Market Strategy
by Talley Leger, Chief Market Strategist
July 17, 2026
Bank Earnings Ratify the “Tech Enablement” Thesis
Corporate management teams are signaling their growing optimism this earnings season. According to FactSet, the S&P 500 “guidance gap” continues to widen in a favorable direction, with an incremental 15 firms issuing positive earnings per share (EPS) pre-announcements for 2Q26, the highest net number since 2Q21 (see the chart below).
More firms have been raising their guidance on future profitability, led by tech
Sources: FactSet, WCG, 7/14/26. Notes: # = Number. NBER = National Bureau of Economic Research. EPS = Earnings per share. The copper arrow indicates an uptrend in technical analysis.
Which sector is leading the charge? As we expected, information technology is pulling the rest of the stock market along for the ride, thereby validating my “tech enablement” thesis. In other words, tech upgrades and positive pre-announcements aren’t just isolated sector wins. Rather, they’re setting a strong foundation for the broader index, as digital efficiencies flow across and down through corporate income statements to better bottom lines.
On Tuesday morning, the spotlight shifted to the “Big Banks,” and the results were decisive. Specifically, revenue growth was broad-based, EPS growth significantly outpaced revenue growth and operating leverage was evident. In short, the classic banking equation remains alive and well:
Revenue growth + controlled expenses + lower credit costs + capital market strength = outsized EPS growth
A big week for “Big Banks:” Across-the-board “top-line” beats and robust growth
Sources: Seeking Alpha, WCG, 7/14/26. Notes: B = Billions. Y/Y = Year over year.
Capital market performance – illustrated by Goldman Sachs’ outstanding 40% year-over-year (Y/Y) revenue growth and 24% “top-line” beat, as well as JPMorgan’s 28% Y/Y revenue growth and $6B “top-line” surprise – isn’t just a cyclical phenomenon. In my view, banks are no longer just financial intermediaries; they’re transforming into tech-enabled platforms where scalable digital infrastructure allows for higher transaction volumes and deeper client engagement with disciplined headcount and operating cost control (see the table above).
A big week for “Big Banks:” Across-the-board “bottom-line” beats and double-digit growth
Sources: Seeking Alpha, WCG, 7/14/26. Notes: GAAP = Generally Accepted Accounting Principles.
Operating leverage is the bridge between the macroeconomic environment and EPS growth (see the table above):
- Robust capital market performance
- Strong operating leverage
- Booming earnings, especially from GS (92% Y/Y) and Citigroup (54% Y/Y).
“Léger’s Law of Dynamic Optimism” states that the path of least resistance remains up for stocks. We’ll compare notes at the end of 2026, but it never ceases to amaze me how the strength of earnings recoveries always seems to catch investors off guard. In the meantime, respect the rally, don’t fear it!
Portfolio Strategy
by Jim Worden, CFA®, CMT®, CAIA®, Chief Investment Officer
July 17, 2026
The Appeal of the Boring
Growing up, I was always fascinated by the currents in the river and in the ocean. There are currents on top, currents on the bottom, and currents that appear to move from side to side. Swimming in slight currents as a boy was always fun, but my parents were always very cautious about swimming in currents with a strong undertow.
So, as much as I love the waves and the momentum of a current, when the waves get really sloppy and there’s plenty of pull in different directions, I tend to want to go where the water and the currents are predictable. It’s like surfing in Waikiki versus surfing on the North Shore, if you’re a surfer. The waves still come, but one is more predictable and, might I say, more boring than the other. The image below illustrates this, generated by ChatGPT 5.6:
When markets have both melt-ups and meltdowns happening at the same time, it feels like those messy, unpredictable waves or currents. I usually find more allure in the boring, the stable, and the names that no one wants to talk about—perhaps because they’re coming out of a very long drawdown and people don’t want to remember the pain, or because they have businesses that just don’t sizzle. But these are exactly the types of companies investors may want to own when volatility increases and correlations increase. Another boring group consists of businesses that aren’t expensive, have decent free cash flow, and even pay a decent dividend, but they often trail the indices during bull markets. These are often referred to as low-volatility stocks, and this is a factor we include in our quant-driven strategies.
Among the boring names might be companies in funeral services, employment staffing, life insurance, canned soup, chemicals, and soda. These companies will likely never be up 200% in a year, and that is 100% okay by me. They won’t make up a huge part of the portfolio, but they may act as stabilizers when volatility is high in other areas.
Definitions
The S&P 500 is an index that tracks the stock performance of 500 of the largest companies listed on exchanges in the United States. Indices are unmanaged and cannot be invested in directly.
The National Bureau of Economic Research (NBER) defines a recession as a significant decline in economic activity that is spread across the economy and lasts more than a few months. Recessions are the periods between peaks and troughs of the business cycle.
Revenues are the total amount of money a business brings in through the sale of its goods or services before any expenses are deducted. It is often referred to as the “top line” because it sits at the very top of the income statement.
EPS are financial metrics calculated by dividing a company’s net profit by its total number of outstanding shares of common stock. It indicates how much money a company makes for each share of its stock and is widely used to gauge corporate profitability.
