Weekly Market Performance — July 18, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of July 14, 2025. Major U.S. averages traded mixed on the week, with technology names powering modest gains for the S&P 500 and growth-laden Nasdaq. Stocks broadly traded in a narrow range over the last five days as market participants digested corporate earnings alongside ongoing Federal Reserve (Fed) independence and trade concerns. Global equities ended the week split between advancers and decliners, while U.S. Treasuries stabilized. In commodities and currencies, the dollar secured consecutive weekly gains while oil turned lower Friday.

Index Performance

U.S. and International Equities

U.S. Equities: The S&P 500 and Nasdaq hovered near record highs Friday afternoon after scoring fresh records on Thursday. Both averages logged relatively modest weekly gains, while the Dow Jones Industrial Average traded slightly lower on the week. Technology shares powered gains for the broader market after the U.S. granted an export license to NVIDIA (NVDA), allowing the chipmaker to ship its H20 chips to China. Small caps also posted a small advance. U.S. equities traded in a narrow range for most of the week, outside of a brief drop on Wednesday following reports that Federal Reserve (Fed) Chair Jerome Powell would be removed by the White House, before President Donald Trump promptly denied the claim from the Oval Office. Thursday’s session supported weekly performance, remaining free of any surprises on the trade or Fed independence fronts, reinforcing the path of least resistance for equities remains higher. Solid economic data also aided sentiment as consumer inflation remained tepid, wholesale inflation cooled, and retail sales accelerated, tempering worries about consumer frugality and immediate tariff impacts.

Elsewhere, second quarter earnings season opened on a high note with America’s biggest banks broadly cruising past consensus earnings per share (EPS) forecasts. Among bank reports were Citi (C), Wells Fargo (WFC), Bank of America (BAC), and Goldman Sachs (GS), while Netflix (NFLX), American Express (AXP), 3M Co (MMM), and Johnson & Johnson (JNJ) also topped estimates. Market reactions varied but skewed negative, due in part to the strength of the latest rally and the level of optimism reflected in stock valuations.

International Equities: European markets traded mixed this week, leading the benchmark STOXX 600 to remain near the week-to-date flatline. After a brief losing streak for the index, positive earnings takeaways aided sentiment after some lackluster reports and outlooks delivered earlier in the week. Mixed macro data also remained in focus, highlighted by an unexpected jump in U.K. consumer inflation last month, which marked the hottest print since January 2024. Key takeaways on the trade front included the European Union (EU) reportedly shifting to a simplified approach to trade negotiations with a focus on lowering auto tariffs, indicating a notable concession from German automakers. However, retaliatory EU levies are being prepared if negotiations fall through. Meanwhile, the EU Commission approved Germany’s multi-year fiscal plan.

Asian equities broadly traded higher this week. Trade remained top of mind amid a cautious risk-on mood across the region on the back of softer Washington-Beijing tensions and hopes for additional trade deals in the region. Japan ended modestly higher as stock investors grappled with pre-election jitters, stabilizing yields, and a weaker yen. Greater China posted solid weekly gains with the help of a Friday rally as markets shrugged off weak corporate earnings concerns to advance on additional liquidity injections from the People’s Bank of China (PBOC). Taiwan outperformed on strong Taiwan Semiconductor (TSM) earnings results (which bolstered tech enthusiasm globally), while South Korea ended with modest gains despite the government unveiling its “Kospi 5,000” plan to boost valuations on Wednesday. Australia’s S&P/ASX 200 Index closed the week with a new record and India declined.

Fixed Income, Currency, and Commodity Markets

Fixed Income: The Bloomberg U.S. Aggregate Index edged higher this week. The monetary policy rate-sensitive two-year yield and the 10-year yield respectively ended roughly unchanged and two basis points higher. President Trump has made it clear that he wants the Fed to cut interest rates. But, as evidenced in Tuesday's Consumer Price Index (CPI) data, inflationary pressures are still above the Fed’s 2% target, so interest rate cuts may not have the desired effect of lowering long-term interest rates. Treasury yields are a function of growth and inflation expectations plus or minus a Treasury term premium (the additional compensation investors demand for owning longer maturity securities). After years of being negative, the Treasury term premium on a 10-year Treasury yield is solidly positive but still below the longer-term average of 1.5%. If the Fed were to cut rates, especially to the degree that Trump has stated, it’s likely the term premium would explode higher as the risks of inflationary pressures would likely increase.

