On Thursday, U.S. stock markets extended their rally, with the S&P 500 and Nasdaq 100 reaching new all-time highs. The gains were driven by signs of economic resilience, growing expectations of Federal Reserve rate cuts, and strong corporate earnings.
Robust Economic Indicators Inspire Confidence
Investors welcomed a batch of strong macroeconomic data. Weekly jobless claims fell to 221,000 — the lowest in three months — indicating continued labor market strength. Retail sales in June rose by 0.6% month-over-month, far exceeding the consensus forecast of +0.1%. Excluding autos, sales increased by 0.5%.
Business activity also showed improvement: the Philadelphia Fed Index jumped to 15.9 — the highest level since February. The NAHB Housing Market Index confirmed stability, rising to 33.
Fed Split Between Doves and Hawks
San Francisco Fed President Mary Daly helped boost investor sentiment with her dovish remarks, suggesting that two rate cuts by year-end would be a "reasonable" scenario. She warned that waiting too long to act on rates could cause "completely unnecessary harm" to the economy.
However, Fed Governor Adriana Kugler took a more hawkish stance, stating that current interest rates should remain elevated "for some time," adding to concerns about persistent inflation.
Trade Developments Send Mixed Signals
Trade tensions remain in focus. President Trump announced potential new tariffs of 10–15% on more than 150 countries starting August 1, though some key partners — including China — may be excluded.
On the brighter side, the U.S. may ease export restrictions on semiconductors to China. The Commerce Department confirmed that Nvidia and AMD could soon resume shipments of less advanced chips to Chinese buyers, raising hopes of a potential trade deal. U.S. Treasury Secretary Bessent is expected to meet with Chinese Vice Premier He Lifeng in the coming weeks, possibly extending tariff relief deadlines to August 12.
Nevertheless, pressure mounted following announcements of 30% tariffs on goods from the EU and Mexico, 35% duties on select Canadian imports, and a 50% tariff on copper products. The administration also threatened pharmaceutical companies with tariffs up to 200% unless they relocate production to the U.S. within a year.
Bond Market Reacts to Strong Data and Fed Signals
The yield on the 10-year U.S. Treasury note rose to 4.463%, reflecting stronger-than-expected data and reduced demand for safe-haven assets amid the equity rally. Inflation expectations rose, with the 10-year breakeven inflation rate hitting a 4.75-month high at 2.45%.
European bond yields showed mixed dynamics: German 10-year yields fell slightly, while U.K. 10-year yields rose to a six-week high.
Big Movers in the Stock Market
Top gainers included:
PepsiCo (PEP): +7% after beating earnings expectations with $22.73B in revenue.
Snap-on (SNA): +7% on strong Q2 sales.
Steven Madden (SHOO): +6% after an upgrade to “Buy” by Citigroup.
CSX Corp (CSX): +4% amid acquisition rumors involving Union Pacific.
United Airlines (UAL) and Alaska Air (ALK): both up over 3% on positive forward guidance.
Travelers (TRV) and Mondelez (MDLZ): +3% after strong earnings and analyst upgrades.
Notable decliners:
Elevance Health (ELV): -12% after cutting full-year EPS guidance.
Abbott Laboratories (ABT): -8% after missing sales forecasts.
Sonic Automotive (SAH): -10% following a JPMorgan downgrade.
Starwood Property Trust (STWD): -5% after a discounted share offering.
Healthcare stocks saw broader weakness: Molina (MOH), Centene (CNC), Cigna (CI), and UnitedHealth (UNH) fell between 1% and 5%.
Global Markets in the Green
International markets followed suit:
Euro Stoxx 50: +1.49%
Shanghai Composite: +0.37%
Nikkei 225: +0.60%
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