Weekly Wrap

The equity market ran into resistance this week as a confluence of policy headwinds, softening economic data, and high-profile earnings letdowns challenged the momentum that had carried major indices to record highs just days earlier. The S&P 500 declined 2.4%, the Nasdaq Composite lost 2.2%, and the Dow Jones Industrial Average underperformed with a 2.9% drop. The small-cap Russell 2000 slumped 4.2%, and the S&P Midcap 400 fell 3.5%, reflecting a broader retreat in risk appetite.

On Thursday, the S&P 500 notched a new intraday record high of 6,427.02, while the Nasdaq Composite reached both an intraday and closing record high of 21,457.48 and 21,178.58, respectively. Earlier in the week, on Monday, the S&P 500 had set a record closing high of 6,389.77.

What began as an encouraging week, buoyed by a U.S.–EU trade agreement and strong earnings from Microsoft and Meta, shifted tone as several megacap names, including Amazon and Apple, disappointed with their outlooks. That, alongside a sweeping escalation in tariff policy, most notably increased rates on imports from Brazil, Canada, India, and Taiwan, sparked renewed concerns about corporate margins and global trade dynamics. Meanwhile, Friday’s employment report added to the uncertainty, with nonfarm payrolls rising just 73,000 and prior months revised sharply lower, dragging the three-month average to a meager 35,000.

Sector performance illustrated the shift in tone. Only the utilities sector managed to finish higher, gaining 1.5% as investors rotated defensively. Communication services was the lone neutral spot, ending flat despite Meta’s standout quarter. The remaining nine sectors finished in the red: materials dropped 5.4%, consumer discretionary declined 4.5%, health care lost 3.9%, financials fell 3.8%, industrials dropped 3.4%, and real estate declined 3.5%. Even the typically resilient consumer staples sector finished down 1.1%. Energy stocks lost 1.6% despite early-week gains in crude oil, and information technology slipped 1.4%, held back in part by a 2.1% weekly decline in the Philadelphia Semiconductor Index as disappointing chipmaker results weighed on sentiment.

The Federal Open Market Committee (FOMC) met earlier in the week and decided to keep interest rates unchanged, signaling a cautious approach amid mixed economic signals. However, the softer economic data that followed the meeting, particularly the disappointing jobs report, rapidly shifted market expectations toward a potential rate cut as soon as the September meeting.

Treasuries rallied sharply into the end of the week amid soft data and rising expectations for a September rate cut. The 2-year yield fell 25 basis points to 3.70%, and the 10-year yield declined 14 basis points to 4.22%. According to the CME FedWatch Tool, the probability of a 25-basis point rate cut at the September FOMC meeting surged to 86%, up from just 38% the day before the jobs report.

After a steady stretch of strength, this week served as a reminder that richly valued markets remain sensitive to both policy shifts and softer economic signals. While the longer-term trend remains constructive, near-term consolidation appears justified as the market digests a more complicated growth and policy backdrop heading into the final stretch of summer.

• Nasdaq Composite -2.2% for the week/ +6.9% YTD
• S&P 500 -2.4% for the week / +6.0% YTD
• DJIA -2.9% for the week/ +2.5% YTD
• S&P 400 -3.5% for the week/ -0.5% YTD
• Russell 2000 -4.2% for the wek/ -2.8% YTD

Monday: 

Opening gains fueled by the announcement of a trade deal between the U.S. and the EU quickly pushed the S&P 500 and Nasdaq Composite to new all-time high levels, but a lack of major developments on any front stalled momentum and saw the major averages finish mixed.

At its peak, the S&P 500 set a new intraday record at 6401.07. After spending much of the afternoon with a modest loss, the index closed up 1.13 points to 6,389.77, squeaking out a new record closing high. The Nasdaq Composite, for its part, set an intraday record at 21,202.18. The closing level of 21,178.58 was also a new closing record high. The DJIA underperformed with a loss of 0.1% for the day.

