Research
Retirement plans are expected to do more. Are they built to deliver? WTW’s 2026 U.S. Defined Contribution Survey explores how employers can close the retirement outcomes gap by defining retirement readiness more clearly, using data and AI-enabled insights, and strengthening support for employees as they move toward and through retirement.
Market update
Recent market performance has been driven by strong earnings reports, particularly in the AI/tech sector, easing concerns around higher inflation and potentially tighter monetary policy. In early August, weaker-than-expected U.S. labor market data, lower oil prices and a view that inflationary pressures may be moderating helped bond yields move lower and supported improved sentiment toward risk assets.
Source: WTW, Factset
Date: August 17, 2026
At its July meeting, the Federal Reserve kept interest rates at 3.5-3.75%, but the decision revealed a more hawkish tone than expected, with three policymakers dissenting in favor of a rate hike, underscoring ongoing concerns about inflation remaining above target.
Furthering the discussion on inflation, July inflation came in at 3.4% year-over-year, in line with consensus and down from the prior month. These results reflected lower energy prices and moderating shelter inflation. The Federal Open Market Committee, the central bank's rate-setting body, does not meet again until September, so it will have an additional month of inflation data to digest before deciding on rates.
Source: WTW, Factset
Date: July 31, 2026 and June 30, 2026
Something encouraging: Renewed tech and AI optimism
Four major U.S. technology companies - Microsoft, Amazon, Meta and Apple - reported earnings during the last week in July, driving a strong recovery in AI/tech sentiment. However, results showed significant dispersion at the individual stock level. Microsoft and Amazon posted single-day gains of 15-16% on cloud revenue growth that was materially ahead of consensus, with Microsoft recording the largest single-day market capitalization addition in stock market history. Two others declined 6-9% over the week despite outperforming quarterly revenue expectations, as forward guidance disappointed on a combination of supply constraints and capital expenditure concerns.
Something cautionary: Weakened U.S. labor market data
The U.S. economy unexpectedly lost jobs in July, with non-farm payrolls falling by 23k compared with the expected gain of 95k jobs. Additionally, previously reported job gains for the prior two months were revised sharply lower, with the economy having added 103k fewer jobs in May and June than previously estimated. Wage growth also moderated to 3.2% year-over-year, compared with 3.5% expected. Despite this, the unemployment rate edged down to 4.1%, largely due to approximately 264k people leaving the labor force.
Source: WTW, Factset
Date: June 30, 2026
Something curious: Despite mixed economic data, the drivers of U.S. growth remain in place
The U.S. economy grew at an annualized 1.5% in Q2 2026, according to the advance GDP estimate released on July 30, slowing from 2.1% in Q1 as weaker government spending, inventories and net exports offset gains in consumer spending and business investment. While headline growth softened, underlying domestic demand remained firm.
Business services remained robust, with the ISM manufacturing PMI rising to 55.6, compared with 54.0 expected, and the ISM services PMI remaining firmly in expansionary territory at 54.1. Preliminary Q2 productivity growth of 1.4% was also stronger than the expected value of 0.7%.
Source: WTW, Factset
Date: July 31, 2026
WTW news
WTW Investments and SEI announced an expanded strategic relationship to support private markets solutions for the 401(k) and broader U.S. defined contribution market, combining WTW’s investment research and portfolio implementation capabilities with SEI’s trust and platform capabilities.
Thank you for taking the time to read this edition of What To Watch, brought to you by Jon Pliner, global chief investment officer; Jim Neill, managing director; Garrett Goniea, manager; Madison Rugh, senior analyst and the WTW Investments team.
Disclaimer
The information included in this email is intended for general educational purposes only and should not be relied upon without further review with your WTW consultant. The information included in this email is not based on the particular investment situation or requirements of any specific trust, plan, fiduciary, plan participant or beneficiary, endowment, or any other fund; any examples or illustrations used in this email are hypothetical. As such, this email should not be relied upon for investment or other financial decisions, and no such decisions should be taken on the basis of its contents without seeking specific advice. WTW does not intend for anything in this email to constitute “investment advice” within the meaning of 29 C.F.R. § 2510.3-21 to any employee benefit plan subject to the Employee Retirement Income Security Act and/or section 4975 of the Internal Revenue Code.
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