Global bond markets have sold off recently due to fiscal concerns, as well as ongoing inflationary pressures, primarily in the U.K. and Japan. Bond markets are naturally global so the sell-off in the Japanese bond market is spilling over into the U.S. As global interest rates move higher, there is less incentive for foreign investors to buy Treasury securities, further increasing the Treasury term premium. And while it’s true that cutting interest rates would help reduce interest costs on some of the Treasury debt stock, savings would likely only range in the $125–150 billion range. But since nearly 80% of the Treasury stock is coupon paying securities, an increase in the Treasury term premium would serve to increase debt services costs on the remaining $22 trillion of outstanding Treasury debt. Moreover, an increase in the 10-year yield would further weigh on mortgage rates. Fed Chair Jerome Powell’s term ends in May, and while there will likely be continued calls for his resignation, the bond market will likely continue to push back against those calls with higher interest rates.

Commodities and Currencies: The broader commodities complex traded higher over the last five days, proxied by the Bloomberg Commodities Index. Crude oil prices turned lower on Friday despite clawing back to the weekly flatline after the European Union (EU) announced a fresh sanctions package against Russia, including a lower crude oil price cap. Crude was also supported by economic resilience in the U.S. and China and a rising risk premium following drone attacks in Iran. Gold steadied, extending its recent trend of rangebound trading influenced by Fed independence and rate cut uncertainty, as resilient economic inflation and retail sales data limited Fed cut urgency. The bullion has stalled over the last few months, continuing to hover near short-term moving averages, suggesting the yellow metal could remain rangebound for now. The dollar strengthened against its peers, logging back-to-back weekly gains. Last week’s yen weakness spilled over amid election-related angst as a shift in government majority would likely be bearish for the yen, and in turn supportive for the greenback. The pound and euro both declined against the dollar.

Economic Weekly Roundup

Annual Inflation Reaccelerated. The annual rate of consumer inflation accelerated to 2.7% in June from 2.4% the previous month, putting uncomfortable pressure on the Fed amid calls for rate cuts. Core rose to 2.9%. Headline inflation rose 0.3% month-over-month, the fastest rate in five months. Medical care services rose 0.6% from a month ago and continue to be a bane for consumers. Consumer demand pushed some discretionary prices up for things like household furnishings and recreational events. The household furnishings and operations index rose 1.0% in June, after rising 0.3% in May and the index for recreation rose 0.4% over the month. New and used vehicle prices declined in June as dealers increased incentives. Perhaps here is where we see the beginnings of a tapering in spending.

Inflation pressure will likely remain acute for the rest of the summer. Tariffs have not materially impacted inflation metrics yet, so we should expect some increased pressures in the coming months. But for the patient investor, inflation will likely stabilize later this year as consumer demand slows and firms have time to assess trade shocks. After a rise in the coming months, we expect December CPI will go back down to 2.7% and the Fed’s preferred metric, the PCE deflator, approaching 2.6%. Although the President has called for rate cuts, the Fed will likely stand pat until inflation pressures abate.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: Leading Index (Jun)

• Tuesday: Philadelphia Fed Non-Manufacturing Activity (Jul), Richmond Fed Manufacturing Index (Jul), Richmond Fed Business Conditions (Jul)

• Wednesday: MBA Mortgage Applications (Jul 18), Existing Home Sales (Jun)

• Thursday: Chicago Fed National Activity Index (Jun), Initial Jobless Claims (Jul 19), Continuing Claims (Jul 12), S&P Global U.S. Manufacturing, Services, and Composite PMIs (Jul preliminary), New Home Sales (Jun), Kansas City Fed Manufacturing Activity (Jul), Building Permits (Jun final)

• Friday: Durable Goods Orders (Jun preliminary), Capital Goods Orders and Shipments (Jun preliminary), Kansas City Fed Services Activity (Jul), Bloomberg U.S. Economic Survey (Jul)

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

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