Weekly Wrap

The stock market extended its rally this week, with the S&P 500 and Nasdaq Composite hitting record intraday and closing highs on Friday. The S&P 500 reached a high of 6,395.82 and closed at 6,388.64, while the Nasdaq hit 21,159.80 intraday and settled at 21,108.32.

Strong earnings fueled optimism, led by Alphabet’s (GOOG) solid results and a notable increase in capital expenditures focused on AI development, underscoring the company’s commitment to advancing artificial intelligence technologies.

This earnings strength, combined with trade deal optimism and moderating Treasury yields, supported the bullish sentiment. Progress on trade agreements with Japan and potential deals with the EU and China eased investor concerns ahead of the August 1 tariff deadline.

All 11 sectors finished higher for the week, led by health care (+3.4%), materials (+2.4%), industrials (+2.3%), communication services (+2.2%), and real estate (+2.2%). Financials (+1.7%), energy (+1.4%), and consumer discretionary (+1.2%) also posted solid gains, while defensive sectors saw modest upside: utilities (+0.9%), information technology (+0.7%), and consumer staples (+0.01%).

Looking ahead, the market faces a pivotal week with roughly 38% of the S&P 500 by market cap reporting earnings, which is more than double this week’s weight. Key tech giants Microsoft (MSFT), Meta (META), Apple (AAPL), and Amazon (AMZN) will all post results midweek, likely shaping market direction. In addition, important jobs data and a critical Federal Reserve meeting are expected to test the current optimism.

Overall, it was a strong week for risk assets as earnings momentum and improving trade prospects propelled markets to new highs, but next week’s slate of data and earnings could bring renewed volatility.

• S&P 400: +1.5% for the week/ +3.1% YTD
• S&P 500: +1.5%% for the week / +8.6% YTD
• DJIA: +1.3%% for the week / +5.6% YTD
• Nasdaq Composite: +1.0% for the week / +9.3% YTD
•  Russell 2000: +0.9% for the week / +1.4% YTD

Monday:

The stock market saw a strong opening fueled by earnings reports, trade deal optimism, and lower Treasury yields that pushed the S&P 500 and Nasdaq Composite to new record highs. Some afternoon selling activity, however, thinned some of the major averages' early advances and left them with mixed results.

The afternoon sell-off was likely a case of moving to take some money off the table after a tremendous run, as the Q2 reporting gets set to ramp up this week. A lot of good earnings news has been priced into the stock market already. Nonetheless, there were some bright spots in today's market that were able to hold on to early gains.

Verizon (VZ 42.49, +1.65, +4.0%) was a clear winner today after beating EPS expectations by $0.03 and reporting revenue growth of 5.2% year over year, its strongest growth in the last 15 quarters. Cellular providers as a cohort benefitted from the move, with T-Mobile US (TMUS 232.62, +5.41, +2.4%) and AT&T (T 27.38, +0.44, +1.6%) capturing nice gains. AT&T is set to report its earnings on Wednesday.

The communication services sector (+1.9%) finished as the day's top performer and was further boosted by gains from its top component, Alphabet (GOOG 191.15, +5.21, +2.8%), ahead of its earnings report on Wednesday.

The consumer discretionary sector (+0.6%) was also a notable gainer, with cyclical stocks performing well throughout the day. The SPDR S&P 500 Retail ETF closed the day with a healthy 0.9% gain.

The majority of today's trade was spent with eight to ten sectors trading in the green, and stocks of all sizes displaying growth.

The market faced some selling pressure in the afternoon hours, however. Four sectors finished with a loss. The energy (-0.9%) and health care (-0.6%) sectors spent most of the day in red, but the financials (-0.3%) and industrials (-0.6%) sectors succumbed to the late pressure.

While stocks of all sizes saw early gains, the pullback was concentrated on smaller-cap stocks. The Russell 2000 was up as much as 0.9% early but finished with a loss of 0.4%. The S&P MidCap 400 (-0.6%) finished similarly after spending the majority of the session in the green. The Vanguard Mega Cap Growth ETF ended with a gain of 0.4%, outperforming the S&P 500 (+0.1%).

