Monthly Market Observations — August 2026
July's standout developments: the SOX Index dropped 20.6% and DRAM makers slid 31.8% as investor focus shifted from AI demand to returns on massive capex — yet hyperscaler earnings from Microsoft (+24.6%) and Amazon (+13.9%) reinforced robust AI demand. Blended Q2 EPS growth reached 47.4% with 86% of S&P 500 companies beating estimates. The Fed held at 3.50%–3.75% amid internal dissent, with markets pricing ~65% odds of a September hike. Portfolio considerations address momentum unwinds, rising long-end Treasury yields, and the AI narrative shifting from demand to return on investment.
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