July 2026 Market Review & Commentary

We hope this reaches you in good spirits and that you're enjoying some wonderful adventures during the warmest days of summer.

In Northern Virginia, the Sauerwines have been dedicating their weekends to visiting colleges as Channing prepares for his senior year of high school. If you have kids, you likely recall the mix of excitement, nervousness, and apprehension as this new chapter in family life approaches more quickly than anticipated. It seems Channing is leaning towards Coastal Carolina, and the next step will be the college application process…

In North Georgia, July marks the unofficial "end of summer" since school resumed on August 3^rd. Furthermore, Chelsea's break from soccer has concluded as she began her U15 season with team camp alongside a completely new group of teammates. Conversely, Chad's soccer break persists as he made the challenging choice to retire from coaching and put away the hoody. Now, the truly hard part starts with not being a sideline coach as a parent. I recommend using suckers and sunflower seeds to help keep the comments to a minimum.

July 2026 Monthly Market Update

July served as a reminder that market performance isn't always reflected by the headline numbers. The S&P 500 finished the month down approximately -0.1%, while the Nasdaq declined approximately -3.2% in July. The change in July was due to investors rotating away from several of the technology companies that had driven much of this year's gains. It is interesting to note the S&P 500 YTD is up 9.2% and the Nasdaq is up 13.4%, even with an essentially sideways market since mid-May.

Beneath the surface, however, the market continued to evolve. Energy stocks benefited from higher oil prices amid renewed geopolitical tensions, while Financials and several defensive sectors posted positive returns. At the same time, many technology companies took a pause as investors became increasingly focused on which businesses are turning significant investments in artificial intelligence into meaningful earnings growth.

This type of market rotation is a normal part of investing. Leadership rarely stays concentrated in one area indefinitely, and periods like these reinforce the value of maintaining a diversified portfolio rather than relying on a single sector or investment theme.

Looking Ahead

As we move further into the second half of the year, we'll continue watching several important developments:

• Inflation and future Federal Reserve policy

• Corporate earnings and continued AI adoption

• Geopolitical developments and energy prices

• Increased market volatility as we approach the midterm elections

While election years often create additional uncertainty, history offers an encouraging perspective. Midterm election years have traditionally experienced increased volatility during the late summer and early fall before recovering into year-end. Looking even further ahead, the twelve months beginning in July of midterm election years have historically produced positive returns 95% of the time, averaging nearly 20%. While history never guarantees future results, it reinforces the importance of maintaining a disciplined, long-term investment approach during periods of uncertainty.

Our Perspective

At Three Leaf Financial, we don't believe every investment should try to accomplish the same objective. Instead, we intentionally build portfolios where each component serves a specific purpose.

Our growth investments are designed to participate in the long-term appreciation of the stock market. While periods of volatility are inevitable, they are a normal part of investing and have historically rewarded patient, disciplined investors over time.

Our structured note strategies serve a different role. Rather than attempting to maximize market appreciation, they are designed to provide systematic interest opportunities with a more measured risk profile. Together, these strategies allow us to build portfolios that seek to balance growth, income, and stability based on each client's individual goals.

Markets will inevitably move through periods of strength and periods of uncertainty. Rather than reacting to short-term headlines, our focus remains on maintaining a disciplined strategy designed to help clients navigate both.