Ultimately, only 36.4% of S&P 500 stocks advanced today. The S&P 400 (34.75% advancing) and Dow Transports (35% advancing) also flashed red flags of narrow participation.

U.S. Treasuries started the week on an upbeat note with relative strength in longer tenors sending yields on 10s and 30s to their lowest levels in more than a week after last week's underperformance. Treasuries recorded the bulk of their gains at the open after an overnight rally in the futures market.

The advance sent the 10-yr yield (4.37%) back below its 50-day moving average (4.412%), while the 30-yr yield (4.94%) settled just above its 50-day moving average (4.920%).

Reviewing today's data:

• The Leading Economic Index was down 0.3% in June (Briefing.com consensus -0.1%) while the May reading was revised up to 0.0% from -0.1%.

Tuesday:

Equity futures were little changed following a sizable batch of earnings reports before the open, and while the major averages faced early losses from the mega-cap stocks and underperforming technology sector (-1.1%), a strong showing from small-cap and mid-cap stocks reflected an inclination to rotate money within the market versus out of the market.

The pre-open action featured relative strength in the mega-cap stocks and some points of attrition for the broader market, with price setbacks for Coca-Cola (KO 69.62, -0.44, -0.6%), General Motors (GM 48.89, -4.32, -8.1%), Lockheed Martin (LMT 410.69, -49.84, -10.8%), Sherwin-Williams (SHW 340.08, -1.22, -0.4%), and Philip Morris International (PM 165.35, -15.13, -8.4%) following their earnings reports.

Semiconductor stocks also faced pressure out of the gate after NXP Semi (NXPI 228.00, -0.27, -0.1%) beat EPS expectations but failed to deliver upside guidance. The technology sector's position improved modestly throughout the session, but the PHLX Semiconductor Index still closed with a 1.8% loss.

Losses in the technology sector kept the Nasdaq Composite (-0.4%) in negative territory throughout the session, while the S&P 500 (+0.1%) captured a modest gain and logged a new closing record high. The DJIA (+0.4%) advanced further.

Buying interest broadened as the session progressed. Nine S&P 500 sectors closed with gains.

The top-performing health care sector (+1.9%) benefitted from earnings news. IQVIA (IQV 187.37, +28.41, +17.9%) finished as the largest advancer in the S&P 500 following an EPS beat and positive guidance. Though not an S&P 500 constituent, Medpace (MEDP 477.73, +168.85, +54.7%), another CRO services company, surged following its earnings after the close yesterday.

The next best-performing sectors were real estate (+1.8%), utilities (+1.3%), and materials (+1.3%).

Smaller-cap stocks and mid-cap stocks led the rally from early lows. Their outperformance persisted into the close. The Russell 2000 advanced 1.0%, and the S&P Mid Cap 400 finished with a gain of 1.4%.

Meanwhile, woes in the technology sector saw the Vanguard Megacap Growth ETF close with a loss of 0.6%. This stifled further gains across the major averages. The market-weighted S&P 500 advanced just 0.1%, while the equal-weighted S&P 500 finished up 1.3%.

Though there was a coalition of blue-chip stocks that retreated following their earnings reports, there were some winners in the category.

Better-than-expected earnings results from homebuilders D.R. Horton (DHI 153.17, +21.95, +16.7%) and PulteGroup (PHM 121.15, +12.50, +11.5%), which were achieved with mortgage rates at elevated levels, contributed to the outperformance of value stocks. The added boost in the homebuilding stocks had a lot to do with the thought of how much better the results can be if and when mortgage rates come down.

The iShares U.S. Home Construction ETF finished with a 7.9% gain today.

Lower Treasury yields also helped support the rotation within the stock market that featured the outperformance of value stocks over growth stocks.

U.S. Treasuries recorded their third consecutive day of gains after overcoming some early softness. The market did not receive any economic data to influence today's trade and things will remain subdued on that front tomorrow. However, the U.S. Treasury will hold a $13 billion 20-year bond reopening in the early afternoon. The 2-yr note yield dipped two basis points to 3.83%, and the 10-yr note yield dropped four basis points to 4.34%.

