S&P 500 rises over 2% in July to extend summer surge

The S&P 500 posted a monthly gain for the third time in a row while setting multiple record highs along the way in July.

The large-cap index rose 2.2% in July following rallies of over 5% in both May and June, according to S&P Global Market Intelligence data. The Dow Jones Industrial Average recorded a more modest 0.1% increase during the month, while the small-cap focused Russell 2000 was up 1.7%.

Geopolitical tensions and tariff threats continue to cloud market outlooks for the second half of the year. However, the US again delayed a deadline for trade negotiations and reached preliminary agreements with other governments throughout July. This allowed investor sentiment to instead shift focus toward bullish indicators such as strong corporate earnings.

"You have a massive secular theme in AI that seems to be generating outsized earning and sales expectations for a large number of companies in the US, and those themes are driving people to maintain their market exposure," said Philip Nelson, partner and head of asset allocation for institutional investment consulting firm NEPC, in an interview. "And there's still quite a bit of liquidity that's leftover in markets from the years of easy US Federal Reserve policy post-financial crisis and then also following the pandemic, so there's a lot of money that can quickly get deployed."

Sectors

Six of the S&P 500's 11 sectors posted gains in July.

As in June, IT stocks again performed the best in July, with the sector climbing more than 5%. Within the sector, 32 of the 68 constituent stocks rose, with the largest gains recorded by PTC Inc. and Advanced Micro Devices Inc.

The healthcare sector dropped 3.4% during the month, the steepest decline among the index's sectors. Of the sector's 60 constituents, 38 posted a loss. Centene Corp. and Molina Healthcare Inc. led the sector's losses.

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Largest gains, drops

Generac Holdings Inc. was the best-performing S&P 500 stock in July, jumping nearly 36% from the end of June. The energy technology product company's share price spiked after it released its second-quarter earnings report July 30, revealing that its normalized earnings per share of $1.65 beat the analyst consensus estimate by 25%, according to Market Intelligence data.

Centene's share price slid 52% in July. This was the biggest loss among the S&P 500's constituent stocks. The health insurer withdrew its full-year financial guidance July 1 after reassessing its market growth, costs and risk adjustment revenue transfer.