|
The Morning Capital
Oil Spiked, Then Broke — Just in Time for the Fed
Tuesday, July 28, 2026
|
Crude cleared $100 a barrel last week and dragged rate-hike odds up with it — then collapsed Monday when U.S. and Iranian strikes paused. The Fed announces its decision Wednesday afternoon, and the inflation input that spooked markets has partly reversed with a day to spare.
By the Numbers
Week ending Friday, July 24, 2026
| Index / Asset |
Level |
1-Week |
YTD |
| S&P 500 |
7,411.98 |
−0.61% |
+8.3% |
| Nasdaq Composite |
24,975.82 |
−2.13% |
+7.5% |
| Dow Jones Industrial Avg. |
51,947.25 |
−0.38% |
+8.1% |
| 10-Yr Treasury Yield |
4.68% |
+13 bp |
— |
| WTI Crude |
$89.31 |
+10.1% |
— |
| VIX (volatility) |
18.58 |
+3.1% |
— |
Levels are Friday, July 24, 2026 closes; 1-week change is vs. the Friday, July 17 close. Treasury 1-week is in basis points (4.55% to 4.68%); a rising yield is shown in red. A rising VIX signals higher expected volatility and is shown in red. WTI is the front-month contract and the week’s move spans a contract rollover. Index YTD is price return vs. the December 31, 2025 close (total-return figures run modestly higher) and may vary slightly by source. Note: markets have already moved since Friday — oil fell sharply Monday, July 27. Sources: TheStreet, Yahoo Finance, MarketScreener, Investing.com, CNBC. Figures are point-in-time and will have moved by the time you read this.
The Story
The Fed announces Wednesday at 2 p.m. ET, and for the first time in years the debate on the table is a possible hike, not a cut.
Oil topping $100 a barrel on the U.S.–Iran conflict pushed futures-implied odds of a July hike from roughly 11% in mid-July to about 38% by Friday, according to CME FedWatch. Then Monday brought a pause in the fighting, Brent crude fell 11.3% to $85.87, and those odds eased back to roughly a third. Economists still expect a hold at 3.50%–3.75% — what would be the fifth straight meeting without a move.
The nuance worth explaining: energy is the single most volatile input in the inflation data, and it just did a round trip in six sessions. Chair Kevin Warsh has stopped issuing forward guidance, so Wednesday’s statement and press conference — not the futures market — will be the first real read on how much weight the committee puts on an oil shock that may already be unwinding.
The Wire
The Magnificent Seven lost $797 billion in a single day
Thursday’s selloff wiped roughly $797 billion off the seven largest tech names — their worst session since April 2025 — after Alphabet and Tesla reported rising AI capital spending. The group is down about 11% from its late-May peak, roughly $2 trillion in market value.
Read the full article →
Oil reverses hard as U.S.–Iran strikes pause
Brent closed Monday at $85.87, down 11.3% and its biggest drop since April, after the U.S. halted strikes and Iran signaled it may hold off as well. Traffic through the Strait of Hormuz remains far below normal, so the risk premium has thinned rather than disappeared.
Read the full article →
New tariffs took effect covering nearly all U.S. imports
A new round of Section 301 tariffs went into force Friday, applying rates of 10% to 12.5% across the largest U.S. trading partners and touching 99.4% of imports. Some energy products were exempted, an acknowledgment that higher fuel costs were already pressuring prices.
Read the full article →
Talking Points
“Wait — the Fed might raise rates? I thought cuts were coming.”
That expectation was widespread at the start of the year, and it has shifted because inflation has stayed above the Fed’s 2% target and energy costs climbed. Futures markets currently put a hike at roughly a one-in-three chance for Wednesday, with a hold still the base case. It’s a useful reminder that rate forecasts are estimates that get revised as data arrives — which is precisely why a plan shouldn’t depend on any particular rate path.
“Gas prices spiked and then dropped. Does that fix inflation?”
Energy is one of the fastest-moving components of the inflation basket, and it can swing double digits in a week — as it just did in both directions. That volatility is exactly why the Fed leans on measures that strip energy out and looks at trends over months, not days. One good week for oil doesn’t resolve the inflation question any more than one bad week decided it.
“Big Tech lost $800 billion in a day. Should I be worried about my accounts?”
Headline dollar figures sound enormous mostly because those companies are enormous; the more useful comparison is what the broad market did. The S&P 500 finished that same week down 0.61% and remains up roughly 8% for the year, and the Dow actually rose on Friday. When a handful of very large names move together, the number in the headline and the number in a diversified portfolio are rarely the same.
Practice Corner
|
Practice tip: how to handle Fed day
Wednesday will generate a lot of noise and a few client calls. Three things that tend to work:
1. Send the note before the decision, not after. A short Tuesday or Wednesday-morning message — “the Fed announces at 2 p.m.; here’s what it does and doesn’t change for you” — positions you as prepared rather than reactive. After the fact, you’re just one more voice in a crowded inbox.
2. Answer “what does this mean for me?” concretely. Clients rarely care about the target range. They care about their mortgage, their CD ladder, their money market yield, and their bond fund. Name the two or three that actually apply to that household.
3. Don’t predict. “Here’s what the market is pricing, and here’s why we don’t build the plan around it” ages far better than a call you may have to walk back in September.
|
The Number
|
$797B
Market value erased from the Magnificent Seven in a single session on July 23 — their worst day since April 2025 — while the S&P 500 finished the full week down less than 1%.
Source: Bloomberg via TheStreet, July 24, 2026.
|
|
Know an advisor who'd find this useful?
The Morning Capital grows by word of mouth. Pass it along: www.themorningcapital.com
Was this issue useful? Just hit reply and tell us — we read every response.
|
The Morning Capital — Markets. In context. An independent, educational market brief for financial professionals.
This newsletter is for educational and informational purposes only and does not constitute investment, legal, tax, or financial advice, nor a recommendation, solicitation, or offer to buy or sell any security. It is not personalized to any individual's circumstances. Market data is point-in-time, drawn from third-party sources believed reliable but not guaranteed, and is subject to change. Past performance does not guarantee future results. Consult a qualified professional before making financial decisions.
|