Wall Street delivered mixed results in July. The Dow posted a modest monthly gain, marking its fourth consecutive positive month, per CNBC. The S&P 500 ended little changed for July, while the Nasdaq recorded a notable monthly decline as investors rotated away from high-growth technology stocks amid rising bond yields. The tech-heavy Nasdaq-100 slumped 3.6% over the past month (as of July 31, 2026).
Rising Oil Prices Add to Inflation Worries
Energy markets remained under pressure after renewed geopolitical tensions disrupted traffic through the Strait of Hormuz. Higher oil and gasoline prices have reignited concerns about inflation and consumer spending, even as the latest University of Michigan survey showed improving consumer sentiment. United States Brent Oil Fund LP BNO has jumped about 27.8% over the past month (as of July 31, 2026).
Treasury Yields Surge on Fed Uncertainty
Treasury yields climbed sharply following the Federal Reserve's decision to keep interest rates unchanged at the month-end meeting without offering clear forward guidance.
The benchmark 10-year Treasury yield closed the month at 4.75%, its highest level since January 2025 (per CNBC), while the 30-year Treasury yield climbed to 5.27%, the highest since 2007. Investors grew increasingly concerned that elevated borrowing costs could pressure equity valuations (read: Fed Holds Rates Steady, May Hike Ahead: ETFs in Focus).
Semiconductor Stocks Suffer Worst Month Since 2008
The semiconductor industry remained one of the market's weakest areas despite Friday's rebound, per the same CNBC source.
The VanEck Semiconductor ETF SMH remained down nearly 17% for July, putting the fund on track for its worst monthly performance since the 2008 financial crisis as investors reassessed AI-related valuations and the impact of higher interest rates.
AI Spending Keeps Tech Momentum Intact
Strong earnings from Amazon (AMZN) and Microsoft (MSFT) reassured investors that AI investment remains robust. Amazon jumped 15% on July 31 on strong cloud growth, while Microsoft extended gains after upbeat Azure results. MSFT and AMZN are up about 21% and 12.4% over the past month (as of July 31, 2026).
Together with Meta (down 9.2% past month) and Alphabet (down 0.4% past month), the hyperscalers now expect to spend $720-$745 billion on capital projects in 2026, easing concerns over an AI spending slowdown, per CNBC.
Apple Lags Despite Strong Sales
Not all Big Tech names participated in the rally in July. Apple fell more than 7% as weaker Services and China revenues offset solid iPhone sales, while Meta also ended the week lower (read: ETFs to Watch as META Sinks Post Q2 Earnings Miss, Poor Cash Position).
Top-Performing ETF Areas of July
Against the above-mentioned backdrop, below we highlight a few winning ETFs of July.
Shipping & Oil – Breakwave Tanker Shipping ETF BWET – Up 74.2%
The Middle East conflict and tensions in the Strait of Hormuz have disrupted key shipping routes, driving a sharp surge in freight rates. This has strengthened the investment case for BWET. The fund’s expense ratio is 3.50%. Oil ETFs like BNO and DBO also surged in July in the Hormuz context.
Rate-Related Niche ETFs – Simplify Interest Rate Hedge ETF (PFIX) – Up 26.0%
There are some niche ETFs that guard against rising rates. PFIX is such an option. The ETF PFIX looks to hedge interest rate movements arising from rising long-term interest rates and to benefit from market stress when fixed-income volatility increases. The fund yields 8.06% annually and charges 50 bps in fees.
China Tech – Roundhill China Magnificent Seven ETF MAGC – Up 22.5%
While the fund has a very small asset base of about $14.0 million despite making a debut in October 2024, this fund’s price surged in July as Chinese AI companies came up with the success of low-cost AI models. KraneShares CSI China Internet ETF KWEB, with an asset base of $5.5 billion, also added 13.4% over the past month.
The country’s Moonshot AI unveiled Kimi K3 on July 16, the largest open-source AI model released so far, per Fortune, as quoted on Yahoo Finance.  The company says K3 delivers performance close to Anthropic's Fable 5 at a much lower cost (read: Moonshot AI Raises the Stakes for Big Tech? ETFs in Focus).
Â
Boost Your Portfolio with Our Top ETF Insights
Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.
Don’t miss out on this valuable resource. It’s free!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Â
Â
Â
(0) comments
Welcome to the discussion.
Log In
Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.