The trade deal between the U.S. and EU will feature a 15% tariff on EU imports with 0% carveouts for certain products like aircraft and component parts, semiconductor equipment, and certain raw materials.

The deal also includes a provision whereby the EU will invest $600 billion in the U.S. and purchase $750 billion of U.S. energy.

The latter point, in conjunction with a 2.4% increase in crude oil prices to $66.75 per barrel, helped the energy sector (+1.0%) close as the day's top performer.

Despite a strong start, the consumer discretionary (+0.7%) and information technology (+0.8%) sectors were the only other sectors to finish in positive territory.

A strong start to the week for chipmakers underpinned the tech gains, with the PHLX Semiconductor Index closing up 1.6%, aided by the EU trade deal carveout for semiconductor equipment.

The consumer discretionary sector was bolstered by its largest components. Amazon (AMZN 232.79, +1.35, +0.6%) traded higher ahead of its earnings report on Thursday. Tesla (TSLA 325.59, +9.53, +3.0%), meanwhile, has recouped almost all of its losses from last Thursday, when the stock fell 8.2% after reporting lackluster Q2 earnings. The stock outperformed today on the back of news that Tesla struck a $16.5 billion agreement for Samsung Electronics to manufacture its AI6 chips.

The other eight S&P 500 sectors spent the majority of today's session trading with losses that steadily broadened throughout the day. Early breadth figures slightly favored advancers but selling interest picked up throughout the session. Decliners outpaced advancers by a nearly 2-to-1 ratio on the NYSE and a nearly 3-to-1 ratio on the Nasdaq.

While today's gains were limited by a lack of headlines, this week will see nearly 38% of the S&P 500 by market cap report earnings (including four “Magnificent 7” names), alongside a trove of economic data and the potential for a trade agreement between the U.S. and China. Trade delegations from the U.S. and China met for trade talks today in Stockholm, Sweden.

Separately, U.S. Treasuries began the week on a lower note, lifting the 10-yr yield back above its 50-day moving average (4.406%). Today's 2-yr note auction met decent demand, but the 5-yr note sale was a bit worse, and both auctions saw below-average foreign demand

The 2-year note yield settled up two basis points to 3.88%, and the 10-year note yield settled up three basis points to 4.42%.

Tuesday:

For the second consecutive day, early gains in the stock market pushed the S&P 500 (-0.3%) and Nasdaq Composite (-0.4%) to record intraday highs, though a late morning sell-off proved to be insurmountable and saw the major averages close in negative territory, unable to secure record closing highs.

At peak levels the S&P 500 established a new record high at 6,409.26, and the Nasdaq secured a record of its own at 21,303.96.

Around the same time, NVIDIA (NVDA 175.51, -1.24, -0.7%) also pushed to a new record high of $179.38 following earlier headlines that the company purchased 300,000 H20 chips from Taiwan Semiconductor Manufacturing (TSM 241.33, -1.42, -0.6%) to satisfy a notable demand in China.

A sell-off ensued from the record high levels, ultimately sending the information technology sector (-0.2%) into negative territory for the day after rising 0.7% in the early going. The PHLX Semiconductor Index finished with a modest gain of 0.2%.

The industrials (-1.1%), health care (-0.8%), consumer discretionary (-0.7%), financials (-0.6%), materials (-0.3%), and communication services (-0.4%) sectors round out the seven sectors that finished in negative territory.

While equity futures were initially buoyed by today's sizable batch of earnings reports, a lack of major developments on the trade front or elsewhere left the market unable to rebound from the late morning sell-off.

A cohort of blue-chip stocks also retreated following their earnings before the open, including UPS (UPS 90.84, -10.74, -10.6%), UnitedHealth (UNH 261.37, -20.75, -7.4%), Royal Caribbean (RCL 334.38, -17.62, -5.0%), Nucor (NUE 140.68, -3.84, -2.6%), and Merck (MRK 82.69, -1.37, -1.6%).

Stocks of all sizes retreated, as evidenced by similar losses between the Vanguard Mega Cap Growth ETF (-0.6%) and the Russell 2000 (-0.7%). The S&P Mid Cap 400 (-0.2%) outperformed the broader market but still closed with a modest loss.

