Market Recap - Monday, July 14, 2025
Quiet Trading Amid Trade Tensions and Inflation Concerns
Stocks closed higher in today, with the Dow rising 0.20%, S&P 500 gaining 0.14%, Nasdaq up 0.27%, and the Russell 2000 advancing 0.67%. Despite a strong start to the week, today's session was fairly quiet, reflecting investor caution ahead of critical economic reports and the unofficial start of Q2 earnings season next week.
Sector Performance: Outperformers included Aerospace & Defense (BA-US), multis, exchanges, staples, retailers, and auto suppliers. Growth and momentum stocks performed well, alongside popular retail favorites. Big tech was mixed, with no standout performers from the "Mag 7." Meanwhile, energy, chemicals, and copper stocks took a hit, with copper down 0.9% after last week's surge.
Economic and Trade Developments: President Trump's tariff threats remained a prominent issue, as he hinted at 30% tariffs on imports from the EU and Mexico, effective August 1. While some reports suggest a potential EU deal could fall through, the market seems relatively unaffected, with the "TACO" (Tariff And Cut-off) narrative helping to maintain a more risk-on stance. Additionally, the 10-year Treasury yield remained steady, and there was notable strength in the US dollar.
Inflation and Fed Focus: The market is anticipating the June CPI report, set for release on Tuesday, with expectations for core CPI to rise 0.3% month-over-month. This, along with upcoming retail sales data, will offer critical insights into inflationary trends and the Fed’s potential response. Cleveland Fed’s Hammack mentioned that while rate cuts aren’t imminent, tariffs could complicate the inflation picture.
Bitcoin's Record High: Bitcoin futures surged 1.4% to a new record above $120K, continuing its upward momentum despite broader market caution.
Here's Our Take:
Muted Sentiment, Tariff Risk Lingers: Today’s quiet session reflects a "wait-and-see" approach as markets brace for crucial data points in the coming days. Trade risks, especially around new tariff announcements, continue to hang over the market, though they seem to be priced in to some degree. The longer-term impact of these tariffs, especially on inflation, will be a key topic for discussion.
Earnings Growth to Slow, but AI Momentum Remains: The bar is set low for Q2 earnings growth, which could mean a higher chance of positive surprises, particularly in the tech and AI sectors. However, continued tariff pressures and macroeconomic uncertainties could weigh on overall growth expectations.
Fed's Next Move: The upcoming CPI and retail sales reports will likely influence the Fed’s outlook, especially as inflationary pressures persist. While the market doesn’t expect immediate rate cuts, inflation and macro resilience will play a crucial role in shaping the Fed’s decisions later this year.
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