoverage/stock-market-news-today-071726?mod=hp_LEDE_C_1 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/07-20-26-Barrons-Dow-Ends-Worst-Week%20-%201.pdf

https://www.bls.gov/opub/ted/2026/consumer-prices-up-4-2-percent-over-the-year-ended-may-2026.htm

https://www.cnbc.com/2026/07/14/consumer-price-index-inflation-report-june-2026.html

https://www.theguardian.com/world/2026/jul/16/us-gas-prices-rise-strait-of-hormuz

https://www.barrons.com/articles/moonshot-ai-alibaba-tech-stocks-189f80f2?mod=hp_LEDE_C_1_B_1 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/07-20-26-Barrons-Moonshot-AIs-Latest-Model%20-%205.pdf

https://www.investopedia.com/articles/exchangetradedfunds/08/market-equal-weight.asp or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/07-20-26-DJIA-S&P-Nasdaq%20-%206.pdf

https://www.bloomberg.com/news/articles/2026-07-17/us-stock-index-futures-slide-as-jitters-grow-on-chip-selloff?srnd=homepage-americas or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/07-20-26-Bloomberg-US-Stocks-End-Week-Lower-%207.pdf

https://www.barrons.com/market-data?eafs_enabled=false

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=202607