US Weekly Recap: Dow (0.07%), S&P 500 +0.59%, Nasdaq +1.51%, Russell 2000 +0.23%
Friday, July 18, 2025 (GMT)

Underperformers: Energy (3.86%), Healthcare (2.55%), Materials (1.33%), Consumer Spls. (0.03%), Communication Services +0.10%, Consumer Disc. +0.54%

Summary:

US equities were mostly higher this week, with the S&P 500 and Nasdaq closing at fresh record highs on Thursday. Big tech was mostly higher with TSLA +5.2% and NVDA +4.5% the standouts. Other outperformers included China tech, online brokers, auto suppliers, software, E&Cs, moneycenter banks, and airlines. Laggards included MCOs, homebuilders, trucking, copper and aluminum, chemicals, energy, parcels and logistics, and credit cards. Treasuries were mixed with the curve steepening; the 30Y ended the week around the 5% level, though a bit off worst levels. The dollar index was up 0.6%. Gold was down 0.2%. Bitcoin futures were down 0.7%. WTI crude was down 1.6%, breaking two-straight weekly gains.

What happened:

The modest upside in equities came despite the market pricing a flatter rate cut path, which fell this week to 42 bp of cuts through year-end, down from 50 bp a week ago. Despite the repricing, equities saw a tailwind from rate stabilization after the sizable Treasury selloff in recent weeks. The front end of the curve was a bit firmer, though the longer-end of the curve saw some a modest weakness, with the 30Y yield back above 5.0% amid lingering concerns around Fed independence (link), debt and deficits

Trump’s attacks on the Fed escalated this week after reports said administration officials had discussed firing Fed Chair Powell (Bloomberg, CBS News, NY Times). However, Trump later denied the reports, saying he is unlikely to fire Powell unless there is cause. This week also saw a ramp in attacks over cost overruns at the Fed’s headquarters, which is seen by some as a pretext for trying to remove Powell (Axios). Elsewhere, Fed Governor Waller said he believes it makes sense to cut by 25 bp at 23-30 Jul FOMC meeting, citing cited tame inflation and a weakening labor market. Reports this week also said White House economist Hassett may be the frontrunner to replace Powell (Bloomberg).

This week featured a lot of headline noise around trade. UBS analysts noted markets may be underestimating tariffs, with its US tariff fear gauge at zero. That dynamic plays into concerns around TACO meme leading to complacency despite the approaching 1-Aug deadline for another increase in tariffs. There was also little movement this week on key trade deals (China, EU, Japan, India). However, Trump threatened 30% tariffs on the EU and Mexico this week, while FT reported Friday that Trump is pushing for a minimal tariff of 15-20% in any trade deal with the EU. The June 0.1% increase in import prices was below consensus, but analysts noted it is measured pre-tariff, suggesting domestic companies and individuals paying for tariffs.

Despite the tariff overhang, data this week continued to reflected economic resilience. Initial jobless claims, June retail sales, June industrial production, housing starts and permits, and the Philly Fed and Empire indexes all came in better than expected. Friday’s Preliminary July Michigan Consumer Sentiment also beat, with 1Y and 5Y inflation expectations continuing to come down after the post-Liberation Day spike, though both remain above Dec-24 levels.

Other pieces of the bullish narrative include an expected CTA tailwind, with UBS estimated a doubling of equity exposure by adding $60-70B over the next two weeks. Retail traders also continued to reverse recent sales and remain buyers. The buyback blackout also peaked this week, and is now easing into early August. Other bearish pieces include extended sentiment and valuations, seen in the most shorted stocks nearly doubling since April, the ARK Innovation ETF back to Jan-22 levels, and S&P 500 P/E in 98th percentile. Seasonality, concentration in megacap tech, some recent cracks in the AI narrative including weaker ASML (8.4%) guidance and this week’s META (1.8%) Behemoth update

Corporate:

The first week of earnings season offered some positive takeaways. Bank earnings faced a high bar but takeaways mixed. Some positive trends included resilient consumer results, strong trading revenues, and smaller provisions than expected. However, WFC (2.3%) guided NII down, while JPM +1.5% and C +7.8% raised NII forecasts. AXP (3.6%) also offered some positive takeaways around resilient consumer spend and credit quality. UAL +5.2% offered an improved 2H outlook on strong demand. NFLX (2.9%) and PEP +5.9% were among the companies to highlight weak dollar tailwind, though Netflix warned of weaker margins in 2H.

The AI secular growth narrative boosted this week by TSM +4.3%, which said it sees strong structural demand from customers. Semis and other AI-adjacent names also rallied after Nvidia announced on Monday that it received assurances from the Trump administration that it can resume selling its H20 AI chip in China. However, ASML pulled its 2026 growth outlook due to increasing macro and geopolitical uncertainty.

AAPL +0.0% will invest $500M in MP +40.2%. UBER (5%) will make a $200M investment in LCID +32.8% for robotaxis. UNP (4.4%) is reportedly considering a deal for NSC +3.8%. MCO names including ELV (18.7%) were weaker over fears around cuts to Medicaid and ACA exchanges as part of OBBB. Crypto names including COIN +8.5% hit record highs after the passage of two crypto bills.

Week ahead:

A big week of earnings next week include VZ (Monday premarket); NXPI (Monday after the close); DHI, DHR, GM, KO, LMT (Tuesday premarket); COF, TXN (Tuesday post); BSX, GD, T, TMO (Wednesday premarket); CMG, GOOGL, IBM, NOW, TSLA (Wednesday post); BX, HON, LUV, UNP (Thursday premarket); EW, INTC (Thursday post); and CNC, HCA (Friday premarket).

Data next week include the Richmond Fed Index (22-Jul, 10 ET), existing home sales (23-Jul, 10 ET), Flash Markit PMIs (24-Jul, 9:45 ET), new home sales (24-Jul, 10 ET), and durable goods (25-Jul, 8:30 ET).

S&P 500 Sector Performance:

Outperformers: Tech +2.09%, Utilities +1.56%, Industrials +0.81%, Financials +0.66%, Real Estate +0.62%

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