GAAP EPS reflect reported earnings per share.
Normalized EPS reflect company-defined adjusted earnings.
Differences between the two may reflect securities gains/losses, reserve changes, tax items or other non-core items (e.g., JPM).
Melt-Up: A rapid and sustained rise in market or security prices, often driven by strong investor demand or momentum.
Meltdown: A rapid and substantial decline in market or security prices.
Drawdown: The decline in an investment or portfolio from a prior peak to a subsequent low.
Volatility: The degree to which an investment’s price or return fluctuates over time.
Correlation: A statistical measure of how two investments or asset classes move in relation to one another.
Free Cash Flow: Cash generated by a business after accounting for operating expenses and capital expenditures.
Dividend: A payment made by a company to shareholders. Dividends are not guaranteed and may be reduced or eliminated.
Low-Volatility Stocks: Stocks that have historically exhibited lower price variability than the broader market. They can still lose value and may underperform in certain market environments.
Factor: A measurable investment characteristic, such as value, quality, momentum, or volatility, used in security selection or portfolio construction.
Index/Indices: An unmanaged benchmark or group of securities used to measure the performance of a market or market segment. An index cannot be invested in directly.
Bull Market: An extended period of generally rising market prices.
Portfolio Panel: In this commentary, the collection of investment factors considered during the portfolio-review and construction process.
Disclosures
This commentary is for informational and educational purposes only and should not be construed as individualized investment, legal, or tax advice.
Opinions expressed are those of the author as of the date of publication and are subject to change without notice.
Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results.
References to industries, market segments, or investment characteristics are for illustrative purposes only and should not be construed as a recommendation to buy, sell, or hold any security or investment strategy.
Low-volatility and dividend-paying stocks may underperform broader markets, decline in value, and fail to provide the expected level of income or downside protection. Dividends may be reduced or eliminated.
Statements regarding portfolio construction describe general investment views and may not apply to every client account. Actual holdings and allocations vary based on each client’s objectives, risk tolerance, restrictions, and other circumstances.
Diversification and risk management do not guarantee a profit or protect against loss in declining markets.
The image in this commentary was generated using artificial intelligence and is for illustrative purposes only. It is not an actual photograph of Waikiki or the North Shore.
The views expressed are for informational and educational purposes only and are subject to change without notice.
This material is not intended as, and should not be interpreted as, individualized investment advice or a recommendation to buy, sell, or hold any security, sector, industry, or investment strategy.
References to specific companies, securities, sectors, or industries are for illustrative purposes only and should not be construed as investment recommendations.
Investing involves risk, including the possible loss of principal. Investments in a specific industry or sector may involve greater risk and volatility than more diversified investments.
Past performance is not indicative of future results. No investment strategy can guarantee a profit or protect against loss.
Forward-looking statements, including views about future demand, pricing, supply, or industry cycles, are based on current expectations and assumptions and are subject to risks and uncertainties. Actual results may differ materially.
Data and information are believed to be reliable, but accuracy, completeness, and timeliness are not guaranteed. Source documents should be retained for factual claims, third-party research references, and company-specific data.
Portfolio holdings, allocations, and risk budgets are subject to change based on market conditions, client objectives, and investment guidelines.
The author, firm, clients, or related persons may hold positions in securities mentioned and may buy or sell those securities without notice, subject to applicable policies and regulations.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through WCG Wealth Advisors, LLC, an SEC Registered Investment Advisor. WCG Wealth Advisors, LLC and The Wealth Consulting Group are separate entities from LPL Financial. Index performance is shown for illustrative purposes only and does not predict or depict the performance of any investment. Past performance does not guarantee future results.
All information in this report is believed to be from reliable sources; however, WCG Wealth Advisors, LLC, makes no representation as to its completeness or accuracy.
In general, stock values fluctuate, sometimes widely, in response to activities specific to the companies as well as broad market, economic and political conditions. Stock investing involves risks, including fluctuating prices and loss of principal. Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time. (135-LPL) International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. (93-LPL)
The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors. (122-LPL)
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss. (28-LPL)
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. (26-LPL)
Standard deviation is a historical measure of the variability of returns relative to the average annual return. If a portfolio has a high standard deviation, its returns have been volatile. A low standard deviation indicates returns have been less volatile. (131-LPL)
This is for educational / general purposes only, does not constitute investment, tax or legal advice and should not be relied on as such. This is not to be construed as an offer to buy or sell any financial instruments. Any strategies discussed are not intended to be relied upon as the sole factor in making an investment decision for any individual. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. These comments should not be construed as recommendations but as an illustration of broader themes.
Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations. In addition, forward-looking statements, including index targets or market scenarios, are hypothetical in nature, reflect current views and assumptions and are subject to change based on market and economic conditions and are not guarantees of future performance. This is a hypothetical example and is not representative of any specific investment. Your results may vary. (88-LPL) Scenario outcomes are illustrative and not predictive. This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.
The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly. (102-LPL)
Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
Publication Date: July 17, 2026
For Public Use in the US
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