• Stocks trade higher to start the week – U.S. equities traded higher on Monday, supported by declining oil prices and lower bond yields, while Canadian markets were closed in observance of the Civic Holiday. Over the weekend, U.S. President Trump announced that he would hold off on planned attacks against Iran while pursuing a diplomatic solution. The announcement sent WTI crude oil down approximately 5% to around $80 per barrel and pushed the 10-year U.S. Treasury yield below 4.7%. From a leadership standpoint, cyclical and growth-oriented segments of the market outperformed, with consumer discretionary and communication services among the top-performing sectors in the S&P 500. On the economic front, the ISM Manufacturing PMI rose to its highest level since May 2022, signaling continued improvement in the goods-producing side of the U.S. economy. Looking ahead, corporate earnings will remain in focus this week, with more than 100 S&P 500 companies scheduled to report. Labour market data will also be key, headlined by Friday’s domestic labour force survey and U.S. nonfarm payrolls report.
   
• Labour-market data and corporate earnings in focus for the week ahead – Investors face a full week of corporate earnings and labour market data that will help set the tone for the week ahead. June U.S. JOLTS job openings are due tomorrow, followed by the ADP employment report and Friday’s release of July nonfarm payrolls and the unemployment rate. We have seen signs of stabilization in the U.S. labour market, with nonfarm employment growing by an average of 92,000 jobs per month through June, an improvement from average monthly employment growth of roughly 10,000 in 2025. In addition, signs of layoffs remain limited, with the unemployment rate at 4.2% and initial jobless claims averaging just 211,000 per week this year. U.S. labour supply and demand also appear fairly balanced, in our view, as evidenced by job openings slightly exceeding the number of unemployed people.
  
  On the corporate front, more than 100 S&P 500 companies will report earnings this week, and second-quarter results have been strong among those that have already reported. Roughly 61% of S&P 500 companies have reported thus far, with 86% exceeding analysts’ earnings expectations. In addition, second-quarter earnings are on pace to grow by nearly 45% year over year, led by the technology, communication services, consumer discretionary, and energy sectors, each of which is on pace to deliver earnings growth of more than 65%. While a portion of the robust second-quarter earnings growth is attributable to nonrecurring items at a handful of large technology companies that benefited from investment-related gains, earnings strength has not been limited solely to large-cap technology companies. The Russell Midcap Index is also on pace to deliver earnings growth of more than 20% in the second quarter. We continue to believe the backdrop remains supportive for equity markets over the coming months, underpinned by strong profit growth, healthy economic activity, and stable labour market conditions.
   
• How do stocks perform around U.S. Midterm elections? – Markets have had their fair share of policy changes to contend with over the past year, and policy implications will remain in focus as the November midterm elections approach. However, while policy headlines can be noisy, history suggests it is best not to play politics with your portfolio. Since 1970, the S&P 500 has generated an average total return of 3.1% in the three months leading up to Election Day, with positive returns in nine of 14 midterm election years, or 64%.* In the three months following Election Day, the S&P 500 generated an average total return of 7.6%, with positive returns in 12 of 14 periods, or 86%.* While there is no guarantee that this historical pattern will repeat in 2026, we believe the data highlight the importance of maintaining a long-term investment strategy aligned with your financial goals rather than allowing political developments to drive portfolio decisions.

Brock Weimer, CFA;
Investment Strategy

^{Special thanks to our summer intern, Owen Apfel, for his assistance with data collection.
Source for all data not cited: FactSet.  
Source for data cited: *FactSet, Edward Jones}

Friday 7/31/2026 p.m.

