July Market Recap

What’s trending in the market:


Delta variant fears: The threat of the rise in the number of Covid-19 cases due to the fast spread of the Delta variant worldwide has shaken global markets negatively throughout July. Cases have been surging across the UK and the US which brought fears to markets that economic recovery and the pace of ‘going back to normal’ would take even more time than expected, as investors worried that new measures would be taken to slow the spread of the delta variant.


Corporate earnings: Strong corporate earnings have further supported investors’ confidence in the corporate recovery, despite the rising threat of the Delta variant. More than 90% of the S&P 500 companies have reported results that exceeded analysts’ expectations according to Bloomberg.


FOMC meeting: Fed Chair Powell reassured to investors the Fed’s view that inflation is transitory and not here to stay, and therefore, there would be no need for any immediate decisions to be taken by the Fed. The Fed also signaled that it was moving closer, but have not yet reached the point to start tapering on its Covid-era policies.


Market performance and reactions:


Dow Jones Industrial Average

For the first half of July, the Dow Jones Industrial Average was in consolidation, moving in a defined range of around 34,700 to 35,000. This was followed by a huge fall in the index, where it reached a low of 33,741 due to Delta variant fears and a weaker than expected consumer sentiment data. However, the index made a strong rebound thereafter, reaching a high of 35,171, due to the ‘Buy-the-dip’ mentality of investors and the general bullish sentiment that exists in the market.


Nasdaq Composite

As for the Nasdaq composite, a completely different Scenario was in place. The composite started the month with an upward movement, building on the strong uptrend from June. However, with the volatility present in the market and the selloff that occurred midmonth, the index reached a low of 14,178. However, as with the case of the other indices, the index rebounded sharply, reaching a high of 14,863, but declined slightly after that due to declines in blue chip stocks after their earning calls.


S&P 500

The S&P500 index started the month on a positive note, climbing up to a new record high of 4,393. However, due to the selloff in US stocks, the index dropped around 160 points to reach a low of 4,233. Nevertheless, the S&P500 had the sharpest rebound among US indices, as it jumped towards a new record high of 4,429, supported by the strong corporate earnings of its component stocks.


VIX Index

The VIX, also known as a gauge of fear among market participants, has been falling over the past couple of months as the economic recovery is taking place and investor’s confidence is boosting markets. The index has reached its lowest level since the pandemic began in June, but have risen noticeably throughout July, reaching a high of 22.5. This was in part due to fears of the rising cases of Covid-19 due to Delta variant.


Yield Curves

Yields on 10 year notes have declined throughout July, reaching a low level of 1.194%, which is their biggest drop since March 2020.2 year bonds have also declined, and the gap between the 2 year and 10-year yields have narrowed.


Year to date recap:


YTD return

Dow Jones Industrial Average


Nasdaq Composite






*As of July 31, 2021.



Throughout July, there was a high volatility in the stock market that was the result of various economic, financial and Virus specific events.  A hefty decline in major indices was the highlight at the beginning of the month, and the immediate V shaped rebound due to ‘buy the dip’ mentality sparked high volatility across markets and resulted in new all-time high numbers.


From an economic point of view, the Fed’s meeting didn’t result in huge swings in the stock market like June’s meeting. Investors are now anticipating any hint from the Fed regarding the tapering of its quantitative easing and asset purchasing operations. From a financial perspective, Strong corporate data still have their appeal for investors, as earnings are now a crucial indicator as how would companies perform and what business models are succeeding in the post-covid era.


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