Wall Street ended the week on a positive note, with stocks hitting fresh all-time highs amid solid earnings and hopes for US trade deals. After an uneventful meeting between Donald Trump and Jerome Powell, the Treasury market barely budged. The dollar climbed.
In the run-up to the busiest week for corporate results, the S&P 500 rose for a fifth straight day, approaching 6,400. While the rally has stoked concerns about inflated prices amid a rush to risky corners and a revival of the meme-stock mania, many traders say it’s hard to bet against the trend. A closely watched gauge of equity volatility – the VIX – closed below 15.
“If you are a structurally bearish investor, the recent few weeks must have felt like a century,” said Florian Ielpo at Lombard Odier Investment Managers. “Not only are most equity indices advancing in what seems like an endless rally, but their valuations now globally surpass those at the start of the year.”
Progress in trade deals, positive economic data and corporate resilience have offset worries that stocks are overheating. More than 80% of S&P 500 companies have exceeded profit estimates, according to data compiled by Bloomberg Intelligence. That’s on track for the highest share of beats since 2021.
“The pace of earnings so far this month has been positive, economic data has been hanging in there, and we’re even starting to get some sense of clarity on tariffs,” said Bespoke Investment Group. “You can’t fault investors for being optimistic.”
Next week will also bring the jobs report, the Federal Reserve’s rate decision and a deadline for US trade deals. European Commission President Ursula von der Leyen said she will travel to Scotland this weekend to meet with Trump, as the two sides aim to conclude a deal ahead of an Aug. 1 deadline.
“The market continues its steady climb as many key investor concerns have failed to materialize,” said Mark Hackett at Nationwide. “While institutional investors who were short on an absolute or relative basis have largely capitulated, positioning still shows little sign of excess.”
This suggests that the market momentum has room to build if macro conditions improve or even stabilize, Hackett noted.
“It’s been a very, very active year for retail and just in the past month, I’d say, has been the craziest month that we’ve seen, so it is the return of meme stock rallying, sharp increases in really small companies picked up by Reddit channels and things like that,” said Sam Nofzinger, Public’s general manager of brokerage.
Goldman Sachs Group Inc.’s trading desk said its clients are growing “more comfortable” betting against shares of unprofitable tech companies, following a resurgence of meme-stock mania that’s sparked rallies in a cohort of smaller names.
“With the market pushing to new highs and volatility falling to its lowest levels since February, two of the major challenges facing investors are complacency and the urge to chase the market,” said Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team.
The risk of a bubble in stock markets is rising as monetary policy loosens alongside an easing in financial regulation, says Bank of America Corp.’s Michael Hartnett. From a technical standpoint, Craig Johnson at Piper Sandler keeps his bullish view, citing factors such as improving market breadth and many of the popular averages reaching new highs.
Monday kicks off the earnings season’s busiest week, with over 40% of S&P 500 companies reporting results. Among the highlights will be several megacaps including Apple Inc., Amazon.com Inc., Microsoft Corp. and Meta Platforms Inc.
“We are seeing some divergence in earnings, but for the most part companies are beating expectations and keeping the stock rally going,” said Chris Zaccarelli at Northlight Asset Management. “As long as trade policy and tariff headwinds are minor, the market can keep moving higher.”
The world’s investors are enjoying a confidence boost after months of uncertainty as Trump finally started signing trade deals. Earlier this year, rapidly-shifting tariff policies sent global markets spiraling. But risk assets have rebounded as investors saw signs of progress in negotiations.
“We’ve already seen a deal with Japan. A deal with the EU is necessary for the equity rally to continue, in our view, but would not be surprise,” said Paul Christopher at Wells Fargo Investment Institute. “The only surprise would be no deal by Aug. 1.”
To Mark Haefele at UBS Global Wealth Management, trade negotiations will ultimately lead to moderate policy.
“We would expect a tariff-led economic slowdown to be mild and short-lived, rather than recessionary,” he said.
Trump also noted he would never back a weak dollar while also touting the economic benefits a low currency would bring, particularly for the country’s manufacturing sector. While the greenback saw its worst week in July, it’s set for the best month in 2025.
The Fed released a statement Friday thanking Trump and Republican lawmakers for visiting the central bank’s renovation project on Thursday. During his visit, Trump offered little criticism of the project, but urged Fed Chair Powell several times to lower interest rates.