• Stock gain with earnings in focus – North American equity markets closed higher on Friday as investors digested earnings results from Apple and Amazon, which were released after yesterday's market close. Both companies exceeded analyst expectations for quarterly revenue and earnings. However, Apple shares are closed lower following a more cautious outlook from management, while Amazon shares gained over 15% as investors appeared to focus on strong results from the Amazon Web Services (AWS) segment, which posted its fastest revenue growth in more than four years. On the economic front, domestic real GDP grew 0.3% in May, exceeding Statistics Canada's preliminary estimate for a 0.1% increase. The mining, quarrying, and oil and gas extraction sector led the gain, with output rising 1.0% during the month. Service-producing industries also posted solid growth, expanding 0.2% in May and signaling improvement in domestic economic activity. Overseas, Asian markets finished higher overnight, led by South Korea's Kospi, which gained nearly 18% amid a rebound in technology shares. European markets also posted modest gains. In fixed income, government bond yields finished higher, with the 10-year GoC yield closing around 3.66% and the 10-year U.S. Treasury yield rising to above 4.7%.
   
• Tech earnings in focus – Technology earnings were in focus Friday as investors assessed results from Apple and Amazon. Apple exceeded quarterly earnings and revenue expectations, supported by strong iPhone and Mac sales. However, shares are under pressure after management projected lower-than-expected revenue growth for the current quarter and cited supply constraints and rising component costs amid AI-related supply-demand imbalances. Amazon also surpassed earnings and revenue expectations, with Amazon Web Services (AWS) revenue rising 37% year-over-year, its fastest growth in 18 quarters, amid strong demand for AI workloads. Management raised its 2026 capital-expenditure outlook to approximately $220 billion, primarily reflecting continued investment in AWS and AI infrastructure. Despite elevated spending, Amazon posted a record operating margin of 13.7%. Recent earnings from major AI enablers, including Alphabet, Microsoft, Meta, and Amazon, have generated mixed stock-price reactions as investors appear to scrutinize whether rising AI investment is translating into adequate returns. We continue to recommend exposure to technology and the AI theme, balanced with more cyclical areas of the market. Within our opportunistic asset-allocation guidance, we favour U.S. large-cap stocks and emerging-market equities, both of which provide meaningful technology exposure, in our view, alongside Canadian small- and mid-cap stocks.
   
• Entering a seasonal soft patch, but the backdrop remains supportive – While fundamentals such as earnings growth and economic activity ultimately drive equity markets in our view, seasonal patterns have emerged over time, with some months historically performing better than others. Since 1970, the S&P 500 has generated an average return of 0.16% in August and posted gains 57% of the time.* By comparison, the index has returned an average of 0.75% across all months over the same period, with positive returns 60.6% of the time.* September has historically been the weakest month, declining by an average of 0.8% and posting gains just 44.6% of the time.* Despite these potential near-term seasonal headwinds, we remain constructive on the longer-term outlook for equities. TSX and S&P 500 earnings are on pace to grow by 25% or more this year, while economic activity remains healthy, supported by stable labour-market conditions, steady consumer spending, and improving manufacturing activity. Against this backdrop, we believe equity markets can continue to perform well in the months ahead.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data not cited: FactSet.  
Source for data cited: *FactSet, Edward Jones}

• Stocks surge after post-Fed sell-off – Equity markets in the U.S. and Canada were higher across the board on Thursday, after a late-day sell-off on Wednesday. The tech-heavy Nasdaq led the gains, up over 2.7%, while the S&P 500 was up about 1.7%, and the Canadian TSX was up about 0.5%. From a S&P sector perspective, the leadership was narrow, with technology far outpacing other sectors, up over 5%. This bounce comes after a sell-off on Wednesday, as stock and bond markets showed concern that the Fed kept rates on hold while acknowledging that inflation remains elevated. The ongoing escalation in Iran also added to uncertainty, with WTI oil prices briefly climbing back above $85. However, today oil prices dipped back below $84, and U.S. and Canadian government bond yields moved modestly lower across the curve. The S&P earnings stories remain mixed across technology, with software giant Microsoft reporting strong earnings driven by its cloud business and AI-related revenue, while Meta missed earnings and saw declining free cash flow due to AI investment. Investors will be looking toward other large-cap tech earnings on Thursday, including reports from Amazon and Apple. Overall, the rotation theme in markets continues to remain intact. Outside of technology, value and cyclical parts of the market are showing signs of life, and within technology, investors were perhaps looking for value in the most downtrodden areas including software and semis.
   
