What Happened in the Markets Last Week
Nasdaq Drops 2.9% on Tech Selloff
The Nasdaq suffered its steepest weekly loss, falling 2.9% as semiconductor and AI-related stocks led the decline. The S&P 500 dropped 1.5% and the Dow shed 0.9% over the same period.
Investors Rotate Hard Into Energy and Industrials
Capital poured out of technology into cyclical sectors, with energy, industrials, and financials attracting the bulk of inflows. Stocks like Caterpillar, Walmart, and Exxon gained ground as the tech-heavy indexes fell.
Semiconductor ETFs Shed Nearly 10% Weekly
The iShares Semiconductor ETF fell more than 10% on the week, while the VanEck Semiconductor ETF slid close to 9%. Concerns grew that major AI spenders may cut back on infrastructure investment, with Nvidia, AMD, and Intel all posting losses.
IBM Posts Worst Single Day in Its History
IBM shares cratered after the company warned that clients are pulling back from software spending. The news added to broader anxiety about slowing enterprise technology budgets heading into the second half of 2026.
VIX Jumps 12% as Market Fear Rises
The CBOE Volatility Index surged 12.19%, signaling a sharp increase in near-term investor unease. Rising oil prices and questions about the economics of AI infrastructure fueled the pickup in uncertainty.
S&P 500 Weekly Outlook
The S&P 500 enters the week of July 27–31 at 7,457.69, sitting roughly 140 points below the 7,600 resistance level after a 1% Friday selloff driven by semiconductor weakness and geopolitical flare-ups in the Strait of Hormuz. The index is down 0.57% over the past month but remains up 18.44% year-over-year, with bulls and bears both holding legitimate arguments heading into one of the heaviest macro weeks of Q3.
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Bull Case: What Could Drive the S&P 500 Higher
📉 Softer Inflation Keeps Hike Risk Contained
June CPI and PPI both came in below expectations, pulling the 10-year yield down from a two-month high of 4.62% to 4.57%. If this week’s data confirms the disinflationary trend, the Fed hold scenario stays intact and equity multiples get some breathing room.
📅 July Streak Survival
A monthly close above 7,499.36 preserves the S&P 500’s 11-year winning July streak. With the index currently at 7,457.69, bulls need roughly 42 points of recovery by July 31 — a modest ask if macro data cooperates this week.
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Bear Case: Risks That Could Weigh on the S&P 500
🤖 AI Capex Pullback Risk
Friday’s chip selloff was triggered by concerns that hyperscalers may reduce AI infrastructure spending. Semiconductor and AI-adjacent stocks carry significant weight in the S&P 500’s year-to-date gains, and a confirmed capex slowdown narrative would pressure the index beyond the chip sector alone.
🛢️ Geopolitical Disruption — Strait of Hormuz
Commercial shipping avoiding the Strait of Hormuz following U.S.-Iran strikes introduces an energy price shock risk that could revive inflation expectations. With over two-thirds of rate futures already pricing a Fed hike by year-end, any upward pressure on oil reinforces the hawkish scenario and weighs on equities.
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Key Market Markers
🔴 7,600 — Resistance Ceiling
The index has given back gains at 7,600 repeatedly, and the 52-week high sits at 7,620.90 — just 20 points above that level. A decisive close above 7,600 on heavy volume would flip this from resistance to support and meaningfully shift the technical picture.
🟢 7,353 — Primary Support
The first meaningful support below current price sits at 7,353, roughly 105 points from Friday’s close. A break below this level would represent a 4.1% pullback from resistance and raise questions about whether the medium-term uptrend remains intact.
📊 10-Year Yield at 4.57%
Yields pulled back from 4.62% on softer inflation data, but remain elevated and carry asymmetric risk given the geopolitical situation. Watch for any move back toward 4.62% or higher as a signal that the Fed hike narrative is repricing — that outcome historically pressures equity valuations at current multiples.
📅 Heavy Macro Calendar
This week is one of the largest data weeks of Q3, with releases that will directly inform the Fed’s path and corporate earnings expectations. Outcomes that confirm disinflation support the bull case; upside surprises on growth or prices tighten the screws on a market already showing RSI divergence at resistance.
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Bottom Line
The S&P 500 sits in a technically defined decision zone — below resistance at 7,600, above support at 7,353, and 42 points short of preserving a streak that spans more than a decade. The bull case rests on soft macro data this week validating the Fed hold, the ascending triangle resolving higher, and the AI capex concern proving to be noise rather than signal. The bear case is built on a real technical warning in the RSI, a geopolitical situation that could push energy prices higher, and a market that has already priced in significant good news at 18.44% year-over-year gains. Neither side has a clean argument, which makes the week’s data releases and how the index reacts to them at these specific levels the only thing that matters.
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