Weekly stock market update | Edward Jones

Despite tariff rates rising, however, we have not yet seen a meaningful impact on inflation, or an outsized impact on consumption or the economy. There could be a number of reasons for this, such as

Higher tariff rates have been absorbed across a number of constituents, including by exporters across the supply chain, by corporations absorbing the higher costs, and some costs being passed to the end consumer; 

Many companies have likely stockpiled inventories ahead of tariffs, or even at a 10% tariff rate, and thus can continue to sell goods to consumers at steady price levels; and 

Third, we have also seen oil and energy prices move lower this year, with WTI crude oil largely in the $60 – $70 range, for example, which has also helped support lower prices at the pump for consumers and lower energy costs for companies.

Finally, investors may also be picking up on some positives coming out of ongoing trade negotiations. For example, last week the U.S. administration announced it may be loosening export restrictions, which would allow companies like NVIDIA to sell certain AI semiconductor chips into China once again. And ongoing deals and negotiations with countries like Vietnam and Indonesia should also help secure alternative supply-chain options outside of China. The likely goal of the administration on trade is that, over time, more companies will diversify their supply chains, and more economies will lower their tariff and non-tariff barriers.

Markets can continue to climb walls of worry in the second half of 2025

Overall, U.S. and Canadian stock markets appear to have overcome the peak fear and uncertainty that emerged in early April around the threat of sharply rising tariffs. Since then, we have seen tariff increases get delayed and inflation and economic data remain resilient. 

As we look ahead, we would not expect markets to continue to move in a straight line higher, especially as we head toward the seasonally choppy months of August and September. Markets will also have to digest additional tariff headlines as the August 1 deadline approaches. This may mean new and even higher tariff rates, and we may see corporations and export partners less willing to absorb these higher costs. Thus, prices may rise, and consumption could cool in both the U.S. and Canada in the second half of the year. All these factors could spark bouts of volatility in the weeks ahead.

However, in our view, investors can still feel comfortable that the worst-case scenario – high tariff rates, no positive outcomes from trade negotiations, and runaway inflation – is not likely to play out. In addition, as we look toward the end of the year and into 2026, we would expect prices and inflation to stabilize again and the Fed and Bank of Canada to lower interest rates. 

We thus believe investors can use pullbacks and volatility to position for a more stable backdrop and re-acceleration of growth in the year ahead. We favour U.S. large-cap and mid-cap stocks, and we recommend sectors across growth and value, including consumer discretionary, financials, and health care. Your financial advisor can help ensure your investments are aligned to your unique goals and risk preferences, and help you navigate through the headlines and walls of worry that may lie ahead.

Mona Mahajan
Investment Strategist

Source: 1. FactSet