Weekly Market Update – July 18, 2025

Quick Takes

• Solid earnings reports, encouraging economic data, and robust retail sales fueled further all-time highs for the S&P 500 and Nasdaq Composite. For the week, the S&P was up +0.6%, the Nasdaq closed +1.5% higher, and the small-cap Russell 2000 Index was up +0.2%.  
• U.S. Treasury yields finished the week little changed, with intermediate- and long-term yields up slightly, while short-term yields were slightly lower. The total return for the Bloomberg U.S. Aggregate Bond Index was essentially flat, ticking up +0.04% for the week.
• Consumer inflation (headline and core CPI) showed some signs of slight acceleration for the first time in months, but the data was relatively benign overall and below Wall Street forecasts. And wholesale inflation was flat and also below Wall Street expectations.

Source: Bloomberg. Data as of July 18, 2025.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Stocks up modestly on solid economic and earning reports

Solid earnings reports, encouraging economic data, and robust retail sales fueled further all-time highs for U.S. equities during the week. Although consumer inflation (headline and core CPI) showed some signs of slight acceleration for the first time in months, the data were relatively benign overall and below Wall Street forecasts. Additionally, wholesale inflation (headline and core PPI) was flat and also below Wall Street expectations. Both reports indicate that retail and producer prices aren’t seeing any material impact from tariffs yet. And inflation expectations continue to recede as well, with data from the University of Michigan showing both short-term and long-term inflation expectations falling more than expected. That preliminary report also showed Consumer Sentiment is slowly improving. Meanwhile, U.S. retail sales rose more than expected in June. Employment data was encouraging as well, with weekly jobless claims falling to their lowest level since April.

The Federal Reserve released their most recent “Beige Book” report on Wednesday. The report is a collection of business anecdotes collected from the 12 Federal Reserve districts and is produced eight times a year to help guide the Fed on U.S. interest rate policy in response to changing economic conditions. Overall, it showed that economic activity increased slightly from late May through early July, but was mixed by region. Five districts noted modest gains, five others were essentially unchanged, and the final two (New York and Philadelphia) reported modest declines. The Fed is widely expected to leave interest rates unchanged at its next meeting at the end of this month.

With the U.S. economy still chugging along despite continued tariff uncertainty, the benchmark S&P 500 Index and the tech-heavy Nasdaq Composite Index notched more record highs during the week. In the end, the S&P 500 was up +0.6% for the week, the Nasdaq closed +1.5% higher, and the small-cap Russell 2000 Index was up +0.2%.  closing out a five-day winning streak and setting its 11th record close of 2025. Overseas stocks were mixed with the MSCI EAFE Index (developed market non-U.S. stocks) slipping -0.3% while the MSCI Emerging Markets Index was up +1.7%. 

U.S. Treasury yields finished the week little changed, with intermediate- and long-term yields up slightly, while short-term yields were slightly lower. The benchmark 10-year Treasury yield ended the week up +1 basis point to 4.42% following the prior week’s +6 basis point rise. The total return for the Bloomberg U.S. Aggregate Bond Index was essentially flat, ticking up +0.04% for the week (bond prices and yields move in opposite directions). Non-U.S. bond returns, as measured by the Bloomberg Global Aggregate ex U.S. Bond Index, were down -0.4% following the prior week’s -1.3% loss.

Chart of the Week

The rate of inflation for consumer goods and services increased in June, with only scattered indications of tariff effects. The headline Consumer Price Index (CPI) was up +0.3% for the month, matching Wall Street expectations. That was up from an unrevised +0.1% increase the prior month. Year-over-year (YoY), CPI was +2.7%, a tick above expectations for +2.6%, and up from +2.4% the prior month (unrevised). Core CPI, which excludes the more volatile food and energy prices, also increased, to +0.2% for the month, up from an unrevised +0.1% the prior month, but below expectations for a +0.3% rise. YoY Core CPI was +2.9%, up from +2.8% the prior month, and in line with expectations. The Federal Reserve and Wall Street generally considers the Core CPI as a better predictor of future inflation. Energy prices increased +0.9% for the month but was down -0.8% for the year. The Apparel index increased +0.4% month-over-month after falling -0.4% the prior month, one of the few indications of tariff-related increases. Household Furnishings, another import-heavy category, rose +1.0% for the month, up from +0.3% in May. Shelter, which is about one-third of the CPI weighting, moderated to a +0.2% monthly rise, down +0.3% the prior month, and on an annual basis it ticked down to +3.8% from a +3.9% rate last month — the smallest gain since 2021. The Food index increased +0.3% month-over-month, unchanged from the prior month, but the annual rate ticked up to +3.0% from +2.9% the previous month. The bottom line is that while both headline and core CPI ticked up slightly on a monthly and annual basis, they were largely in line with expectations and didn’t show any broad or persistent tariff impacts.