Wednesday:

The stock market had its strongest session of the week today, with earnings report optimism and the announcement of trade deals with the EU and Japan propelling the S&P 500 (+0.8%) to a new all-time intraday (6,360.64) and closing (6,358.91) high.

Equity futures were higher in response to President Trump's announcement of a finalized trade deal with Japan, which featured a 15% tariff on Japanese imports, an investment of $550 billion into the U.S., and an opening of Japan's markets to rice and auto imports from the U.S.

Stocks got off to a decent start in response but rose precipitously around 12:00 ET when Financial Times reported that the U.S. and the EU were close to finalizing a trade agreement, also with a 15% tariff.

Increased buying activity following the report reflected the market's comfort with the 15% tariff rates for key trade partners, which are notably lower than the 30% proposed tariffs that were to go into effect August 1.

The trade news was enough to reverse a second consecutive day of early sluggishness in the technology sector (+0.7%), with its early losses limiting gains in the major averages for most of the morning.

The sector faced early pressure in its chipmaker components following Texas Instruments (TXN 186.25, -28.67, -13.3%) earnings report after the close yesterday, which saw the company beat EPS expectations, though uncertainty around future growth prompted management to speak in a more cautious tone during the earnings call.

While the sector shed its early losses, chipmakers remained a point of relative weakness, with the PHLX Semiconductor Index finishing flat for the day.

There were some notable beneficiaries in the wake of earnings, however. The health care sector (+2.0%) was today's top performer and widened its gains to 3.3% week to date.

Thermo Fisher (TMO 466.53, +38.91, +9.1%) beat EPS expectations by $0.13, and added to yesterday's strong performance among CRO services companies.

The Industrials sector (+1.8%) also finished among the top, as GE Vernova (GEV 629.56, +80.57, +14.7%) and Lennox Int'l (LII 661.51, +41.54, +6.7%) both captured nice gains today after beating EPS expectations and issuing upside guidance.

In total, nine sectors finished in positive territory, with only the defensive utilities (-0.8%) and consumer staples (-0.1%) ending the day with losses.

Buying activity was notably prevalent across stocks of all sizes.

Small-cap and mid-cap stocks widened their gains from yesterday, with Russell 2000 (+1.5%) and S&P Mid Cap 400 (+0.9%) outperforming.

Mega-cap stocks improved their position, with the Vanguard Mega Cap Growth ETF closing with a gain of 0.7%, after a 0.6% loss yesterday.

If yesterday's trade marked a rotation into value stocks from growth stocks, today's session reflected a more bullish attitude that saw the market emboldened by earnings data and trade developments alike.

U.S. Treasuries retreated on Wednesday, snapping their streak of three consecutive days of gains. Treasuries ranged near their opening lows during the first couple hours of action, slipping to fresh lows in the wake of reports about the impending deal with the EU.

The selling was met with an afternoon bounce, which followed the completion of a strong $13 billion 20-year bond reopening. Late trade saw a fresh low in the 2-yr note, while longer tenors finished a bit above their worst levels of the session, with the 10-yr yield back above its 50-day moving average (4.411%).

The 10-year note yield settled up five basis points to 4.39%.

Reviewing today's data:

• Existing home sales decreased 2.7% month-over-month in June to a seasonally adjusted annual rate of 3.93 million (Briefing.com consensus 4.00 million) from a revised 4.04 million (from 4.03 million) in May. Sales were unchanged on a year-over-year basis.
  
  • The key takeaway from the report is that the median home sales price continued growing in June even though sales decelerated, which puts the spotlight on housing affordability at a time when mortgage rates remain high.
• The weekly MBA Mortgage Index rose 0.8% after falling 10.0% a week ago. The Purchase Index was up 3.5% while the Refinance Index fell 2.6%.
• Weekly crude oil inventories decreased by 3.17 million barrels after decreasing by 3.86 million barrels a week ago.

Thursday:

Yesterday's upward momentum and a flurry of earnings reports quickly propelled the S&P 500 (+0.1%, intraday high of 6,381.31) and Nasdaq Composite (+0.2%, intraday high of 21,113.10) to fresh record highs, and while the majority of the session passed in an uneventful manner, the early gains were enough to see the indices capture record closing highs as well.

