Market recap: Week ended July 24, 2026

Earnings season and AI sentiment shaped market performance

The major North American stock markets declined on Monday, as investors continued to weigh valuations of AI-related companies, escalating tensions in the Middle East and elevated oil prices. Canada’s TSX fell 0.86%, pressured by weakness in financial shares, while the U.S. indexes also lost ground. The Dow lost 0.59%, the S&P 500 slipped 0.19% and the Nasdaq edged down 0.05%.

On Tuesday, the TSX gained 1.17%, led by strength in basic materials shares, as gold prices moved higher. The U.S. benchmarks also advanced, with the Dow rising 0.74%, the S&P 500 adding 0.89% and the Nasdaq climbing 1.29%. Technology stocks helped drive the gains with shares of AI companies rebounding. Investors were also encouraged by stronger-than-expected earnings from several major U.S. companies, including General Motors.

The TSX continued to move higher on Wednesday, advancing 0.33% to a record closing high despite new tariff threats by U.S. President Trump targeting Canadian exports and generic pharmaceutical products. On Wall Street, the Dow slipped 0.01%, while the S&P 500 and tech-heavy Nasdaq lost 0.14% and 0.57%, respectively, as investors focused on AI infrastructure spending by big-tech companies.

All the major indexes fell on Thursday. The TSX declined 0.82%, weighed down by weakness in technology, consumer discretionary and real estate stocks. U.S. markets posted steeper losses, with the Dow falling 0.97%, the S&P 500 dropping 1.21% and the Nasdaq tumbling 2.15%. Shares of Alphabet and Tesla came under significant pressure following their latest earnings reports, which renewed investor concerns about AI-related spending. Escalating tensions in the Middle East pushed oil prices sharply higher, adding to investor concerns about inflation and economic growth.

On Friday, the TSX gained 0.50%, while U.S. markets delivered mixed results. The Dow rose 0.46% and the S&P 500 edged up 0.05%, but the Nasdaq fell 0.64% as weakness in semiconductor stocks continued to weigh on the technology sector. Investor sentiment was supported by a pullback in oil prices amid reports that diplomatic efforts to revive U.S.-Iran talks could resume. However, concerns about AI spending and a fresh round of U.S. tariffs on dozens of trading partners remained in focus.

Trade tensions flared

Canada-U.S. trade relations took focus after the U.S. administration announced plans to impose new 50% tariffs on a broad range of Canadian exports beginning next month. The proposed duties would apply to hundreds of products, including some goods that were previously exempt under the Canada-United States-Mexico Agreement (CUSMA).

The latest measures marked a significant escalation in trade tensions between the two countries and added another layer of uncertainty for businesses dependent on cross-border supply chains. The White House said the tariffs are a response to Canada’s retaliatory trade measures, provincial restrictions on U.S. alcohol sales and longstanding disputes involving dairy and automotive trade. The measures are separate from recent tariff threats from U.S. President Donald Trump related to Canadian wildfire smoke. The announcement came just weeks after the U.S. declined to extend CUSMA under its scheduled review process, triggering annual reviews while the agreement remains in force. Later in the week, the U.S. also announced new 10% tariffs on imports from Canada and several other countries under a separate trade measure tied to forced-labour concerns, although goods compliant with CUSMA remain exempt.

Canadian officials responded by emphasizing a co-ordinated national approach to negotiations. Canada’s premiers spent much of the week discussing the issue during the Council of the Federation meetings in Charlottetown, while Prime Minister Mark Carney called the tariffs “the latest in a series of unilateral U.S. trade actions.” Carney said Canada stands ready to intensify discussions in the weeks ahead and will do “whatever it takes to defend and support our families, our workers and our businesses.”

Investors will continue to monitor trade discussions closely, particularly as negotiations over the future of CUSMA move forward.

Canada’s inflation rate eased while consumer spending remained resilient

Canadian inflation provided some encouraging news at the start of the week. StatCan reported that the Consumer Price Index rose 2.8% year-over-year in June, down from 3.2% in May and slightly below economists' expectations. Lower oil prices drove the decline following ceasefire efforts in the Middle East earlier in the month.

Beneath the headline figures, underlying inflation pressures remained relatively contained. Excluding gasoline, the inflation rate was unchanged from May, while several measures of core inflation came in below expectations. The data reinforced the Bank of Canada’s recent view that higher energy costs have not yet translated into widespread price increases across the broader economy.

Additional economic data released by StatCan on Thursday suggested Canadian consumers remained willing to spend despite elevated borrowing costs and lingering economic uncertainty. Retail sales rose 1.0% in May, with gains recorded across all major subsectors. Higher sales at gasoline stations contributed to the increase, but core retail sales, which exclude gasoline and motor vehicle purchases, also posted a solid advance. A preliminary estimate for June pointed to an additional 0.4% increase.