US Core CPI Rises Less Than Expected Again Despite Tariffs

CPI excluding Food and Energy rose less than expected for a fifth month

Source: Bureau of Labor Statistics, Bloomberg

The Week Ahead

After picking up the last couple of weeks, the economic calendar slows down again this week. On Monday, the Conference Board releases their U.S. Leading Economic Indicators (LEI), and on Tuesday, the only report is the Richmond Fed district’s manufacturing index. Wednesday brings the usual weekly MBA Mortgage Applications along with Existing Home Sales from the National Association of Realtors. Then, New Home Sales from the Census Bureau are reported Thursday along with S&P Global’s flash U.S. Purchasing Managers Indices (PMIs), the Kansas City Fed manufacturing index, and weekly jobless claims. Durable and Capital Goods Orders wrap up the week on Friday.

Beyond economic reports, eyes will be on Federal Reserve Chairman Jerome Powell on Tuesday, as he makes opening remarks at a conference for large banks in Washington, D.C. Earnings season gets into full swing this week with roughly 20% of S&P 500 companies reporting results, including two of the “Mag 7.” Verizon Communications kicks off the week’s earnings on Monday. Coca-Cola, Danaher, and Texas Instruments release results Tuesday. Alphabet (Google), IBM, and Tesla headline Wednesday’s results, while Thursday sees releases from Blackstone, Honeywell International, and Intel.

Did You Know?

WORST TIME OF YEAR – Over the last 25 years, the three months following July 15 have been the weakest three-month period of the year, with the S&P 500 averaging a decline of -1.1% and positive returns less than half of the time. (Source: Bespoke)

33% IN 3 MONTHS – In the three months ending July 8, the Nasdaq Composite rallied +33.3%, its largest three-month gain since June 2020. In the seven prior periods when the index rallied 33.3%+ in three months, it saw a median gain of +16.8% over the next six months, with positive returns six out of seven times. (Source: Bespoke)

WEALTH TARGETS – The average American would need a net worth of $2.3 million to feel “wealthy,” and 35% think they are either on track or already wealthy. Gen Z Americans say it would take an average net worth of $1.7 million to feel wealthy, while Baby Boomers would require an average of $2.8 million. (Source: Charles Schwab)

This Week in History

BIG JET PLANE – On July 15, 1916, William Boeing, a Yale-educated aeronautical engineer, incorporated Pacific Aero Products in Seattle with $100,000 in capital. In 1917, he renamed his firm the Boeing Airplane Co. (Source: The Wall Street Journal)

