Markets ended last week higher with both the S&P 500 and Nasdaq near all-time highs. It was an event packed week as earnings season continued along with tariff announcements, inflation data, and continued drama between President Trump and Fed Chair Powell.
The week started off with news of a proposed 30% tariff on the EU and Mexico, starting August 1. The negative news was tempered by reports that the head of the EU’s Executive Commission and the President of Mexico both expressed a willingness to negotiate a better trade deal before the August 1 deadline.
The inflation data points brought a mixed message to the market. Total CPI was up 0.3% month-over-month in June and core CPI, which excludes food and energy, was up 0.2%. The latter was lower than expected and contributed to the stock market’s early strength, but a closer look at the report revealed pockets of inflation in several areas that stirred concerns about tariff-driven inflation. Apparel prices, for example, increased 0.4% after being down 0.4% in May, while household furnishings and supplies
prices increased 1.0% following a 0.3% increase in May.
The week’s earnings reports mainly came from the financial sector. For the most part, results surpassed consensus estimates but the response was mixed. JP Morgan, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley all surpassed consensus estimates. The lone outlier who came short of the estimates was Wells Fargo.
On Wednesday, the markets began to move lower in the morning trade when news reports suggested President Trump is likely to fire Fed Chair Jerome Powell. The president, himself, said in an Oval Office interview with the press pool shortly after the headlines circulated that he wouldn’t rule out anything, but that it is highly unlikely that he will fire Fed Chair Powell, unless there is fraud. Fortunately, this was reassuring enough for the market to recover.