Despite the broad-based losses, the real estate (+1.7%), utilities (+1.2%), energy (+1.0%), and consumer staples (+0.8%) sectors captured healthy gains today.

The energy sector benefitted from an increase in crude oil prices that settled today's session $2.47 higher (+3.7%) at $69.22 per barrel. The price increase followed comments from President Trump on Air Force One that Russia will face secondary sanctions if it does not stop the Ukraine war by the deadline, which is 10 days from now.

Meanwhile, the real estate and utilities sectors were supported by a strong rally in treasuries that sent yields on the 10-year note and the 30-year bond to their lowest levels since early July, back below their respective 50-day moving averages, with the 10-year yield also sliding past its 200-day moving average. The 2-year note yield settled down five basis points at 3.88%, and the 10-year note yield settled down nine basis points at 4.33%.

The rally preceded tomorrow's release of the FOMC policy statement, which is not expected to call for a rate cut, but the decision is not expected to be unanimous, with at least one policymaker dissenting.

In addition to the Fed statement, the market will also receive Advance Q2 GDP readings as well as another hefty batch of earnings reports, all of which could either reinforce today's downward trend or provide the catalyst for a renewed push toward record highs

Reviewing today's data:

• The Conference Board's Consumer Confidence Index rose to 97.2 in July (Briefing.com consensus 95.5) from an upwardly revised 95.2 (from 93.0) in June. In the same period a year ago, the index stood at 101.9.
  
  • The key takeaway from the report is that the improvement was driven by an increase in the expectations index, though that index remains below a level that is typically indicative of a recession ahead.
  • The Present Situation Index fell to 131.5 from 133.0.
  • The Expectations Index rose to 74.4 from 69.9, remaining below 80, which is a level that typically signals recession ahead.
  • Average 12-month inflation expectations fell to 5.8% from 5.9%.
• Job openings for June decreased to 7.437 million from a revised 7.712 million (from 7.769 million) in May.
• The FHFA Housing Price Index was down 0.2% in May (Briefing.com consensus -0.2%) after a revised reading of -0.3% (from -0.4%) in April.
• The S&P Case-Shiller Home Price Index was up 2.8% in May (Briefing.com consensus 3.0%) after increasing 3.4% in April.
• The advance goods trade deficit reached $85.9 bln in June, up from a revised $96.4bln (from $96.66 bln) deficit in May.Advance Retail Inventories were up 0.3% in June after increasing a prior unrevised 0.3% in May, while advance Wholesale Inventories were up 0.3% in June after a prior 0.3% decrease in May.

Wednesday:

An unsurprising decision by the FOMC to leave the fed funds rate unchanged did little to sway the stock market from its modest early gains, but comments from Fed Chair Powell during his press conference sent September rate cut expectations lower, with stocks and treasuries facing some impulse selling as a result.

The Fed opted to keep the fed funds rate range between 4.25% and 4.50%, though Fed Governors Waller and Bowman voted in favor of a 25-basis-point rate cut, representing the first dissent by two Fed governors since 1993.

Fed Chair Powell said in his press conference that there is scope to reduce rates once conditions are met, but large cuts are unlikely unless the labor market weakens significantly and the economy is not showing signs of being held back by restrictive policy.

The comments sent the probability of a September rate cut tumbling, with the implied probability now 48.1%, down from 64.6% yesterday.

Selling pressure in the stock market ensued, sending the major averages into negative territory after spending the majority of trade with modest gains.

The Nasdaq Composite (+0.2%) was able to recapture a modest gain, while the S&P 500 (-0.1%) and DJIA (-0.4%) finished with losses.

This morning's early gains came on low volume and nearly even breadth figures, reflecting a wait-and-see approach in the market that left it vulnerable to volatility following the FOMC decision.

At the bottom of the afternoon slide, only the utilities sector (+0.7%) remained in positive territory for the day, though a late rally saw the information technology (+0.4%) and communication services (+0.2%) resurface with modest gains.