Trump says he had a good meeting with Powell, leading the US president to believe the Fed might cut borrowing costs.
At Pepperstone, Quasar Elizundia says policymakers are expected to hold steady while signaling sensitivity to global trade conditions and softening investment trends.
“The case for leaving policy on hold has been made by several Fed speakers: inflation remains above target, inflation risks still pervade, and the labor market is near full employment,” said Michael Feroli at JPMorgan Chase & Co.
The Fed “should cut rates next week, but we don’t think it will,” said FHN Financial’s Chris Low and his colleagues. “Instead, watch for Chair Powell to use the press conference to prep markets for a cut in September.”
“While Chair Powell will probably keep his options open for September, we think he will emphasize that recent US inflation and employment data make a case for leaving rates unchanged,” said James Egelhof and Guneet Dhingra at BNP Paribas. “As we have since December 2024, we expect the policy hold to run past year end.”
Corporate Highlights:
Intel Corp. sank as Chief Executive Officer Lip-Bu Tan sparked concerns that he was more focused on cost cutting than restoring the chipmaker’s technological edge.Microsoft Corp. is investigating whether a leak from its early alert system for cybersecurity companies allowed Chinese hackers to exploit flaws in its SharePoint service before they were patched, according to people familiar with the matter.American Airlines Group Inc. finally has taken possession of its first long-range Airbus SE A321XLR aircraft, but the plane will remain in Europe because of a supply chain issue that’s caused a shortage of seats.Paramount Global’s merger with Skydance Media was approved by the US Federal Communications Commission.Pinnacle Financial Partners Inc. agreed to acquire Synovus Financial Corp. in an all-stock transaction valued at $8.6 billion, combining two sizable players in the US Southeastern market ahead of a potential wave of banking M&A.Charter Communications Inc. reported it lost more internet customers than expected during the second quarter amid increased pressure from mobile companies’ 5G and fiber home internet offerings.Fuzzy Ugg boots and chunky Hoka running shoes saw big sales gains last quarter, bolstering financial results for parent company Deckers Outdoor Corp.Centene Corp. issued fresh annual guidance and laid out a plan to address problems in its Affordable Care Act business, offering investors a ray of hope in a year when insurers across the industry have struggled to cope with rising costs and changing government policies.Sarepta Therapeutics Inc. shares plunged after European regulators rejected its gene therapy Elevidys, intensifying scrutiny on the drugmaker after it was pressured to halt shipments of its treatment in the US.Bristol-Myers Squibb Co.’s chief medical officer is stepping down from his role after six years at the company, a surprise move as the drugmaker races to find its next hit to reverse its declining fortunes.Eli Lilly & Co. won the backing of European Union regulators for its Alzheimer’s disease drug Kisunla in a specific group of patients, potentially paving the way for it to become the second drug in the region to slow the most common cause of dementia in the elderly.Newmont Corp. has made progress getting its costs under control, helping the world’s top gold miner beat expectations on earnings at a time when a rally for the precious metal is underpinning the industry.Phillips 66 is maximizing diesel production to take advantage of strong demand and would consider investing in projects that give its refineries greater flexibility to tweak fuel output to match changing consumption patterns.Lyft Inc. is partnering with Benteler Group, an Austria-based manufacturer, to deploy autonomous shuttles in the US in late 2026, trying to catch up with rival Uber Technologies Inc. in offering driverless rides.
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.4% as of 4 p.m. New York timeThe Nasdaq 100 rose 0.2%The Dow Jones Industrial Average rose 0.5%The MSCI World Index rose 0.1%Bloomberg Magnificent 7 Total Return Index rose 0.5%The Russell 2000 Index rose 0.4%
Currencies
Cryptocurrencies
Bitcoin fell 1.7% to $116,755.58Ether fell 2.5% to $3,644.22
Bonds
The yield on 10-year Treasuries declined one basis point to 4.38%Germany’s 10-year yield advanced two basis points to 2.72%Britain’s 10-year yield advanced one basis point to 4.64%
Commodities
West Texas Intermediate crude fell 1.5% to $65.05 a barrelSpot gold fell 0.9% to $3,337.87 an ounce
