Geopolitics returns, but tech still rules

Geopolitics pushed back into the market spotlight last week, but US stocks mostly shrugged off the apparent end of the US-Iran ceasefire, with the S&P 500 (SPX) benefiting from gains in energy and tech—even though most of its sectors declined for the week.

Renewed hostilities in the Strait of Hormuz ended the fragile truce, sending oil prices nearly 9% higher on Tuesday and Wednesday, and prompting President Trump to declare the ceasefire “over.” However, oil prices subsequently retreated and the SPX rebounded from Wednesday’s five-day intrady low to close higher for the week:

The headline: SPX up for second week in a row, 13 of past 15 weeks.

The fine print: Despite the headline-grabbing news out of the Middle East, the tech sector’s swings (and, most of all, semiconductor performance) appeared to have a bigger influence on the stock market. The Nasdaq 100 (NDX) tech index tracked the PHLX Semiconductor Index’s (SOX) higher or lower closes each day last week, and the SPX did every day but Wednesday.

The number: 9 (of 17), the slim majority of Fed board members anticipating a rate hike by the end of the year, according to the FOMC minutes released last Wednesday. Nonetheless, Morgan Stanley & Co. economists think Fed projections may be overstating inflation risks, with fading tariff effects, lower oil prices, and falling rents poised to cool price pressures and open the door to lower rates next year.¹

The scorecard: The SPX and the Nasdaq 100 (NDX) tech index climbed last week, the other major stock gauges slipped:

S&P 500 sector returns: The strongest S&P 500 sectors last week were tech (+3.4%), energy (+3%), and communication services (+2.2%). The weakest sectors were materials (-1.9%), health care (-1.8%), and consumer staples (-1.3%).

S&P 500 stock movers: Last week’s biggest gains were Hewlett Packard Enterprise (HPE) +18% to $48.79, Arista Networks (ANET) +16% to $186.99, Meta (META) +15% to $668.73. The biggest losses were Moderna (MRNA) -14% to $68.52, Honeywell Aerospace (HONA) -11% to $221, Builders FirstSource (BLDR) -10% to $75.92. Other: Crinetics Pharmaceuticals (CRNX) +99% to $83.53 on Tuesday, Rivian Automotive (RIVN) -18% to $16.49 on Tuesday.

Yields and the dollar: The 10-year US Treasury yield climbed 0.07% to 4.56% last week. The US Dollar Index (DXY) rose 0.09 to 100.95.

Commodity futures: After jumping more than $6 to $74.76 on Tuesday-Wednesday, August WTI crude oil (CLQ6) pulled back to end the week up just $2.72 at $71.41. (Prices jumped again Sunday night as Strait hostilities continued.) August gold (GCQ6) slipped $12 to $4,113.70. Biggest gain: September cocoa (CCU6) +20.4%. Biggest decline: September orange juice (OJU6) -16.7%.

Crypto: Bitcoin +4.3% to $64,127.14 last week, Ethereum +5.7% to $1,795.69.

Coming this week

The economic calendar springs back to life this week with key inflation numbers, retail sales, the Fed Beige Book, and housing data:

●Tuesday: NFIB Business Optimism Index, Consumer Price Index (CPI)
●Wednesday: Producer Price Index (PPI), Empire State Manufacturing Index, Fed Beige Book
●Thursday: Retail Sales, Philadelphia Fed Manufacturing Index, Business Inventories, NAHB Housing Market Index, Pending Home Sales
●Friday: Housing Starts and Building Permits, Industrial Production and Capacity Utilization, Import Price Index, Consumer Sentiment

Big banks officially kick of a new earnings season:

●Monday: FB Financial (FBK), Omnicom (OMC)
●Tuesday: Bank of America Corp (BAC), Citigroup (C), Fastenal (FAST), Goldman Sachs (GS), JPMorgan Chase (JPM), Kinder Morgan (KMI), Wells Fargo (WFC)
●Wednesday: ASML (ASML), Blackrock (BLK), Conagra (CAG), J.B. Hunt Transport (JBHT), Johnson & Johnson (JNJ), Morgan Stanley (MS), United Airlines (UAL)
●Thursday: Alcoa (AA), Abbott Laboratories (ABT), General Electric (GE), Intuitive Surgical (ISRG), 3M (MMM), Netflix (NFLX), UnitedHealth (UNH), US Bancorp (USB)
●Friday: Fifth Third Bancorp (FITB), Travelers Companies (TRV)

This week’s IPOs include: Csquare (CSQR)

Gauging potential earnings surprises

What do Citigroup (C) and UnitedHealth (UNH) have in common?

Not much, other than both are scheduled to announce Q2 earnings this week, and both figure prominently in Morgan Stanley & Co.’s recent report on stocks most likely to post earnings surprises in the coming weeks.²

The report identifies stocks (both US and European) that are 1) expected to report earnings between July 4 and August 3, are 2) rated Overweight by Morgan Stanley & Co. analysts, and 3) rank in the top two quintiles of the proprietary Earnings Surprise Composite score. The list of US stocks represents nine of the S&P 500’s 11 sectors, but is skewed toward financials (nine stocks), industrials (seven), and tech (five).

The analysis also covers the opposite end of the surprise spectrum, listing the stocks that are rated Underweight or Equal-Weight that fall within the bottom two quintiles of Earnings Surprise Composite scores.

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¹ MorganStanley.com. What We Like if the Fed Stays on Hold This Year. 7/1/26.
² MorganStanley.com. Quant Driven Earnings Ideas—Stocks Poised for Earnings Surprises in July 2026. 7/3/26.