The Week That Was and The Week Ahead
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After a powerful late June rally investors entered last week with cautious optimism. The prior surge in equities had been fueled by hopes of tariff delays and central bank pivots but the July 7 to 11 period tested that narrative. Mixed macro data shifting Fed expectations and renewed tariff threats injected volatility back into markets. While the pullback was modest the tone noticeably changed as momentum cooled and investors began bracing for a much more data sensitive July.
This update breaks down the key themes that shaped last week's market movements and sets the stage for the critical week ahead.
The Week That Was (July 7, 2025 - July 11, 2025)
US equities paused their rally as traders absorbed new trade threats surprisingly strong payroll numbers and shifting rate cut probabilities. While there was no panic the rotation was clear as safe havens like gold rose bond yields climbed and small caps underperformed.
Market Snapshot Brief Pullback After Multi Week Gains
The S&P 500 eased 0.01%, Dow Jones Industrial Average declined 0.96% and Nasdaq 100 declined by 0.56% by Friday. Russell 2000 dropped 0.12% signaling risk appetite may be cooling. Despite the modest losses equity funds still saw net inflows although sharply lower than the week before.
Trade Tensions Resurface
Markets initially cheered President Trump's postponement of the Liberation Day Two tariffs to August 1 but relief quickly turned to concern as the administration introduced new tariff threats targeting Brazil Canada and several strategic sectors. The resulting geopolitical anxiety weighed on global risk sentiment.
Macro Jobs Beat Fed Cut Bets Fade
Thursday's (July 3) nonfarm payroll report showed 147,000 jobs beating the 106,000 forecast and lowering unemployment to 4.1 percent. This surprise prompted markets to cut probability of a July Fed rate cut to 3-4%, raising the likelihood of a later more cautious move.
Bonds and Commodities
Gold rose nearly 2 percent to nearly $3,360 per ounce on safe haven flows.
Oil Brent closed at $70.69 on Friday and WTI at $68.06, fueled by strong summer demand and geopolitical tensions. Fresh U.S. and EU sanctions on Russian energy and tightening inventories outweighed OPEC+ supply increases and trade policy uncertainty.
Treasury yields moved slightly higher as bond traders recalibrated Fed timelines.
The Week Ahead (July 14, 2025 - July 18, 2025)
This week could define the second half of 2025. With earnings season kicking into high gear, a crucial CPI report on deck and the Fed's messaging under the microscope, markets are entering high stakes stretch. Investors will be watching for confirmation that growth and inflation are moderating, but any surprises could sharply shift positioning across stocks bonds and commodities.
Earnings Season Heats Up
Things are getting serious this week as earnings season kicks into high gear. All eyes are on the financial heavyweights and tech titans stepping into the spotlight.
Tuesday (July 15)
The week starts strong with major financial names stepping up to report. JPMorgan, Citi, BlackRock, and BNY Mellon will set the tone. Investors will be looking for signs of loan growth, credit quality, and how these firms are navigating the interest rate environment.
Wednesday (July 16)
Midweek brings another heavyweight slate. Bank of America and Goldman Sachs headline the financials, while Johnson & Johnson offers a glimpse into healthcare resilience. ASML will be closely watched for semiconductor supply chain insights, and United Airlines will help gauge travel demand as summer peaks.
Thursday (July 17)
Thursday may be the most closely followed day of the week. Netflix’s results will shape sentiment on consumer discretionary tech, while PepsiCo will give an update on global consumer staples. GE Aerospace and Taiwan Semiconductor will speak to industrial and chip sector momentum, and Novartis rounds out the day with a view into pharmaceutical trends.
Friday (July 18)
The week wraps up with several key earnings reports and fresh economic data. Procter & Gamble and Schlumberger headline the morning releases, offering insights into household staples and energy services. American Express will provide a window into consumer credit health.
Outlook
Consensus expects S&P 500 earnings to rise about 4.8% this quarter, marking the softest pace in nearly two years. That means markets may not be satisfied with just avoiding disaster. To sustain the rally, investors are looking for clear beats, strong guidance, and sector leaders that can justify high valuations heading into the second half.
Economic Data
Consumer Price Index Report (June 2025)
The Consumer Price Index (CPI) report for June will be released on July 15 at 8:30 a.m. Eastern Time. Core inflation is expected to increase by 0.3 percent month-over-month, though headline inflation could surprise to the upside due to ongoing tariff related pressures. Markets will be watching closely for any reacceleration in goods or services inflation, which could shift expectations around the timing of Federal Reserve policy moves.
Advance Monthly Retail Trade Report (June 2025)
Scheduled for release on July 17, this report tracks monthly sales across U.S. retail and food service sectors, serving as a high frequency gauge of consumer spending the engine of nearly 70 percent of U.S. GDP. A strong reading would indicate resilient household demand, reinforcing a growth driven outlook. Conversely, a disappointing print could be an early signal of softening consumption, potentially driven by elevated credit costs, waning wage growth, or inflation fatigue.
Building Permits Survey (June 2025)
Housing data for June, including the Building Permits Survey, will be released on July 18. This metric reflects the number of new residential construction projects approved and offers a forward-looking read on the housing market. Rising permit activity points to builder optimism and anticipated demand, while a downturn may reflect headwinds from affordability concerns, elevated mortgage rates, or fading buyer interest.
University of Michigan Consumer Sentiment (Preliminary July Reading)
Also releasing on July 18, the preliminary July reading of the University of Michigan Consumer Sentiment Index captures household views on current economic conditions and future expectations, including inflation, income prospects, and employment. Elevated sentiment typically supports continued consumer spending, while a decline may indicate growing concern around economic stability, potentially foreshadowing a broader pullback in demand.
Together, these reports will show if the U.S. economy is still growing or starting to slow. Strong inflation, spending, housing, and sentiment point to resilience but may delay Fed cuts. Weakness across them would signal cooling momentum and raise chances of rate relief.
Fed and Treasury
Markets are closely watching Fed speakers this week for clues on future rate cuts after July odds collapsed. Meanwhile, Treasury Secretary Bessent signaled plans to curb long-term bond issuance, aiming to anchor 10-year yields around 3.75–4%, potentially reshaping duration risk and bond market dynamics heading into Q3.
Trade Watch
The August 1 tariff deadline remains a wild card. Any escalation could shock foreign exchange markets, credit spreads and equities globally. EU and Mexico trade talks remain unresolved and bear watching.
Final Thought
After weeks of optimism-fueled gains, markets appear to be catching their breath. With second-quarter earnings, inflation data, and Fed communication converging this week, the potential for repricing is substantial. Investors would be wise to remain tactically nimble and closely guided by evolving macro signals.
