July 27, 2025
Volume 12, Issue 30
Weekly Recap
Domestic stocks posted gains last week, pushing the S&P 500 and Nasdaq Composite to record highs for the second consecutive week. The Dow Jones Industrial Average rose 1.26 percent, while the S&P MidCap 400 and Russell 2000 both climbed over 0.9 percent. Value stocks outpaced their growth counterparts throughout most of the week, although the spread was modest by Friday’s close. Stocks were supported by headlines around several new trade deals during the week, including announcements that the U.S. had reached agreements with Japan, Indonesia, and the Philippines. Reports that the U.S. and European Union are progressing toward a deal ahead of August 1 – which President Trump has set as his latest deadline, this time to impose 30 percent tariffs on European goods – also appeared to boost sentiment.
Last week also brought a slew of corporate earnings reports, including two of the so-called Magnificent Seven stocks, which had mixed responses. Google parent company Alphabet (up 4.38 percent) reported results on Wednesday that largely beat consensus estimates, while the company’s commentary around artificial intelligence appeared to provide a tailwind for other stocks with AI exposure. Meanwhile, Tesla’s report appeared to fall short of consensus expectations, driving the electric vehicle maker’s stock lower by 4.12 percent for the week.
In a light week of economic data releases, the highlight of the calendar was S&P Global’s report of its U.S. flash Purchasing Managers’ Index data for July. According to the report, U.S. business activity growth accelerated to start the third quarter, with the composite PMI output index jumping 1.7 points to a seven-month high of 54.6 (readings above 50 signal expansion). The expansion was entirely driven by growth in the services sector, with the services PMI rising to 55.2 from 52.9 in June. Meanwhile, the manufacturing PMI dropped from 52.9 in June to 49.5 in July, the lowest reading since December.
According to Chris Williamson, chief business economist at S&P Global Market Intelligence, “The flash PMI data indicated that the U.S. economy grew at a sharply increased rate at the start of the third quarter…. Whether this growth can be sustained is by no means assured. Growth was worryingly uneven and overly reliant on the services economy as manufacturing business conditions deteriorated for the first time this year, the latter linked to a fading boost from tariff front-running.” On Wednesday, the National Association of Realtors reported that existing home sales declined 2.7 percent month-over-month to a seasonally adjusted annual rate of 3.93 million in June, while the median sales price of existing homes hit a record high of $435,300. The report noted that “high mortgage rates are causing home sales to remain stuck at cyclical lows,” while “multiple years of undersupply are driving the record high home price.” U.S. Treasury paper generated mixed returns last week as yields on the front end of the yield curve drifted a bit higher while yields on the back end drifted lower. Longer-term yields decreased on headlines from the Fed’s regulatory conference and emphasis on the importance of the Fed’s independence.
Market Monitor
A full listing of market performance data is available here.
DQYDJ.com (“Don’t Quit Your Day Job”) offers helpful investment calculators here, including one that shows total returns for individual stocks. Koyfin.com provides reams of data on individual stocks, including the ability to track total return — and just about anything else — over time.
In the News
Fed Chair Jerome Powell maintains that the Fed should not cut rates yet, despite pressure to do so from President Trump and members of his administration. Inflation is still above the central bank’s target of 2 percent, and it could climb upwards as the ripple effects of the Trump administration’s tariffs work their way through the economy. According to June’s inflation numbers, that might already be happening. The Consumer Price Index, which tracks the cost of goods and services, rose 0.3 percent in June and 2.7 percent annually, the highest inflation rate since February. Fed policymakers still expect to cut rates by 25 basis points twice this year, although they will be keeping an eye on tariff disruptions. That would still be far from the president’s 1 percent target.
The trade deals keep coming, yet the dollar continues to weaken, down over 10 percent this year after the biggest first-half loss since 1973.
Credit rating downgrades are becoming more frequent, with around $94 billion in high-grade U.S. debt downgraded in the second quarter. Corporate bond valuations are high, with U.S. investment-grade spreads hovering around 0.8 percentage point, well below the two-decade average of around 1.5 percentage points. Reddit is back to moving markets. This time, instead of pumping up GameStop’s price, users have zeroed in on Kohl’s. The retailer closed Tuesday up 38 percent in the internet’s latest get-rich-quick scheme. Will this boost the value of your Kohl’s cash? Possibly. But meme stock investors have already moved on to Krispy Kreme equity, so consider leveraging some options to pay for as many boxes of donuts as you can get your hands on.
The S&P 500 inclusion effect springboard is back in a big way.Three questions for clients.
Charts of the Week
I found the following articles to be of note. Some may be of interest only to advisors while others are aimed more broadly. You may hit paywalls below; many can be overcome here.
- The International Rebalance (Morgan Stanley)
- 5 Key Tax Changes Advisors Need to Know in 2025 (Sheryl Rowling)
- Under Pressure (Adam M. Grossman)
This is the best thing I’ve read recently. The sweetest. The funniest. The most beautiful Musical version here). The most insightful. Winning well; losing well. RIP, Chuck Mangione.
In 2019, cars that cost under $30,000 accounted for 38 percent of new car sales. This year, that price point accounts for just 13.9 percent of all sales, indicating that the lower-cost vehicle space is pinching consumers. One reason for the pinch is the fact that 92 percent of vehicles under $30,000 are built outside of the United States. With the Mitsubishi Mirage ending production and the end of incentives for the model, June 2025 also marked a grim stat: it’s no longer possible to get a new car for less than $20,000. With tariffs looming, this trend is likely to continue.
“Worry is a way to pretend that you have knowledge or control over what you don’t.”
~ Rebecca Solnit
Securities and advisory services are offered through Madison Avenue Securities, LLC, a member of FINRA and SIPC, a registered investment advisor. This report provides general information only and is based upon current public information we consider reliable. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment or any options, futures, or derivatives related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, other investment, or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Diversification does not guaranty against loss in declining markets.
