
Market Update
The S&P 500 ended the week at a fresh all-time high, driven by better than expected corporate earnings and growing optimism around U.S. trade negotiations. The U.S. reached an agreement with Japan last week, and over the weekend a deal with EU was reached. These trade deals likely have boosted confidence that the cycle of tariff uncertainty may finally be winding down, even if the economic consequences of the new trade regime have yet to be fully felt. On the earnings front, over 80% of S&P 500 companies have exceeded estimates, and the improving sentiment also reignited meme stock activity, with Opendoor and Krispy Kreme soaring 43% and 39% in a single day, respectively.
This week is a very busy week, with over 40% of the S&P 500 index set to report - including Apple, Amazon, Microsoft, and Meta. The Federal Reserve meets on Wednesday, and while rates are expected to remain unchanged, markets will focus on any commentary related to executive removal authority. Finally, investors will be closely watching Friday’s jobs report and the looming August 1st trade deadline.
Earnings Season
Earnings season remains strong, with around 83% of S&P 500 companies beating EPS expectations and average surprises near 6.5%, but several names highlight growing tariff headwinds. GM noted over $1B in profit hit from tariffs, RTX expects $850M in costs this year, and both Mattel and Hasbro flagged $100M and $60M in exposure, respectively. On the positive side, AI continues to be a secular tailwind. Alphabet reported strong results across Search, YouTube, and Cloud, with upbeat commentary on AI adoption and monetization, even as capex guidance rose by $10B to $85B for 2025. Tesla had a mixed quarter, revenue beat but declined 12% YoY, and regulatory credits were down sharply, yet focus stayed on its AI and autonomy vision, including a potential robotaxi rollout by year-end and Optimus production in FY26. GE Vernova also added to the AI-powered infrastructure theme with strong earnings and record power auction prices.
New and Existing Home Sales
Existing home sales fell in June by 2.7% month-over-month, continuing the downward trend we’ve seen since March and reaching a nine-month low. New home sales increased slightly in June, however remain sluggish. Many homebuyers are choosing to sit on the sidelines amidst elevated mortgage rates and economic uncertainty. Due to the weak homebuying activity, housing inventory has been steadily increasing over the year, with months’ supply of unsold inventory now at the highest level since 2015. Until either mortgage rates or the economic backdrop shows signs of improvement, it’s likely that the housing market activity will remain subdued.
Sources:
https://www.nar.realtor/newsroom/nar-existing-home-sales-report-shows-2-7-decrease-in-june
https://www.census.gov/construction/nrs/index.html
https://markets.jpmorgan.com/jpmm/research.article_page?action=open&doc=GPS-5036254-0