• U.S. GDP growth softer, but consumption holds up – An advanced reading of second-quarter U.S. GDP growth showed economic growth cooling but still positive. GDP growth slowed to 1.5% annualized, below forecast of 2.0% and last quarter's 2.1% reading. However, the biggest contributor to growth remained personal consumption, which rose by 3.2%, above forecasts of 2.3%, suggesting household spending continues to support the broader economy. The detractors to growth for the quarter included government spending and net exports, implying trade remains a drag on economic growth. Of note, the personal consumption expenditures (PCE) price index, a preferred inflation metric for the Fed, was in line with expectations for June at 3.7% year-over-year, below last month's 4.1%. Core PCE inflation was also in line with forecasts, at 3.3%, slightly below last month's 3.4%. While core inflation did tick lower, it remains well above the Fed's 2.0% target, helping create a tougher backdrop for the Fed to remain neutral on rates. If these conditions hold between now and the next September 16 FOMC meeting, we think the Fed may feel obliged to take more decisive action and raise the fed funds rate to 3.75%-4.0%.
   
• Fed stayed on hold but ready to act – Alongside the conflict in the Middle East, Wednesday's Fed rate announcement was the primary focus for markets, arriving amid heightened uncertainty and renewed gains in energy prices. The Fed delivered a hawkish hold, keeping rates steady at 3.50%–3.75%, though three officials dissented in favour of a hike. Chair Kevin Warsh signaled comfort with markets doing some of the policy tightening, pointing to higher bond yields in recent weeks, and reiterated that the Fed will not hesitate to act if needed. The three dissents were not a surprise to us, but they do hint at the direction of travel if geopolitical tensions persist and the labour market remains resilient. We think September could be a live meeting, with the probability of a rate hike rising if geopolitical tensions persist and oil prices continue to trend higher. Upcoming inflation data for July and August will be critical in determining the Fed’s next move, in our view.

Mona Mahajan;
Investment Strategy

^{Source for all data: Bloomberg.}  

• Stocks decline as oil prices jump and long-term yields rise – Main indexes in Canada and the U.S. declined more than 1% on renewed geopolitical tensions and investor concerns that the Fed is falling behind on inflation after it kept interest rates steady. Iran launched a missile strike on a U.S. base in Jordan that was intercepted, and President Donald Trump said the U.S. would retaliate, signaling a potential escalation following a recent pause in hostilities. In response, WTI oil prices jumped 7% to $85, still below last week’s $90 peak but up meaningfully from $70 at the end of June. Long-term bond yields rose after the Fed meeting, while the energy sector outperformed. On the corporate front, Visa posted 10% U.S. payments volume growth, the highest since 2019, and noted that the consumer spending environment remains strong across both discretionary and non-discretionary categories. In addition to geopolitics and the Fed, investors will be closely watching mega-cap tech earnings, with Microsoft and Meta scheduled to report after the close today, followed by Apple and Amazon tomorrow.
   
• Fedis on hold but ready to act – Alongside the conflict in the Middle East, today’s Fed rate announcement was the primary focus for markets, arriving amid heightened uncertainty and renewed gains in energy prices. The Fed delivered a hawkish hold, keeping rates steady at 3.50%–3.75%, though three officials dissented in favour of a hike. Chair Kevin Warsh signaled comfort with markets doing some of the policy tightening, pointing to higher bond yields in recent weeks, and reiterated that the Fed will not hesitate to act if needed. The three dissents were not a surprise to us, but they do hint at the direction of travel if geopolitical tensions persist and the labour market remains resilient. We think September could be a live meeting, with the probability of a rate hike rising if geopolitical tensions persist and oil prices continue to trend higher. Upcoming inflation data for July and August will be critical in determining the Fed’s next move, in our view.
   
