Markets entered the final days of July with a cautiously optimistic tone. Investor sentiment has been supported by stronger-than-expected corporate earnings and signs of durable consumer demand. Yet, under the surface, policy uncertainty—particularly around international trade—remains a growing risk as the August 1 tariff deadline approaches. As central banks prepare to meet, and earnings guidance takes center stage, the balance between resilience and risk is shifting.

Index Snapshot (as of July 26, 2025)

S&P 500: 6,397.42 (+0.5% weekly)

Nasdaq Composite: 21,218.78 (+0.7% weekly)

Dow Jones Industrial Average: 41,160.25 (–0.1% weekly)

Euro Stoxx 600: 524.13 (+0.4% weekly)

Earnings: A solid season

The Q2 earnings season has delivered broadly positive results so far, particularly among large-cap technology, financials, and industrials. Most S&P 500 companies have beaten consensus forecasts on both revenue and earnings per share. However, market reaction has become increasingly selective, reflecting heightened sensitivity to guidance.

Tech giants like Microsoft and Alphabet beat expectations, but the upside was muted as investors weighed forward-looking capex and margin commentary.

Consumer names remain mixed—strong demand persists in travel and entertainment, while retail shows signs of normalization.

Financials benefited from stable credit quality and strong fee-based income, but regional banks remain under pressure.

Manufacturing and logistics firms flagged input cost risks and global trade disruptions as key variables for H2.

In short: results have reaffirmed the market’s growth base, but stretched valuations mean that guidance—not performance—is now the critical driver of equity direction.

Tariffs: Market Watches as August 1 Deadline Looms

While earnings buoy short-term confidence, investor focus is increasingly shifting toward trade. President Trump’s administration has reiterated plans to implement a new set of “reciprocal tariffs” starting August 1, with headline rates set at 25%–50% on imports from counStockholm, U.S. and Ctries deemed to impose unfair barriers to U.S. goods.

• Following two days of high‑level discussions in Stockholm, U.S. and Chinese trade officials agreed to seek an extension of the existing 90‑day tariff truce set to expire on August 12. While the meetings were described as constructive, Treasury Secretary Scott Bessent clarified that no agreement is final until President Trump formally approves it.
• A newly finalized U.S.–EU agreement has eased immediate concerns on that front. The deal sets mutual tariff caps at 15%, significantly below earlier threats of 35%–40%, and includes coordinated policy targets in energy, manufacturing, and digital services.
• Japan, Indonesia, and the Philippines agreed to restructured terms last week, accepting reduced tariff schedules of 15%–20% on most categories in exchange for greater U.S. market access and bilateral investment pledges.

Tariff-sensitive sectors like autos, semiconductors, and agriculture saw notable swings last week as traders responded to shifting expectations. With the deadline approaching and few concrete signs of breakthrough with China, headline risk remains elevated heading into August.

The week ahead

The next few days will be critical in shaping investor positioning into August. Key events include:

Federal Reserve decision (July 30) - The market expects a hold, but forward guidance will be closely dissected.

U.S. jobs and PCE inflation data - Needed to reinforce the soft-landing narrative.

Tariff announcements - Any last-minute revisions or escalations may trigger fast sector rotations.

Big Tech earnings - Apple, Amazon, and Meta will deliver results this week; outlooks on AI spending, margins, and global demand will be closely monitored.

Financy Team

Jul 29, 2025