Between geopolitical tensions in Iran, new leadership in the Federal Reserve, and volatility in interest rates, July’s financial news kept investors and experts on their toes.
Where might the stock market go from here? Does the data bode well, even with an approaching midterm election?
Value Stocks Outperform Growth Stocks
Value stocks are generally less volatile and more predictable than growth stocks. In July, the performance spread between value stocks and growth stocks widened, with value outperforming growth by a significant margin.
Our Investment Management Team watches these performance metrics closely, understanding the tactical advantages of active management.
Strategic active management allows us to play the spread between value and growth, assessing which names have contributed to the downside versus the upside and pivoting between them.
Our team takes advantage of dislocation across strategies, an approach that contributed positively to our July aggregate performance profiles, which bore strong outcomes net of fees and taxes.
Typically, in a midterm election year, volatility manifests in the third and fourth quarters, and value stocks tend to overtake growth stocks. Therefore, the dichotomy between value and growth stocks is likely to continue.
Our active management strategy allows us to pivot quickly if necessary to capitalize on what the market does in this environment.
In summary: Value stocks are outperforming growth stocks, and this will likely persist. Talk to a member of our team about how Credent’s active management strategy can benefit your portfolio, especially during midterm election season.
Technicals Cultivate Optimism
The market has performed well, with many investors experiencing exciting gains. However, amidst this kind of performance, some people start to wonder where the path forward leads. Right now, technicals do not indicate a need for worry.
For example, one technical metric we analyze as a momentum indicator is the percentage of stocks within the S&P 500 that are performing better than their 200-day moving average. Historically, this metric serves to help investors and portfolio managers know whether to be bullish or bearish in the market moving forward.
What does the current data show us about the market outlook for the rest of 2026?
The data has been on a relative uptrend over the last 6-18 months, with 68% of S&P 500 constituents now trading above their 200-day moving average. There is room for this number to grow, however, and we don’t believe we’ve yet reached a peak that would raise a red flag about an impending downside swing.
If closer to 80-90% of constituents were trading above their 200-day moving average, we would be more concerned about hitting a cap and seeing downside returns in the next 3-12 months.
In summary: From a technical standpoint, we have no immediate worry about near-term market performance.
Better-Than-Expected Earnings Support the Market
On the fundamental side, earnings revisions are the process of analysts, portfolio managers, and economists continuously reevaluating and adjusting their earnings predictions, a healthy and normal part of market analysis.
Throughout 2026, the vast majority of revisions have been to the upside (better earnings data than expected). These adjustments have been warranted.
Case in point: The July earnings backdrop has been stellar. So far, earnings growth for companies in the S&P 500 has surpassed 28-29%, surprising analysts.
What does better-than-expected earnings data tell us? In a period of abundant AI expenditure, the main question is: does money spent on AI lead to better operating profits and margins? So far, the answer is yes, and we have seen accelerated expectations of when operating margins will improve across a subset of individual equities.
This has caused better forward guidance (the assessment of how equities are likely to perform in the future) which is how the market generates stock prices.
In summary: Positive earnings revisions and surprisingly strong July earnings data contribute to favorable expectations for the future of the stock market. But because analysts and experts are not always correct in their predictions, avoiding putting your weight solely on one kind of market expectation. Instead, stay invested for the long term with a risk-centric mindset and broad exposure.
What about Macroeconomic Data?
Data from Federal Reserve banks across the country show that, despite the war in Iran and perceived inflationary pressures from higher oil prices, there has been a notable uptick in aggregate manufacturing capacity and output across the United States. This is a good sign for the economy.
Once again, data like this can surprise even expert economists, reminding us that allocating assets based on one expectation, without making space for a contrarian viewpoint, can derail a portfolio or financial plan.
Credent takes a blended exposure approach, prioritizing risk management first and total returns second, knowing that’s the strategy most likely to generate the best outcomes for clients.
In summary: Economic data indicates surprising strength despite current events. Invest with objective risk management to avoid counting on one outcome that could fail to materialize.
If you’d like to talk to an advisor about how to structure your portfolio and financial plan, reach out using the form below.
Want to read more like this? Check out our Markets Midyear Review & What to Expect the Second Half of 2026.
