Sector Rotation, Q2 Earnings, and the Fed Risk Repricing

SPY, the S&P 500 ETF, closed Monday's session at $747.03, up 0.72%, while IWM, the Russell 2000 ETF, finished at $291.20, down 0.48%. That 120-basis-point gap between large-caps and small-caps, the third consecutive session in which it has opened or widened, is the most honest summary of where this market stands heading into the second half of 2026. Key Takeaways SPY closed at $747.03 (+0.72%) on August 3, while IWM fell 0.48% to $291.20, its third straight session of underperformance versus large-caps. Consumer Discretionary (XLY +3.29%) and Energy (XLE +1.00%) led sector gains as Iran de-escalation headlines drove oil lower by more than 4%, removing a key inflation input. Q2 2026 blended S…