Earnings were a key catalyst for the communication services sector (+0.5%), which saw continued outperformance in cellular providers after T-Mobile US (TMUS 247.50, +13.57, +5.8%) raised its guidance and delivered an impressive EPS beat. More notably, the company led the industry in key metrics, including service revenue, postpaid net additions, and postpaid phone net additions.

The sector also benefitted from top component Alphabet (GOOG 193.28, +1.76, +0.9%) trading higher after the company beat EPS expectations by $0.13 and reassured the market about the industry's commitment to AI development by raising its capital spending guidance by $10 billion to $85 billion.

Alphabet's hefty commitment to AI, combined with headlines that President Trump signed executive orders to support the export of American AI technology and the buildout of data center infrastructure, led to the technology sector (+0.7%) finishing as one of the top performers.

Though the sector captured a similar gain yesterday, sluggishness amongst chipmakers this week persisted, with the PHLX Semiconductor Index posting a modest gain of 0.1%, which leaves it down 1.5% for the week.

The energy sector (+0.7%) rounded out the top three performers, with a vast majority of its constituents capturing modest gains amid a $0.94 increase in oil prices to $66.19 per barrel, a change of 1.4%.

The eight other sectors finished in negative territory, though the consumer discretionary (-1.2%) and materials (-0.8%) were the only sectors with losses greater than 0.5%.

The consumer discretionary sector faced pressure after Tesla (TSLA 305.30, -27.26, -8.2%) reported EPS in-line, with an 11.8% decrease in revenues year-over-year and deliveries falling 13.5% in that same time span. More importantly, CEO Elon Musk warned of "a few rough quarters" ahead, citing the expiration of federal electric vehicle tax credits as a significant headwind.

Chipotle Mexican Grill (CMG 45.76, -7.02, -13.3%) also traded lower following its earnings release, which saw the company report EPS in line, with revenues rising a slim 3.0% year-over-year, and issuing flat FY25 comparable sales guidance.

Despite the poor showing from Tesla, mega-cap stocks performed well, with the Vanguard Mega Cap Growth ETF finishing with a 0.4% gain. The outperformance in mega-cap names preserved early gains in the major averages, as eight sectors finished in negative territory and breadth figures favored decliners by a nearly 2-to-1 ratio.

Relatively broad-based selling activity saw small-cap and mid-cap stocks give back some of their gains from earlier in the week, as the S&P Mid Cap 400 finished with a loss of 0.9%, and the Russell 2000 lost 1.3%.

Today's session reflected the idea that the market is still optimistic about the potential of AI growth, but a lack of trade developments and other headlines resulted in some profit taking in most other spaces.

U.S. Treasuries finished Thursday with losses in most tenors, though the long end outperformed, allowing the long bond to reclaim its opening loss by the close. Longer tenors climbed off their lows after today's second batch of data showed that flash July S&P Global U.S. Manufacturing PMI (49.5; prior 52.9) returned to contraction, while activity in the services sector accelerated, with the flash July S&P Global U.S. Services PMI hitting 55.2, up from 52.9 in June.

The 10-year note yield settled up two basis points to 4.41%.

Reviewing today's data:

• New home sales increased 0.6% month-over-month in June to a seasonally adjusted annual rate of 627,000 units (Briefing.com consensus 650,000) from an unrevised 623,000 in May. This leaves the pace of sales near the lowest level of the year, comparable to what was seen in October. On a year-over-year basis, new home sales were down 6.6%.
  
  • The key takeaway from the report is that is that the pace of sales remained near the lowest level of the year, as sharp decreases in sales in the Northeast and the West masked gains in the Midwest and the South. There was pressure on the median selling price as homes priced between $300,000 and $399,000 accounted for 35% of all sales, up from 25% in May.
• Initial jobless claims for the week ending July 19 decreased by 4,000 to a lowly 217,000 (Briefing.com consensus: 225,000). Continuing jobless claims for the week ending July 12 increased by 4,000 to 1.955 million.
  
