A mix of resilient economic data, the pullback in long-end yields and a perceived easing of pressure on Fed Chair Powell lifted equities to fresh highs this week. The S&P 500 climbed 0.8% to notch a new record and the Nasdaq gained 0.7%. The Dow came within striking distance of its own all-time high. The trade/tariff theme dominated news flow with a number of encouraging signs that the US and Japan are nearing a trade agreement, while reports suggest a deal with the EU is also close. GE Vernova (GEV) surged 14.5% after raising guidance and reporting strong quarterly results. Several other names climbed as well including JPMorgan Chase (JPM), BlackRock (BLK), Albertsons (ACI) and JCB Hunt Transport Services (JBHT). However, Workday (WDAY) fell 4% after forecasting third-quarter subscription revenue that was below StreetAccount estimates.
The week ahead looks busy with a slew of economic reports and earnings. Expected earnings from big banks could set the tone for the rest of the season. However, second-quarter earnings growth has been weak so far with some companies lowering their outlook. In addition, back-to-school and holiday shopping season will be in full swing but tariffs might limit consumer demand if they lead to higher inflation later this year. The market’s breadth remains healthy though, with 73% of S&P 500 stocks trading above their 50-day moving average. Technology and communication services are leading the way, but gains are broad-based with even cyclical sectors like materials and industrials benefiting from the Tesla impact.