A modest outperformance in mega-cap stocks supported the latter two S&P 500 sectors, as the Vanguard Mega Cap Growth ETF finished the day with a 0.3% gain.

Elsewhere, losses were broad-based, with the materials (-2.0%), real estate (-1.4%), and energy (-1.4%) sectors closing with the widest losses in the wake of the FOMC announcement.

U.S. treasuries also finished Wednesday on their lows, as the 10-year note settled up six basis points to its 200-day moving average at 4.38%. The July FOMC decision overshadowed the morning release of the U.S. Treasury's latest quarterly refunding statement, in which the Treasury said that the frequency of nominal buybacks of longer-dated Treasuries will be increased.

Today's data included a solid advance reading of Q2 GDP, which gives the central bank more room to delay the next cut. The market also received a stronger-than-expected ADP Employment Change report for July.

A sizable batch of earnings reports had little impact on the broader market this morning, but upcoming results from Microsoft (MSFT 513.24, +0.67, +0.1%) and Meta Platforms (META 695.21, -4.79, -0.7%) after today's close could help spark a rebound if the numbers impress.

Reviewing today's data;

• Weekly MBA Mortgage Applications Index -3.8%; Prior 0.8%
• July ADP Employment Change 104K (Briefing.com consensus 78K); Prior was revised to -23K from -33K
  • The key takeaway is that, while the overall employment growth was modest, it was broad-based with gains for small, medium, and large establishments. In brief, it was not a report that signals any material weakness in the labor market.    
• Q2 GDP-Adv. 3.0% (Briefing.com consensus 2.5%); Prior -0.5%, Q2 GDP Deflator-Adv. 2.0% (Briefing.com consensus 2.6%); Prior 3.8%
  • The key takeaway from the report is the recognition that the stronger growth was fueled by the decrease in imports (-30.3%), which are a subtraction in the calculation of GDP. The net exports component contributed 4.99 percentage points to Q2 GDP growth.
• June Pending Home Sales -0.8% (Briefing.com consensus 0.4%); Prior 1.8%

Thursday:

The stock market was invigorated by impressive earnings reports from Meta Platforms (META 773.44, +78.23, +11.3%) and Microsoft (MSFT 533.50, +20.26, +4.0%) and quickly pushed the S&P 500 (-0.4%) and Nasdaq Composite (flat) to new record intraday highs, but the broader market struggled to keep pace, with broad-based losses keeping the indices from record closing highs.

At its peak, the S&P 500 set a new record of 6,427.02. The Nasdaq Composite set a new record around the same time at 21,457.48

The communications services sector (+2.1%) was able to retain the bulk of its early gains thanks to Meta's stellar Q2 earnings report, which bolstered its stock to new record highs, as the company's robust beat-and-raise performance underscored its dominance in digital advertising and AI-driven innovation.

Microsoft also soared to new record levels after posting its largest EPS beat in the last seven quarters, with the early gains pushing the company past $4 trillion in market capitalization. The company's Azure AI services grew a notable 39%.

Early excitement in tech was further compounded with the IPO of the collaborative design software company Figma (FIG 115.50, +82.50, +250.0%). The 36.9 million share IPO was priced far above expectations ($33 vs. $25-$28 projected range), opened for trading with a staggering 158% gain at $85, and then rocketed as high as $116 before shares were immediately halted.

Despite all the buzz in the tech world, semiconductor stocks markedly underperformed out of the gate, hinting at volatility that would ultimately steer the major averages from their hot start.

Disappointing earnings and guidance from Qualcomm (QCOM 146.80, -12.26, -7.7%), Arm Holdings plc (ARM 141.38, -21.95, -13.4%), and Lam Research (LRCX 94.85, -4.24, -4.3%), along with weaker-than-expected results from Samsung Electronics, weighed heavily on chipmakers. The Philadelphia Semiconductor Index finished with a loss of 3.1%, narrowing its month-to-date gains to just 1.1%.

