The S&P 500 Index ($SPX) (SPY) Thursday closed up +0.54%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.52%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.74%.  September E-mini S&P futures (ESU25) rose +0.59%, and September E-mini Nasdaq futures (NQU25) rose +0.77%.

Shares rallied on Thursday, with the S&P 500 and Nasdaq 100 indexes posting new document highs.  Indicators that the US economic system is holding up, regardless of tariff uncertainty, boosted shares.  Optimistic financial information Thursday included a decline in weekly jobless claims to a 3-month low, a stronger-than-expected retail gross sales report, and an increase within the Philadelphia Fed index to a 5-month excessive.

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Shares added to their beneficial properties Thursday afternoon on dovish feedback from San Francisco Fed President Mary Daly, who stated the newest set of fee projections from Fed officers, issued in June, provided a “reasonable outlook” in pointing to 2 25 bp fee cuts by yr’s finish.  She added that the Fed shouldn’t wait too lengthy earlier than shifting on charges, as a result of in the event that they wait till inflation is 2%, they’ve “likely injured the economy in some way that was completely unnecessary.”

On the damaging aspect, well being insurers retreated on Thursday, led by a -12% plunge in Elevance Well being after the corporate reduce its earnings outlook for the yr.  Additionally, hawkish feedback from Fed Governor Adriana Kugler have been bearish for shares when she stated the Fed ought to preserve rates of interest on maintain “for some time,” citing accelerating inflation as tariffs begin to enhance costs.

US weekly preliminary unemployment claims unexpectedly fell -7,000 to a 3-month low of 221,000, displaying a stronger labor market than expectations of a rise to 233,000.

US June retail gross sales rose +0.6% m/m, stronger than expectations of +0.1% m/m, and June retail gross sales ex-autos rose +0.5% m/m, stronger than expectations of +0.3% m/m.

The US June import value index ex-petroleum was unchanged m/m, weaker than expectations of +0.2% m/m.

The US July Philadelphia Fed enterprise outlook survey rose +19.9 to a 5-month excessive of 15.9, stronger than expectations of -1.0.

The US July NAHB housing market index rose +1 to 33, proper on expectations.

On the commerce entrance, President Trump stated late Wednesday that he intends to ship a tariff letter to greater than 150 international locations notifying them their tariff charges may very well be 10% or 15%, efficient August 1, and that the group was “not big countries who don’t do that much business with the US.”

Additionally, indicators that the US might ease a few of its export restrictions on semiconductor chips to China are bullish for chip makers.  Commerce Secretary Lutnick stated Nvidia might quickly resume gross sales of its much less superior H20 chips to China, and Superior Micro Gadgets acquired comparable assurances from the Commerce Division, an indication that the US could also be within the strategy of negotiating a grand commerce take care of China.  Treasury Secretary Bessent is anticipated to fulfill his Chinese language counterpart, Vice Premier He Lifeng, inside “the next couple of weeks” and signaled the US will seemingly lengthen an August 12 deadline for the easing of sky-high tariffs.

Nevertheless, shares have been undercut by damaging commerce information that emerged final week and through this previous weekend.  Over the weekend, President Trump introduced that the US will impose 30% tariffs on US imports from the European Union and Mexico, efficient August 1.  Mr. Trump stated final Thursday {that a} 35% tariff on some Canadian merchandise would take impact on August 1, up from the present 25%. Final week, Mr. Trump imposed a 50% tariff on copper imports, which can embrace semi-finished items, and said that drug corporations might face tariffs as excessive as 200% on imports if they do not relocate manufacturing to the US throughout the subsequent yr.

Federal funds futures costs are discounting the possibilities for a -25 bp fee reduce at 3% on the July 29-30 FOMC assembly and 58% on the following assembly on September 16-17.

The markets will give attention to any contemporary information relating to tariffs or commerce offers throughout the the rest of this week.  On Friday, June housing begins are anticipated to climb +3.6% m/m to 1.300 million, and June constructing permits are anticipated to slide -0.5% m/m to 1.387 million.  Additionally, the College of Michigan’s US July shopper sentiment index is anticipated to climb +0.8 to 61.5.

Earnings season started in earnest this week with a give attention to large financial institution earnings outcomes.  The consensus is for S&P 500 corporations to point out Q2 earnings progress of +2.8% y/y, the smallest enhance in two years, in accordance with Bloomberg Intelligence.  Additionally, solely six of the eleven S&P 500 sectors are projected to publish a rise in earnings, the fewest since Q1 of 2023, in accordance with Yardeni Analysis. 

Abroad inventory markets on Thursday settled greater.  The Euro Stoxx 50 closed up +1.49%.  China’s Shanghai Composite closed up +0.37%.  Japan’s Nikkei Inventory 225 closed up +0.60%.

