Financial Market Update – Week of 07/14

Last week was all about stirring developments, such as the One Big Beautiful Bill Act and notable tariff developments. Read on for highlights of what you should know and how the market outlook is shaping up.

Stock Index Performance

• The S&P 500 slid by 0.33%.
• The Nasdaq 100 fell by 0.38%.
• The Dow Jones Industrial Average declined by 1.02%.

Big Beautiful Budget

• The recently passed “One Big Beautiful Bill” is expected to add about $3.4 trillion to the national debt over the next decade.
• Top 20% earners, employees who work for tips, and regions with heavy manufacturing, defense contracting, and construction are among the groups set to benefit from the new legislation.
• Lower-income households, states with high Medicaid enrollment, and clean energy investment, in general, will benefit less under the new legislative package.

Tariffs & Trade Policy

• The Trump administration imposed a 35% tariff on imports from Canada, set for August 1, up from the previous 25%.
• This followed President Donald Trump’s announcement of a 30% tariff against the European Union and Mexico and plans to impose blanket tariffs of 15% or 20% on most other trading partners in the coming weeks.
• Altogether, President Trump sent tariff letters to over 20 trade partners, setting levels of 20% to 40%, except for a 50% levy on goods from Brazil.

Fed Watch

• A few Federal Reserve policymakers were more concerned about possible tariff-driven inflation than others, according to the minutes of the Federal Open Market Committee’s June meeting.
• However, most Fed members believe that some reduction in the target range for the key interest rate this year would likely be appropriate, noting that upward pressure on inflation from tariffs may be temporary or modest.
• Federal Reserve Chair Jerome Powell is willing to wait and see. Despite slowly rising pressures, the economy is resilient, which he perceives as allowing policymakers time to assess the ultimate impact of tariffs.

 The Week Ahead

• Earnings season kicks off, with second-quarter S&P 500 earnings projected to rise by 4.8% to 6% year-over-year, the slowest pace of growth since the fourth quarter of 2023.
• Despite ongoing concerns surrounding tariffs, geopolitical tensions, and fiscal policy, investor sentiment remains broadly constructive. That said, there is a rising awareness of elevated market valuations and the possibility of heightened volatility in the months ahead.

That’s it for this week’s update! If you’d like to delve into these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out.

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