Last Week
The stock market reached its 14th record high of 2025 on Friday, with the S&P 500 gaining 1.5%, the Nasdaq Composite +1%, and the Russell 2000 +0.9% for the week. The number of Advancing issues was double that of declining issues, and every industry sector except Consumer Goods finished in the green.
The tariff pendulum swung towards the positive axis on Tuesday, with President Trump announcing a “massive deal” with Japan. The President also suggested that further progress was being made on trade with China and, over the weekend, announced that the U.S. and European Union had reached a deal to lower tariffs and expand market access for key goods and services. The apparent trade truce is providing smooth waters for the markets to cruise on.
Better-than-expected corporate earnings reports contributed to the positive tone on Wall Street. The projected earnings growth increased to 6.4% from 5.9% the week earlier, primarily because of strong reports in the Financial and Communications sectors. Additionally, the percentage of companies lowering their outlook for the next quarter has been running slightly lower than the historical average.
The bond market remained stable, with the yield on the 10-year Treasury inching down 4 basis points to 4.39%. The 10-year yield has been in a tight range between 4.2% to 4.5% for most of 2025. The Dollar resumed its downward trend to approach its multi-year low, which was set on July 4 of this year as we (ironically?) celebrated our Independence Day. Crude Oil also resumed its slide, dropping by over 3% during the week.
The Cubs and the Sox squared off for a series on the Chicago Sports Scene. The Sox have been playing much better since the All-Star break, but the Cubs won two of the three games, which is consistent with how both teams’ seasons have been going.
This Week
Corporate earnings will be in focus, with 164 S&P 500 companies reporting results, including four of the Magnificent Seven.
On Wednesday, the Federal Open Market Committee will announce its monetary-policy decision. Whereas the FOMC will almost certainly leave the federal-funds rate unchanged, it looks like there will be dissents from Fed governor Christopher Waller and Vice Chair for Supervision Michelle Bowman-both, both of whom were appointed by President Donald Trump. It has been over three decades since two Federal Reserve Board governors dissented on an interest-rate decision. The economic data has shown signs of weakening, suggesting that easing monetary policy would be appropriate. On the other hand, there is the unknown impact of the unknown tariffs at a time that is…unknown.
The Bureau of Labor Statistics will release the July jobs report on Friday. Economists forecast a modest 106,000 increase in non-farm payrolls, with the unemployment rate increasing to 4.2% from 4.1%. If the report is softer than those expectations, then the pressure on the Fed to cut rates will intensify.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.