HOTLINE
Hotline Archive
July 17, 2026
This is John Bonnanzio with a Fidelity Monitor & Insight Hotline update for Friday evening, July 17.
There are no model portfolio trades advised.
This week’s market-moving news shifted with each passing day.
Among the most important – at least in the longer-term – was the start of second-quarter earnings. As usual, the country’s biggest banks kicked things off, and their news was exceptionally good. On Tuesday, JP Morgan Chase, BoA, Citi, Wells Fargo and Goldman all easily surpassed Wall Street expectations. In the aggregate, they’re on track for year-over-year earnings growth of 30%.
Key performance drivers came from most of their business lines including dealmaking, trading, IPOs and massive borrowing for AI infrastructure. On the consumer side, borrowing remains robust while delinquency rates eased. (Some consumer stocks also reported strong earnings growth for the quarter while consumer sales rose 0.2% last month.)
With banks sitting at the center of the U.S. economy, their earnings strength is often a reflection of strength in other areas of the economy.
On that note, a key inflation gauge, the Producer Price Index (PPI), surprised most everyone on Wednesday when the government reported that it dropped 0.3% in June from May. The chief driver of the decline was the 12% decline in the wholesale price of gas which was triggered by last month’s announcement that a Memorandum of Agreement had been signed by the U.S. and Iran. Of course, with both countries once again fighting, oil prices (West Texas Intermediate) jumped nearly 15% to $82.53 a barrel.
As for the tech (which is now the main performance-driver behind large-cap stock indexes), the week saw investors alternatively worried and not at all concerned about massive AI infrastructure spending. In the shorter-term, some balance sheets have been compromised by debt, while the longer-term concern remains ROI.
Against that backdrop, the AI momentum trade ran into a brick wall this week with semiconductor stocks taking the brunt of the selling. Then on Friday, the broader tech sector briefly recoiled on news that Chinese startup Moonshot AI, and its Kimi K3 model, might pose a threat to America’s AI frontrunners like Anthropic (Chinese AI companies, faced with a shortage of training compute, have developed a process called distillation, which allows them to extract data and mimic the reasoning of advanced AI by querying America’s frontier models tens of millions of times).
For the week through Friday’s close, the Dow Industrials and S&P 500 fell 1.0% and 1.5%, respectively. For its part, the tech-rich Nasdaq Composite fell 1.4% on Friday but was down 2.9% for the week. (Notably, the Philadelphia Semiconductor Index dropped over 12% this week.)
Elsewhere, the good inflation news was relatively helpful to small- and mid-cap stocks; the Russell 2000 index and its midcap counterpart ended the week slightly underwater: -0.5% and -0.6%, respectively.
The selloff among chipmakers, coupled with rising oil prices, weighed most heavily on Asian markets. Japan’s Nikkei plunged 6.4% while the Shanghai Composite fell a comparable 5.8%.
As for European markets, London’s FTSE 100 rose 1.0% while the broader Stoxx Europe 600 and France’s CAC 40 were flat. Their relative strength to the U.S. this week reflects a lack of big tech exposure, while many of their banks have significant operations in the U.S.
Turning to gold, Mideast fighting didn’t dissuade investors from selling: the precious metal fell 2.4% to $4,015.20 a troy ounce.
This week’s welcome inflation news steadied Treasury yields, which had been on the rise. With several gauges pointing to an easing of price pressures, the probability of one (or even two) rate hikes in the second half of the year has lessened. That said, the yield on the benchmark 10-year Treasury slid 1 basis point this week to 4.55%. Suffice it to say, had oil prices not spiked (along with renewed inflation concerns in some quarters), yields may have fallen further. (Bond prices move in the opposite direction of their yields.)
| Our model performance as of Friday's close is listed below: | ||
|---|---|---|
| Week | YTD | |
| S&P 500 | - 1.5% | + 9.6% |
| Barclays US Aggregate Bond | + 0.1% | + 0.1% |
| Income Model | - 0.5% | + 4.1% |
| G&I Model | - 1.0% | + 8.2% |
| Growth Model | - 2.2% | + 11.7% |
| Select System | - 2.6% | + 15.6% |
| Unique Opportunities Model | - 2.3% | + 10.2% |
Finally, our next regularly scheduled Hotline will be Friday evening July 24.
Fidelity Monitor & Insight's Hotline is updated on Friday evenings or whenever the Dow moves 1,000 points or more in either direction.