Curiosity Charges

September 10-year T-notes (ZNU25) on Thursday closed down -3.5 ticks.  The ten-year T-note yield rose +0.8 bp to 4.463%.  T-notes on Thursday posted modest losses following stronger-than-expected US financial information, together with June retail gross sales, weekly preliminary unemployment claims, and the July Philadelphia Fed manufacturing survey, which signaled a hawkish tone for Fed coverage.  Additionally, Thursday’s rally within the S&P 500 to a brand new all-time excessive lowered safe-haven demand for T-notes.  As well as, hawkish feedback from Fed Governor Adriana Kugler weighed on T-notes when she stated the Fed ought to preserve rates of interest on maintain “for some time.” Lastly, rising inflation expectations undercut T-notes when the 10-year breakeven inflation fee rose to a 4.75-month excessive of two.450% on Thursday.

Losses in T-notes have been restricted Thursday on carryover assist from late Wednesday when President Trump stated he has “no plans” on firing Fed Chair Powell. T-notes additionally discovered assist on indicators of easing value pressures after Thursday’s information confirmed the June import value index ex-petroleum rose lower than anticipated.

European authorities bond yields on Thursday have been combined.  The ten-year German bund yield fell -1.3 bp to 2.675%.  The ten-year UK gilt yield rose to a 6-week excessive of 4.678% and completed up +1.7 bp to 4.655%.

Swaps are discounting the possibilities at 1% for a -25 bp fee reduce by the ECB on the July 24 coverage assembly.

US Inventory Movers

United Airways Holdings (UAL) closed up greater than +3% to guide airline shares greater after CEO Kirby stated the second half of the yr has turn out to be extra predictable and the corporate has potential “upside” to beat its earnings targets as prospects returned to reserving flights.  Additionally, Alaska Air Group (ALK) closed up greater than +3% and American Airways Group (AAL) closed up greater than +2%.  As well as, Delta Air Traces (DAL) closed up greater than +1%.

PepsiCo (PEP) closed up greater than +7% to guide gainers within the Nasdaq 100 after reporting Q2 internet income of $22.73 billion, above the consensus of $22.32 billion. 

Snap-on (SNA) closed up greater than +7% after reporting Q2 internet gross sales of $1.18 billion, stronger than the consensus of $1.16 billion. 

Steven Madden Ltd (SHOO) closed up greater than +6% after Citigroup upgraded the inventory to purchase from impartial with a value goal of $32. 

CSX Corp (CSX) closed up greater than +4% after Semafor reported that Union Pacific is exploring an acquisition of the corporate.

Vacationers Cos (TRV) closed up greater than +3% to guide gainers within the Dow Jones Industrials after reporting Q1 core EPS of $6.51, effectively above the consensus of $3.60.

Mondelez Worldwide (MDLZ) closed up greater than +3% after Jefferies upgraded the inventory to purchase from maintain with a value goal of $78. 

Medical health insurance suppliers are sliding as we speak, led by a -12% plunge in Elevance Well being (ELV) to guide losers within the S&P 500 after slicing its earnings outlook for the yr to “approximately” $30 per share, effectively under a earlier forecast of $34.15 to $34.85 per share.  Additionally, Molina Healthcare (MOH) closed down greater than -5% and Centene (CNC) closed down greater than -4%.  As well as, Cigna Group (CI) closed down greater than -2% and Humana (HUM) closed down greater than -1%.  Lastly, UnitedHealth Group (UNH) closed down greater than -1% to guide losers within the Dow Jones Industrials.

Sonic Automotive (SAH) closed down -10% after JPMorgan Chase downgraded the inventory to underweight from chubby with a value goal of $72.

Abbott Laboratories (ABT) closed down greater than -8% after reporting Q2 natural gross sales of +6.90%, under the consensus of +7.03% and forecasting full-year natural gross sales of +6% to +7%, weaker than the consensus of +7.37%.

Starwood Property Belief (STWD) closed down greater than -5% after promoting over 25.5 million shares of its widespread inventory in an underwritten public providing in a single day between $19.91 to $20.33 a share, under Wednesday’s closing value of $20.85.

Shake Shack (SHAK) closed down greater than -1% after Jeffries downgraded the inventory to underperform from maintain with a value goal of $120.

Zoetis (ZTS) closed down -1% after Leerink Companions downgraded the inventory to market carry out from outperform.

Earnings Reviews (7/18/2025)

3M Co (MMM), Ally Monetary Inc (ALLY), American Categorical Co (AXP), Charles Schwab Corp/The (SCHW), Comerica Inc (CMA), Euronet Worldwide Inc (EEFT), Huntington Bancshares Inc/OH (HBAN), MarketAxess Holdings Inc (MKTX), Areas Monetary Corp (RF), Schlumberger NV (SLB), Southern Copper Corp (SCCO), Truist Monetary Corp (TFC).

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