Commodities shine in July
Commodities emerged as the top-performing asset class in July, surging 12% over the course of the month. The iShares S&P GSCI Commodity-Indexed Trust, which tracks a range of major commodities, showed the strength behind this rise. The increase came after a sharp drop in crude oil prices in June, which were followed by a significant rebound in July. The volatility was largely driven by ongoing tensions in the Persian Gulf and shifting forecasts for a potential ceasefire.
Brent crude, the leading international oil benchmark, saw prices climb about 23% during the month, rising from $73 per barrel to $90. The increase reflected the market's reaction to the continued instability in the region and the fluctuating expectations for peace. Gold also performed well, gaining approximately 0.9% in July, as investors sought safe-haven assets in times of geopolitical uncertainty.
Stocks lagged behind
In contrast to commodities, the broader stock market showed little movement. The S&P 500 index remained nearly unchanged for the month, while the Nasdaq-100, which is heavily weighted toward technology stocks, dropped by 6.6%. This decline was part of a broader sell-off in the tech sector, which struggled amid shifting investor sentiment and macroeconomic concerns.
Looking ahead, it's difficult to determine whether the commodity surge will continue into August. Oil prices have been highly unstable since the U.S. and Israel escalated hostilities with Iran in February. Prices initially rose dramatically from around $72 per barrel to nearly $188 in late April, only to fall back to pre-war levels by June before experiencing a resurgence in July. This pattern of volatility makes it hard for investors to know what to expect.
Real estate as a potential bet
While commodities remain unpredictable, real estate investment trusts (REITs) have shown a more consistent upward trend. As measured by the Vanguard Real Estate ETF, REITs gained 2.6% in July, adding to a strong performance in 2026 with a total rise of about 14% year to date. They have outperformed the S&P 500 by four percentage points, offering a compelling alternative for investors.
REITs faced challenges in the years following the pandemic. Rising interest rates and a shift toward remote work hurt sectors like retail and office spaces. However, the tide has turned in recent months. Workers are returning to offices, and consumer activity is picking up at physical retail locations. Additionally, the Federal Reserve has kept interest rates steady this year, providing a more favorable environment for REITs.
The rebound in the REIT sector has been led by several key areas. Lodging and resort REITs have skyrocketed nearly 43% in the first half of 2026, thanks to a resurgence in business and group travel. Meanwhile, data center REITs have climbed more than 33% through June, driven by the rapid growth in artificial intelligence and increasing demand for digital infrastructure. Healthcare and self-storage REITs have also performed well, rising over 20% in the same period.