Though the technology sector was up as much as 1.3% in the early going, it closed with a loss of 0.3%. The communication services (+2.1%) and utilities (+0.6%) sectors were the only S&P 500 sectors to close with a gain, though eight sectors traded in positive territory this morning.

The health care sector (-2.8%) was the hardest hit, as pharmaceutical stocks faced pressure after President Trump declared that he sent letters to 17 pharmaceutical CEOs demanding an extension of most favored drug pricing by September 29, raising concerns about their earnings prospects.

The real estate (-1.7%) and materials (-1.0%) sectors round out the bottom three S&P 500 sectors.

While a trade deal with South Korea featuring a 15% tariff rate was struck, and Mexico was granted a 90-day extension on the 25% tariff rate, there were reminders today that tariffs for other countries are reverting to the onerous tariff rates announced on April 2.

Additionally, today's economic reports largely fell in line with the Fed's prevailing view that it can stand by to watch more incoming data before cutting rates since the economy remains on a growth track at the same time inflation continues to stick at higher levels amid higher tariff rates.

The retreat on "good news" today triggered selling activity that could be indicative of a looming consolidation in an overbought market. The CBOE Volatility Index was up 8.6% at 16.82.

U.S. Treasuries finished July on a subdued note despite a morning barrage of economic data. The quiet session capped a month that saw losses across the complex with relative weakness up front amid receding bets for near-term easing from the Fed. The 2-year note yield settled up one basis point at 3.95% (+23 basis points in July), and the 10-year note yield settled down two basis points at 4.36% (+13 basis points in July).

Reviewing today's data:

• June Personal Income 0.3% (Briefing.com consensus 0.3%); Prior -0.4%, June Personal Spending 0.3% (Briefing.com consensus 0.4%); Prior was revised to 0.0% from -0.1%, June PCE Prices 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.2% from 0.1%, June PCE Prices - Core 0.3% (Briefing.com consensus 0.3%); Prior 0.2%
  
  • The key takeaway from the report is that real personal spending was up a modest 0.1% in June. That isn't much, although it does show that consumers continue to have the capacity to spend in the face of higher prices.
• Weekly Initial Claims 218K (Briefing.com consensus 220K); Prior 217K, Weekly Continuing Claims 1.946 mln; Prior was revised to 1.946 mln from 1.955 mln
  
  • The key takeaway from the report is the recognition that employers still remain reluctant to lay off employees, but employees that do get laid off are facing a tougher time finding a new job.
• Q2 Employment Cost Index 0.9% (Briefing.com consensus 0.8%); Prior 0.9%
  
  • The key takeaway from the report is that compensation costs have moderated, which could serve to lower some of the inflation temperature at the Fed.
• July Chicago PMI 47.1 (Briefing.com consensus 42.1); Prior 40.4

Friday: 

The stock market ended the week on a decidedly negative tone after the announcement of elevated tariff rates, weakness in several mega-cap tech stocks following earnings, and soft economic data combined to prompt concerns about economic and earnings growth potential.

Global markets and equity futures were lower this morning after President Trump signed an executive order that increased tariff rates for several key partners, including increases to 50% for Brazil, 35% for Canada (up from 25%), 25% for India, 20% for Taiwan, and a 40% tariff on all transshipped goods, regardless of origin.

The pre-open negativity was compounded by a soft payrolls report for July that saw nonfarm payrolls rise by just 73,000. The major revisions to May and June figures were equally concerning, which showed the combined increase over the two previous months was 285,000 lower than previously reported, bringing the three-month average for nonfarm payroll increases to a scant 35,000.

This afternoon, President Trump fired the Commissioner of Labor Statistics, Dr. Erika McEntarfer, citing the revisions and alleged data manipulation in a post on Truth Social.

The market's economic outlook was not helped by a weaker-than-expected July ISM Manufacturing Index, which suggested that the manufacturing sector has not yet seen the benefits of onshoring in response to the tariff actions, which themselves have stoked a good bit of planning uncertainty.

