WEEKLY MARKET SUMMARY
Global Equities: Stocks delivered a solid weekly performance despite worries over the August 7th tariff deadline, which reinstated duties on a broad range of products from most US trading partners. Continued strong second quarter earnings led to gains for domestic large cap stocks, with the S&P 500 advancing 2.4% during the weekly session. The Dow Jones Industrial Average tacked on 1.4% and the Nasdaq Composite outperformed with a 3.9% weekly gain as big tech companies showed strong relative strength over other sectors. US Small caps were also positive, posting a 2.5% weekly gain. Foreign developed market stocks also were up during the week, gaining 3.5%, while Emerging markets rose 2.6%.
Fixed Income: 10-Year Treasury yields crept higher, ending the week around 4.29% following weak 10- and 30-Year auctions. Expectations remain high for a September rate cut at a 90% probability according to CME Group’s Fedwatch tool. US investment-grade corporate bonds were down slightly for the week, slipping -0.2%, while high yield bonds gained 0.3%.
Commodities: US West Texas Intermediate crude oil prices slipped to $63.60 as the Baker Hughes US rig count declined for the third week in a row. President Trump ramped up pressure on India to cease buying Russian oil, which is not sanctioned but is subject to a price cap by the US and other nations. Surprise news of tariffs on gold bar imports pushed gold prices to $3,456/oz.
WEEKLY ECONOMIC SUMMARY
Tariffs Resume: The August 7th deadline for trade deals passed with most US trading partners without comprehensive agreements, resulting in the return of “reciprocal” tariff rates. The tariffs range from 10% for the United Kingdom to 50% for Brazil, with various carve outs as well as extra duties charged for specific items and commodities. Semiconductors were a major focal point of the tariffs, with a 100% charge on imported chips. There was, however, an exemption sparing companies such as Nvidia (NVDA) which manufacture or commit to build facilities in the United States.
Fed Shakeup: With Fed Chair Jerome Powell’s term set to expire in May of 2026, there has been much discussion of a Trump-appointed replacement and even an early firing of Powell, although the president has walked back that possibility over recent weeks. President Trump teased several possibilities, mentioning “two Kevins”, believed to be White House National Economic Council Director Kevin Hassett and former Fed governor Kevin Warsh. Current Fed member Christopher Waller is also rumored to be in the running. While Trump waits until next year to fill Powell’s seat, he had the opportunity to install a loyalist within the Fed this week by nominating Stephen Miran to fill the seat of Fed governor Adriana Kugler, who is resigning early.
Earnings Update: While most of the “Magnificent Seven” stocks have already reported earnings, there were some notable names releasing second quarter results during the week. Eli Lilly (LLY) beat estimates and raised its 2025 outlook but shares still fell sharply due to a setback in trials for its oral weight-loss drug. Shopify (SHOP) shares advanced over 17% after beating and raising guidance, while Super Micro (SMCI) fell by around the same amount after heavy data center spending failed to pay off. So far, 82% of S&P 500 companies have beaten estimates in Q2, but the magnitude of the beats is notable at 8%, which is above the 10-yr average of 6.9%, per Factset.
CHART OF THE WEEK
The Chart of the Week shows the surge in US tariff revenue in recent months, including nearly $30 billion in July alone. In the last three months, $77 billion has been collected, which exceeds receipts for the entire year of 2024. While the increased revenue is much needed to help pay off the ever-increasing US deficit spending, the inflationary cost and burden on US consumers has sparked concerns at the Fed. President Trump has repeatedly stated that foreign governments and companies bear the cost of the tariffs, but Treasury Secretary Scott Bessent this week acknowledged that is an inaccurate claim, stating “the check is written by the importer at the dock.” As higher tariffs begin to kick in, US Commerce Secretary Howard Lutnick suggested monthly receipts will rise to around $50 billion shortly.
