US Stock Market Momentum: Tech-Led Gains Keep S&P 500, Nasdaq Near Records Amid Tariff Headwinds
The S&P 500 (SPX) closed at 6,389.45, up 0.78%, while the Nasdaq Composite (IXIC) surged 0.98% to 21,450.02, marking consecutive record closes. The Dow Jones Industrial Average (DJI) gained 0.47% to 44,175.61 as Wall Street brushed aside the initial shock of President Trump’s sweeping 10%–50% tariff regime on imports from nearly 200 countries. Investor focus stayed pinned on AI-driven earnings strength and heightened expectations for a September Federal Reserve rate cut, with futures pricing in a 90% probability of easing and two cuts in 2025 still projected. Trump’s nomination of Stephen Miran to the Fed board is being interpreted as a dovish policy signal.
AI Trade Drives Tech Outperformance
Mega-cap technology stocks led the rally. Apple (AAPL) jumped 13.3% to $229.35, its strongest week in five years, supported by tariff exemptions tied to a $100B US investment pledge. Alphabet (GOOGL) climbed 6.5% to $201.42, breaking above a key resistance level, while Tesla (TSLA) advanced 8.9% to $329.65 after Elon Musk reiterated aggressive self-driving deployment goals. Microsoft (MSFT) and Meta (META) also strengthened on robust AI and cloud results. Palantir (PLTR) gained 2.61%, pushing past a $420B market cap as defense and enterprise AI contracts accelerated growth.
IPO Market Shows Renewed Strength
Investor demand for new listings has returned. Firefly Aerospace (FLY) opened at $45, spiked to $70, and ended its debut session at $60.35, giving it an $8.48B valuation. Figma (FIG) surged from $33 to $115.50 on day one, supported by enterprise adoption and $100K+ annual contracts with GOOGL and MSFT. Unlike the frothy SPAC wave of 2020–2021, these IPOs are being embraced for operational maturity and established customer bases.
Earnings Season Delivers Upside Surprises
With Q2 S&P 500 EPS growth at 11.8%, this marks the third consecutive quarter of double-digit gains. Standout performers included SoundHound AI (SOUN), up 26.4% to $13.55 on 217% YoY revenue growth; Sunrun (RUN), rallying over 30% after a surprise profit; and Block (SQ), climbing 10% following a 14% gross profit increase and raised guidance. Yet not all sectors fared well—Crocs (CROX) plunged 25% after projecting a $90M full-year tariff hit, and Trade Desk (TTD) collapsed 38.6% on advertiser pullbacks linked to global policy uncertainty.
Tariff Impact Hits Autos and Consumer Goods
Automakers are bearing heavy costs. Toyota (TM) reported a $3B quarterly profit hit from tariffs, contributing to an estimated $11.7B combined loss among global manufacturers including Volkswagen (VWAGY), GM (GM), and Ford (F). The 25% tariffs on Canada and Mexico auto imports have driven cost inflation for both foreign and US-based OEMs. In retail, Under Armour (UA) fell 17.2% after cutting full-year guidance, while Texas Roadhouse (TXRH) warned of 5% commodity inflation compressing margins despite positive same-store sales growth.
Commodity and Currency Market Ripples
Gold (GC=F) futures briefly hit a record $4,490/oz before settling at $3,491.30, up 1.09%, amid confusion over whether Swiss gold bars faced a 39% tariff. The White House promised an executive order to clarify. WTI crude fell 5.1% to $63.88/bbl on seasonal demand softening. In currencies, the dollar eased ahead of the July CPI, while EM currencies like the Mexican peso and Indian rupee saw volatility on trade policy risks.
Global Market Reaction
Japan’s Nikkei 225 rose 1.85% to a record 41,820.48, led by SoftBank Group (+13.1%) after strong earnings. Conversely, the Hang Seng Index (HSI) slipped 0.89%, and South Korea’s Kospi (KS11) declined 0.55% as export-reliant markets priced in US trade headwinds.
Key Data and Earnings to Watch
Markets await July CPI (expected +2.8% YoY, core +3.0%) as a critical input for Fed policy direction. Scheduled reports include Cisco (CSCO), CoreWeave (CRWV), Applied Materials (AMAT), Cava (CAVA), and Deere (DE). Potential escalation in China tariffs remains on the table if no truce extension is granted.
Market Positioning Verdict
With the S&P 500’s forward P/E at 22.1, well above historical norms, gains are increasingly concentrated in AI-heavy megacaps. While tech strength offsets cyclical weakness, sector allocation is key—maintain overweight positions in AAPL, GOOGL, NVDA, PLTR, and AI infrastructure plays, hold broad indices into CPI, and steer clear of tariff-vulnerable consumer cyclicals. Buy tech on controlled pullbacks, hold index exposure, avoid tariff-heavy retail and autos.
