The U.S. stock market ended the week on a strong note. The S&P 500 rose by 0.4%, the Nasdaq 100 gained 0.23%, and the Dow Jones Industrial Average increased by 0.47%. Indices were supported by better-than-expected corporate earnings, moderate macroeconomic data, and signs of easing trade tensions between the U.S. and key partners.
According to Bloomberg Intelligence, approximately 83% of reporting companies in the S&P 500 have exceeded analysts' expectations — the highest figure for any earnings season in the last two years.
Top performers included Comfort Systems (+23%), Deckers Outdoor (+11%), and Newmont (+6%). Conversely, Intel (–8%) and Charter Communications (–18%) lagged after disappointing reports and weaker guidance.
Corporate Earnings
Preliminary data suggests S&P 500 companies’ earnings may grow by 4.5% year-over-year in Q2, exceeding the 2.8% preseason forecast. However, growth is uneven: only 6 out of the index’s 11 sectors are expected to report positive earnings growth, indicating that strength is concentrated in specific industries.
U.S. Macroeconomic Data
Economic indicators were mixed. A notable positive was a drop in initial jobless claims to 217,000 — a three-month low — which signaled continued labor market strength and lowered the likelihood of immediate Fed intervention.
However, manufacturing data painted a less optimistic picture. The S&P U.S. Manufacturing PMI declined to 49.5, the lowest level this year. Core durable goods orders (excluding defense and aircraft) unexpectedly fell by 0.7% in June, contrary to expectations of modest growth.
Monetary Policy
Futures pricing for federal funds indicates only a 3% probability of a rate cut at the July 29–30 FOMC meeting. The odds for a cut in September stand at 66%. The yield on 10-year U.S. Treasuries closed the week at 4.38%, having declined on soft macro data and safe-haven demand.
Trade and Geopolitical Developments
The most notable political development was the U.S.-Japan trade agreement announced this week. The deal includes reduced tariffs, increased Japanese purchases of U.S. goods, and expanded investment in the U.S. economy.
President Trump also reiterated plans to impose new tariffs ranging from 15% to 50% starting August 1, covering goods from more than 150 countries. Despite the aggressive tone, markets responded calmly, expecting that new agreements may partially offset the risk.
Global Markets
Performance was mixed across international equity markets. Euro Stoxx 50 finished slightly down. Japan’s Nikkei 225 reached a new annual high following trade deal news, while China’s Shanghai Composite remained near a 9.5-month high.
Bond Market
The 10-year U.S. Treasury yield ended the week at 4.38%, down from midweek levels as investors rotated into bonds amid soft economic data. In Europe, yields on sovereign bonds declined as ECB officials signaled a possible pause in further rate cuts, citing macro uncertainty.
The U.S. equity market continues to trend upward, supported by strong corporate earnings and a resilient labor market. However, weak manufacturing and investment data raise concerns about the sustainability of growth.
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