Markets Weekly July 25, 2026

Summary

Joseph Wang warns of market turbulence driven by three major headwinds: the AI semiconductor trade peaking, imminent escalation in the Iran conflict threatening oil supply, and potential hawkish Fed rate hikes. He advises caution on equities, expects the S&P 500 could undergo a correction, and sees long-term government bonds as an attractive hedge at elevated yields.

• AI trade showing signs of peaking as semiconductor index tops and market turns skeptical on hyperscaler spending.
• Google's earnings punished despite raising AI capex, signaling the market now demands tangible returns from AI investments.
• China's open-weight AI models becoming competitive and potentially reducing demand for GPUs and RAM.
• Iran war escalation imminent with military assets surging and Houthis blocking Red Sea oil transit, squeezing global oil supply.
• Oil prices have surged near $100/bbl Brent, with further supply constraints likely.
• Federal Reserve may hike rates this week, surprising markets to distance itself from political calendar.
• Equity markets fragile; S&P 500 could correct 10% toward its 200-day moving average around 7,000.
• Long-term bonds favored at high yields, providing a hedge against potential equity declines.