A large batch of earnings reports between yesterday’s close and today’s open didn’t provide any reprieve either.

Amazon (AMZN 214.75, -19.36, -8.27%) and Apple (AAPL 202.38, -5.19, -2.50%) both beat EPS and revenue expectations, yet both traded lower. Amazon, in particular, got hit hard after its AWS growth and operating income guidance disappointed.

As a result, the consumer discretionary sector (-3.6%) finished as the worst-performing S&P 500 sector among the eight sectors that finished in negative territory.

Today's broad-based losses disproportionately impacted sectors with high growth potential and cyclical stocks. The information technology (-2.1%), financials (-1.8%), energy (-1.8%), and communication services (-1.7%) sectors all closed with sizable losses.

Stocks of all sizes were affected. The Vanguard Mega Cap Growth ETF (-2.3%) felt the pressure from Amazon's underperformance, while the Russell 2000 (-2.0%) and S&P Mid Cap 400 (-1.5%) were rolled back on the growth concerns.

There was a cohort of defensive stocks that benefitted from today's risk-off mindset that saw a pickup in hedging activity. The CBOE Volatility Index was up to 20.57 (+23.0%). The health care (+0.6%), consumer staples (+0.5%), and utilities (+0.1%) sectors all posted gains, reflecting a modest rotation into more defensive-oriented equities.

Ultimately it did little to alter the standings of the major averages, as the S&P 500 (-1.6%), Nasdaq Composite (-2.2%), and DJIA (-1.2%) all incurred losses that saw them finish the week in negative territory.

On the contrary, U.S. Treasuries began August on a firmly higher note, sending yields toward their lows from the start of July.

Today's disappointing economic data led to renewed expectations for a rate cut in September, with the Fed funds futures market now seeing an 86% implied likelihood of a September cut, up from yesterday's 37.7%.

The 2-yr note yield settled 25 basis points lower at 3.70%, while the 10-yr note yield settled 14 basis points lower at 4.22%.

Separately, Fed Governor Adriana Kugler submitted a letter of resignation as a member of the Federal Reserve Board, effective August 8, 2025. President Trump will nominate her successor.

Reviewing today's data:

• July Nonfarm Payrolls 73K (Briefing.com consensus 102K); Prior was revised to 14K from 147K, July Nonfarm Private Payrolls 83K (Briefing.com consensus 110K); Prior was revised to 3K from 74K, July Unemployment Rate 4.2% (Briefing.com consensus 4.2%); Prior 4.1%, July Avg. Hourly Earnings 0.3% (Briefing.com consensus 0.3%); Prior 0.2%, July Average Workweek 34.3 (Briefing.com consensus 34.2); Prior 34.2
  • The key takeaway from the report is the soft nonfarm payrolls situation, as that will stoke concerns that the Fed is behind the curve, which in turn could stoke concerns that economic and earnings growth prospects are not as bright as currently envisaged. That could pose problems for a richly valued stock market, unless it trades through that noise and focuses on the notion that rate cuts are sure to follow.
• June Construction Spending -0.4% (Briefing.com consensus 0.1%); Prior was revised to -0.4% from -0.3%
  • The key takeaway from the report is the same as the prior month: a downturn in new single-family construction, which is being pressured by higher costs, was the driver behind the weakness in residential spending.
• July S&P Global U.S. Manufacturing PMI - Final 49.8; Prior 52.9
• July ISM Manufacturing Index 48.0% (Briefing.com consensus 49.5%); Prior 49.0%
  • The key takeaway from the report is that 79% of the sector's GDP contracted in July. That is up from 46% in June and suggests the manufacturing sector has not yet seen the benefits of onshoring in response to the tariff actions, which themselves have stoked a good bit of planning uncertainty per the observations of survey respondents.
• July Univ. of Michigan Consumer Sentiment - Final 61.7 (Briefing.com consensus 61.8); Prior 61.8
  • The key takeaway from the report is that consumer sentiment, while not strong, has improved in recent months along with inflation expectations.