Last month, in our mid-year outlook, we made an argument that was easy to state and uncomfortable to hold: the market was higher, and it was narrower. The index was setting records on the strength of a remarkably small group of companies, and an investor who simply owned that index owned a concentrated bet he had never consciously placed.
We also said what we would be watching for in the second half — a broadening of participation, a less accommodating interest rate backdrop, and the moment the market began asking harder questions about what the artificial intelligence build-out actually earns on the money going into it.
July did not make us wait. This month’s Moran Monthly Digest works through what a genuinely consequential month told us:
The rotation arrives. The first half’s biggest winners sold off sharply while the rest of the market rose. Per Bespoke Investment Group, the twenty-two S&P 500 stocks that had more than doubled in the first half fell an average of 14.1% in early July, while the other 478 members of the index rose an average of 1.8%. We look at why concentration is a risk that settles itself quietly, in a single rebalancing week.
Inflation’s streak breaks — the right way. Headline consumer prices fell 0.4% in June, the largest monthly decline since April 2020, easing the annual rate to 3.5% from 4.2%, with core inflation at 2.6%. Both came in below consensus. We work through what was energy-driven and what was not.
Earnings quietly did the work. Estimates for the second quarter rose while the quarter was being reported — FactSet’s blended growth rate reached 24.7% by July 17, up from 23.2% at quarter end — and all eleven sectors of the index are growing revenue. The earnings base is widening underneath a market whose leadership is rotating.
The bill for artificial intelligence arrives. For the first time, the market began charging for the question of what an enormous capital spending cycle actually returns, rather than waiting for the answer.
The economic backdrop underneath all of it firmed on measurable terms. Unemployment stood at 4.3% in May, and payroll gains averaged 181,000 per month over the three months through May, against roughly 26,000 per month over the prior year, according to J.P. Morgan Asset Management’s reading of Bureau of Labor Statistics data as of June 8, 2026. Bespoke’s composite of economic indicators, published this month, reached its highest net reading since October 2024.
To continue reading, please download the full Moran Monthly Digest here.