{{current_date_full}} | Unsubscribe
Good Morning!
Before we jump in, a quick reminder that we have new stock alerts coming next week. Keep an eye on your inbox.
Now let’s break down what actually moved markets this past week and what to watch next.
Market Recap
This was a rough and volatile week, and the driver was a renewed spike in oil prices that reignited inflation fears. After last week's encouraging inflation report, rising energy costs pushed bond yields to multi-decade highs and pressured stocks, particularly in technology.
The central story was oil. Escalating tensions in the Middle East sent crude climbing steadily through the week, and by Thursday international benchmark Brent crude had pushed back above $100 per barrel. That is the key number of the week, because surging energy prices threaten to undo the disinflation progress that drove last week's rally. The improvement in underlying inflation is still intact, but oil is the one variable that can reverse it quickly, and this week it moved the wrong way.
The impact rippled straight into the bond market. As oil climbed and inflation fears returned, Treasury yields jumped sharply, with the 30-year yield rising above 5.1%, near its highest level since before the financial crisis. Rising yields matter enormously for stocks, and especially for the smaller, more rate-sensitive companies our readers focus on, because they push up borrowing costs across the economy. The combination of higher oil and higher yields hit the market hard on Thursday, when the tech-heavy Nasdaq fell more than 2% for its worst day in over a month. This is the tension defining the market right now: underlying inflation is improving, but energy prices keep threatening to reignite it.
Layered on top of the energy story was the busiest stretch of earnings season, and the results kept the debate over AI spending front and center. A major search and cloud company delivered blockbuster cloud results, reporting a contract backlog that had ballooned to over half a trillion dollars, a sign that AI demand remains very real. But a leading electric vehicle maker missed expectations and signaled even higher spending on AI, which spooked investors and sent its shares down roughly 19% on the week. Chip stocks stayed under pressure as well. The message from the market is clear: investors will reward AI spending that produces visible returns and punish spending that does not, and that scrutiny is only intensifying.
There was a glimmer of relief by Friday. Oil pulled back below $100 on hopes that tensions could ease, and stocks stabilized into the weekend, with the Dow finishing higher on the day even as chip weakness kept the broader market subdued. It was a reminder of how quickly sentiment can turn when the energy picture shifts.
The bottom line on the week: the return of oil above $100 reignited inflation fears and drove yields higher, pressuring stocks and especially tech. Mixed mega-cap earnings kept the AI-spending debate raging. Late-week relief on oil helped, but the market heads into a pivotal week on shaky footing. For small caps, rising yields were a real headwind this week, and the direction of oil and rates from here will determine whether the broadening rally we have been tracking can resume.
What's Coming Next Week
Next week is one of the most important of the entire year, with three major forces converging at once.
The first is the Federal Reserve meeting, which concludes Wednesday. After last week's soft inflation report, the Fed is widely expected to hold rates steady, so the decision itself is not the story. What matters is the tone. With oil back near $100 and yields climbing, investors will be listening closely to whether the Fed treats this renewed energy spike as a temporary shock to look through or as a reason to stay firmly hawkish. That guidance will set the direction for rates, and by extension for the rate-sensitive smaller companies that have the most at stake.
The second force is a wave of critical economic data landing Thursday, the day after the Fed decision. Both the first estimate of second-quarter GDP and the June reading of the Fed's preferred inflation gauge are due, giving investors a simultaneous look at growth and prices. Like last week's inflation report, the June data will predate the recent oil spike, so it may show continued cooling even as the more recent picture looks more worrisome. Jobs data is also on the horizon as we head toward month-end.
The third force is the biggest week of mega-cap technology earnings, with four of the largest companies in the market reporting, two on Wednesday and two on Thursday. Given how much these giants drive the indexes and how heated the debate over AI spending has become, their results and their capital spending guidance could single-handedly set the market's tone for August. This is the definitive test of whether the AI trade can regain its footing after the recent selloff.
Underneath all of it, energy prices remain the biggest wildcard. Whether oil continues to ease or climbs back above $100 will drive the inflation and interest rate picture more than anything else on the calendar, and it could easily overwhelm the other catalysts.
The bottom line heading into next week: a pivotal Fed meeting, make-or-break tech earnings, and major inflation and growth data all land at once. The setup is as consequential as any week this year. For small-cap investors, a patient Fed and easing oil would revive the broadening theme, while persistent energy pressure and rising yields remain the central risk.
We will keep you updated with new opportunities as they emerge.
To get all of our updates in real-time – Click here to sign-up for free text alerts to your phone. (*We do not charge for this service, but standard carrier message and data rates may apply.)
Please make sure our emails are landing in your inbox, not spam, so you do not miss the alert.
All alerts are released only during normal market hours to ensure all subscribers get the same fair access and to avoid after-hours volatility.
See you soon!
SmallCapStocks Team
DISCLAIMER:
You should read and understand this disclaimer in its entirety before joining the website or email/blog list of SmallCapStocks.com (the “Publisher”). The information (collectively the “Advertisement”) disseminated by email, text or other method by the Publisher including this publication is a paid commercial advertisement and should not be relied upon for making an investment decision or any other purpose. The Publisher is engaged in the business of marketing and advertising the securities of publicly traded companies in exchange for compensation. The track record, gains, upside, and/or losses mentioned in the Advertisement, if any, should not be considered as true or accurate or be the basis for an investment. The Publisher does not verify the accuracy or completeness of any information included in the Advertisement. While the Publisher does not charge for the SMS service, standard carrier message and data rates may apply. To unsubscribe from receiving promotional text messages to your phone sent via an autodialer, using your phone reply to the sender’s phone number with the word STOP or HELP for help.You are receiving this report/release because you subscribed to receive it at our website or through a third-party site. All our newsletters include an "unsubscribe" link, and you can remove yourself at any time from our newsletters by clicking on that "unsubscribe" link. You can also contact us at [email protected] to change your information at any time. By your subscription to our profiles, the viewing of this profile and/or use of our website, you have agreed and acknowledged the terms of our full disclaimer and privacy policy which can be viewed at the following link: www.SmallCapStocks.com/Disclaimer and www.SmallCapStocks.com/Privacy-Policy