  • The key takeaway from the report is still the same. The low level of initial jobless claims connotes a relatively solid labor market; however, the elevated level of continuing jobless claims connotes some added difficulty in finding a new job in the event one gets laid off by their employer.
• The S&P Global U.S. Manufacturing PMI hit 49.5 in the preliminary reading for July, down from 52.9 in June.
• The S&P Global U.S. Services PMI hit 55.2 in the preliminary reading for July, up from 52.9 in June.
• Weekly natural gas inventories increased by 23 bcf after increasing by 46 bcf a week ago.

Friday:

The stock market's trend of upwards momentum continued through today's trade, culminating in new record intraday and closing highs for the S&P 500 (+0.4%) and Nasdaq Composite (+0.4%).

A lack of major catalysts saw the indices face resistance at yesterday's record high levels, but prevailing optimism around earnings reports and trade developments saw the S&P 500 and Nasdaq push to new records just before 12:30 ET.

The S&P 500 reached 6,395.82 today and finished at 6,388.64.

The Nasdaq Composite reached 21,159.80 and settled at 21,108.32.

The Wall Street Journal reported that the Trump administration will hold trade talks with China next week, while Reuters reported that the U.S. and EU could reach the foundation of a trade deal by this weekend. The market viewed these headlines optimistically, with this week's announcement of a trade deal with Japan providing confidence that better trade deals with key partners can be negotiated before the August 1 deadline.

On the earnings front, today's reports (while not as consequential as yesterday's) were generally positive, strengthening the notion that there is even further upside if next week's mega-cap earnings reports beat expectations.

The consumer discretionary sector (+0.8%) finished as one of the best performers of the day, with Deckers Outdoor (DECK 116.92, +11.98, +11.4%) finishing as the top gainer in the S&P 500 after the company beat EPS expectations by $0.25.

The sector also benefitted from Tesla (TSLA 316.04, +10.74, +3.5%) rallying from an 8.2% loss yesterday after the company reported earnings in line and issued cautious guidance about the next several quarters.

The materials (+1.2%), industrials (+1.0%), financials (+0.7%), and health care (+0.5%) sectors round out the top five performers of a day that saw nine sectors finish in positive territory, with only the energy (-0.4%) and communication services (-0.2%) sectors closing with a loss.

Today's broad-based gains were widened throughout the duration of the session. Some early gains among mega-cap names initiated the advances in the major averages, but breadth figures were decidedly negative until the afternoon.

Advancers ultimately outpaced decliners by an 8-to-5 ratio on the NYSE, while advancers narrowly surpassed decliners on the Nasdaq.

The improvement in breadth figures benefitted smaller stocks, with the Russell 2000 finishing with a gain of 0.4% after spending most of the morning in negative territory. Mid-cap stocks advanced even further, with the S&P Mid Cap 400 finishing with a gain of 0.9%.

Overall, risk appetite remained strong, with broad participation across market caps and sectors, helping the S&P 500 and Nasdaq extend their record-setting streaks.

U.S. Treasuries finished the week on a subdued note, with 10s and 30s padding this week's modest gains, while the 2-yr note finished flat, ending the week with a modest loss.

The entire complex spent afternoon trade near session highs, with the 30-yr yield finishing just above its 50-day moving average (4.925%) while the 10-yr yield fell below the 50-day moving average of its own (4.408%), settling not far above its 200-day moving average (4.371%).

The 10-yr note yield settled down two basis points to 4.39%.

Reviewing today's data:

• Durable goods orders were down 9.3% month-over-month in June (Briefing.com consensus -11.0%) after an upwardly revised 16.5% jump in May (from 16.4%). Excluding transportation, durable goods orders were up 0.2% month-over-month (Briefing.com consensus -0.2%) after rising a revised 0.6% (from 0.5%) in May.
  
  • The key takeaway from the report is that the sharp headline decrease was largely due to a drop in transportation equipment orders after a big jump in May, though nondefense capital goods orders, excluding aircraft—a proxy for business spending—fell 0.7% after increasing 2.0% in May, reflecting a moderation after a solid rise