In this week’s edition of Steady Investor, we break down the latest developments shaping the economic and market outlook, including:
- Consumer spending remained strong
- Fed held rates steady
- Oil volatility returned
U.S. GDP Growth Slowed, but Underlying Demand Looked Stronger – U.S. economic growth slowed in the second quarter, but the headline number looked softer than some of the underlying details. Real GDP grew at a 1.5% annualized rate, according to the Commerce Department’s advance estimate, down from 2.1% in the first quarter and below economists’ expectations for 1.8% growth. Because this is the advance estimate, the figures could still be revised in the months ahead.But one detail in particular should stand out to readers: the ‘drag’ came largely from trade, with net exports subtracting about 1 percentage point from GDP. This is in part because strong demand for imported technology components like semiconductors and AI-related equipment counts against U.S. output in the GDP calculation (see chart below).1
What Today’s Market Signals Mean for Investors
Geopolitical uncertainty has returned to center stage, fueling market volatility and raising new questions for investors. While headlines can drive short-term reactions, history suggests markets often prove more resilient over the long run.
Our exclusive guide, How Geopolitical Crises Affect the Stock Market 3, shows how major events influence markets and provides perspective for your next moves.
Inside, you’ll find:
- Five significant conflicts since World War II, from Korea to Crimea
- An analysis of each conflict and its economic impacts
- U.S. GDP and S&P 500 figures for key periods of these wars
- Plus, more insights on how these crises affect the economy and market
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If we look past trade and think in terms of domestic-demand, economic growth looks much healthier than the 1.5% figure implies, in our view. Consumer spending rose at a 3.2% annualized pace, up sharply from 0.5% in the first quarter, despite higher gasoline prices during much of the period. Final sales to private domestic purchasers, a measure that strips out trade, inventories and government spending, rose at a 3.9% rate, the fastest pace since early 2023. Importantly, recent durable-goods data also point to continued business investment beyond just AI. New orders rose 0.3% in June, while core capital-goods orders climbed 0.9% after a 1.9% May gain. This comes on the back of broad-based gains in durable goods orders throughout this bull market, as seen below:
The Fed Didn’t Hike, But Rate Pressure is Building – The Federal Reserve held interest rates steady this week, which was broadly expected. Markets didn’t seem to like it anyway. Three Fed officials dissented in favor of raising rates, a sign that pressure for tighter policy is building.
Fed Chair Kevin Warsh seemed to make the case against hiking by suggesting that the recent rise in bond yields may already be doing some of the Fed’s work for them, by pushing borrowing costs higher across the economy. His comments come as the average 30-year fixed mortgage rate rose to 6.66%, its highest level in a year and the fourth straight weekly increase. Mortgage rates briefly fell below 6% in February, but higher Treasury yields, oil-driven inflation concerns, and uncertainty around the Fed have pushed them back up. In our view, this strengthens the case even further for the Fed’s wait-and-see approach. Though the market seems to want to price a hike in 2026, we do not see that as a high likelihood outcome.5
Oil Market Volatility is Back, But Markets are Adapting More Quickly – Oil markets remain volatile as renewed fighting in the Middle East keeps pressure on key shipping routes. Brent crude recently touched $100 a barrel before easing, then moved back above $90 as attacks resumed. That kind of swing understandably attracts attention, especially with the Strait of Hormuz normally handling about one-fifth of global oil and LNG flows.But it’s probably safe for investors to look through most of this price volatility, as markets have ‘seen this movie’ before and can likely adapt more quickly. Producers reroute exports, buyers seek alternative suppliers, shipping routes change, and higher prices can eventually pull more supply into the market or curb demand. To be sure, volatility is likely here to stay even with these adaptations, but we also see limited economic damage compared with the worst-case headlines.There is also important historical context. The U.S. economy is far less energy-intensive than it was in the 1970s, with the EIA noting that energy use per dollar of GDP has declined substantially over time.6
Navigating Markets During Geopolitical Uncertainty – Geopolitical risks, from renewed conflict in the Middle East to evolving trade policies, continue to create uncertainty and fuel market volatility.
Understanding how these events can influence markets may help investors make more informed decisions when uncertainty arises.
Download our exclusive guide, How Geopolitical Crises Affect the Stock Market7, for insights into how global events have affected investors and the key considerations for navigating periods of geopolitical uncertainty.
Inside, you’ll discover:
- Five significant conflicts since World War II, from Korea to Crimea
- An analysis of each conflict and its economic impacts
- U.S. GDP and S&P 500 figures for key periods of these wars
- Plus, more insights on how these crises affect the economy and market
If you have $500,000 or more to invest, request this report today!
Disclosure
2 BEA. July 30, 2026. https://www.bea.gov/news/2026/gdp-advance-estimate-2nd-quarter-2026
3 Zacks Investment Management reserves the right to amend the terms or rescind the free How Geopolitical Crises Affect the Stock Market offer at any time and for any reason at its discretion.
4 Fred Economic Data. July 27, 2026. https://fred.stlouisfed.org/series/DGORDER
5 Wall Street Journal. July 29, 2026. https://www.wsj.com/finance/stocks/warshs-posture-on-interest-rates-sparks-market-inflation-fears-60b9933c?mod=finance_lead_pos4
6 Wall Street Journal. July 29, 2026. https://www.wsj.com/finance/stocks/warshs-posture-on-interest-rates-sparks-market-inflation-fears-60b9933c?mod=finance_lead_pos4
7 Zacks Investment Management reserves the right to amend the terms or rescind the free How Geopolitical Crises Affect the Stock Market offer at any time and for any reason at its discretion.
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