• Broader leadership is helping cushion AI pullback - Concerns over the monetization of large AI investments and emerging competition from China have triggered a roughly 5% pullback in tech since the beginning of the month, with the Philadelphia semiconductor index down 22%. At the same time, as investors have rotated out of tech and AI, financials, energy, and healthcare have each gained more than 5%, helping the broader market hold up, with the TSX, the equal-weight S&P 500 and the Russell 1000 Value index hitting all-time highs. In our view, this is a healthy market dynamic, as crowded positioning and leverage in parts of tech unwind. The good news, in our view, is that risk/reward has improved as valuations have reset and now trade at multiyear lows across several mega-cap tech names, potentially lowering the bar into upcoming results. As we move through a critical stretch of tech earnings, we expect investors to focus on whether companies can translate elevated AI investment into higher revenue, stronger margins, and expanding cash flow. In our view, the AI theme is maturing rather than breaking. Demand trends remain intact, and the cycle is still early in terms of adoption and dissemination. However, we think the next chapter for markets will be less about riding the wave and more about monetization. We continue to recommend maintaining exposure to AI-related allocations, while complementing them with more diversified and differentiated sources of return.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data: Bloomberg.}  

• Markets finish higher as broad gains offset tech pullback – Canadian and U.S. equity markets closed higher on Tuesday, with the TSX reaching a record high. Selling pressure in semiconductor stocks appeared to carry over from Asian markets, where South Korea's Kospi index fell more than 10%. Overall, today's move was an extension of the recent trend of market leadership widening beyond technology. Bond yields declined, with the 10-year Government of Canada yield at 3.53% and the 10-year U.S. Treasury yield near 4.60%. In energy markets, WTI oil prices extended their decline, falling below $80 per barrel. The U.S. dollar weakened modestly versus major currencies, consistent with the drop in bond yields.
   
• Several Magnificent 7 companies to report earnings this week – Meta Platforms (Facebook, Instagram) and Microsoft are scheduled to release quarterly results Wednesday, followed by Amazon and Apple on Thursday. In addition to earnings results, investors will likely focus on capital-spending plans and evidence that substantial AI investments are translating into revenue and earnings growth. Alphabet (Google) raised its 2026 capital-expenditure forecast last week, which contributed to a negative reaction in its share price. In our view, this response reflects a shift in investor expectations: markets appear increasingly reluctant to reward higher AI spending on its own and instead are looking for progress in earning a return on that investment. More broadly, while earnings season is still in its early stages, results have been strong. With about a third of S&P 500 companies reporting, 85% have beaten analyst estimates by an average upside surprise of 37%. As a result, forecasts for second-quarter earnings growth have been revised higher to 36%, up from 22% at the end of the quarter. Energy companies are expected to post the strongest growth — supported by higher oil prices during the quarter — followed by the communications and technology sectors. Earnings gains are also forecast to be broad-based, with 10 of the 11 sectors expected to report year-over-year increases. If realized, we believe wider participation could help make the market's advance more durable by reducing its reliance on a small group of mega-cap companies. It could also help create a more favourable backdrop for diversified portfolios. We continue to recommend overweight positions in U.S. large- and mid-cap stocks, as well as emerging-market equities.
   
• Fed appears positioned for a hawkish pause– The Fed's Open Market Committee (FOMC) began its July meeting today, with markets expecting policymakers to maintain the fed funds target range at 3.5%-3.75%. We agree that no change is the most likely outcome, although one or two of the 12 voting members could dissent in favour of a rate increase. Because the rate decision itself is unlikely to surprise markets, we expect attention to center on any changes to the policy statement and Chair Kevin Warsh's tone in the press conference. With the Fed's employment mandate largely being met and inflation above the 2% target, we expect the policymakers to emphasize inflation risks and preserve the option to raise rates at a future meeting. That could make the September meeting more consequential. In our view, the likelihood of a rate hike is rising, especially if geopolitical tensions escalate and oil prices rebound. Conversely, the inflation outlook could become more balanced if the U.S.-Iran pause leads to a longer ceasefire and oil prices remain contained. Tighter policy cannot directly resolve a supply-driven inflation shock, but it can help prevent higher energy prices from becoming embedded in broader inflation expectations. Short-term bond yields have moved higher as markets price in a higher probability of Fed rate hikes, offering a better yield advantage versus cash yields, in our view.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.}