Economic Review

• Like consumer inflation, wholesale inflation was also lower than expected in June. The headline Producer Price Index (PPI) was flat for the month, below expectations for +0.2% increase. That was down from the prior month’s +0.3% reading (revised higher from +0.1%). Year-over-year (YoY) PPI increased at a +2.3% rate, also below expectations, which was for +2.5%, and was down from the prior month’s +2.7% annual rate (revised higher from +2.6%).  Core PPI, which strips out volatile food and energy costs, was also flat for the month, under expectations for a +0.2% rise, and down from +0.4% the prior month (revised higher from +0.1%). YoY Core PPI was up +2.6%, under expectations for +2.7% and down from the prior month’s +3.2% annual rate (revised up from +3.0%). The index for final demand goods rose +0.3% after ticking up +0.1% in May, while the index for final demand services ticked down -0.1% after decreasing +0.4% in May. 
• Imports Prices were up +0.1% in June, below expectation for a +0.3% rise, and up from a -0.4% drop the prior month (revised lower from 0.0%). Import Prices ex Petroleum were flat for a second straight month after the prior month was revised down from +0.2%. Year-over-year, the cost of imports was down -0.2%, far below expectations for a +0.4% increase and unchanged from the prior month’s annual rate after it was revised down from +0.2%. Meanwhile, Export Prices were up +0.5%, above expectations for a flat reading and up from the prior month’s -0.6% drop (revised higher from 0.9%). Export prices accelerated to +2.8% over the past year, up from last month’s +1.9% annual rate (revised up from +1.7%).
• The preliminary reading of the University of Michigan Consumer Sentiment Index for June improved to 61.8 from the 60.7 final reading the prior month and was above the expected 61.5. In the same period a year ago, the index stood at 66.4. The Current Economic Conditions component rose to 66.8 from the prior month’s final reading of 64.8 and was well above expectations for a 63.9 reading. It was 62.7 a year ago. The Consumer Expectations component rose to 58.6, up from the final reading of 58.1 the month before, and was far above expectations for 56.9. It was 68.8 a year ago. One-year inflation expectations fell to +4.4% from +5.0%, where it was expected to stay. 5-10 year inflation expectations dropped to +3.6% from +4.0% the prior month, and was below expectations for +3.9%. The report continues to reflect a vastly improved outlook and optimism in addition to improved inflation expectations. 
• The Commerce Department reported that the advanced read on U.S. Retail Sales for June showed a rise of +0.6%. That easily beat Wall Street expectations for a +0.1% increase and was up sharply from an unrevised -0.9% drop the prior month. Retail sales represent about one-third of all consumer spending and offer clues on the strength of the economy. Retail Sales Ex-Autos rose +0.5% for the month following a -0.2% dip the prior month, topping expectations of +0.3%. Auto sales account for one-fifth of all retail sales. Sales Ex-Autos and Gas rose +0.6%, beating expectations for a +0.3% rise and up from a flat reading the prior month. Both were revised higher from the prior month. The Control Group, a figure used to calculate Gross Domestic Product (GDP), increased +0.5%, above expectations for a +0.3% increase and up from +0.2% the prior month (which was revised lower from +0.4%). Food and Beverage Store Sales, about 12% of Retail Sales, rebounded to a +0.5% gain following a -0.5% decline the prior month. The bottom line is that the report showed a broad-based rebound in retail consumption following declines in April and May.  
• U.S. Industrial Production increased +0.3% for the month of June, beating expectations for a +0.1% increase and up from the prior month’s flat reading (revised up from -0.2%). However, Manufacturing Production was up +0.1%, above expectations to be flat and down from +0.3% gain the prior month (after being revised higher from 0.0%). Manufacturing represents about three-quarters of total Industrial Production. Year-over-Year, Industrial Production was up +0.6%, following the prior month’s +1.5% increase. Capacity Utilization ticked up to 77.6% from 77.5%, after being revised higher from 77.4% where Wall Street expected to remain this month. Capacity Utilization reflects how much a manufacturing plant is being used to produce things. The key takeaway from the report is that the jump in industrial production in June was driven mostly by an increase in the output of utilities, which surged +2.8% following a -2.5% decline in May.
• The New York Fed’s Empire State Manufacturing Index, a gauge of manufacturing activity in the state, jumped +21.5 points to +5.5 in July. That is the first positive reading since February and smashed Wall Street forecasts for an improvement to -9.2. The improvement was driven by a +16.2-point increase in New Orders to +2.0 and a +18.7-point jump in Shipments to +18.7. Employment improved +4.5 points to +9.2 after a +9.8 point increase the prior month. The inflation components were mixed, with the Prices Paid indicator rising +9.2 to +56.0, although the Prices Received indicator slipped -0.9 points to +25.7.
• The Philly Fed Manufacturing Business Outlook Survey jumped nearly +20 points in July, rising to +15.9 from -4 the month before. That beat all Wall Street forecasts and the consensus expectation for an improvement to -1.0 and was the first positive reading since March, before the White House’s “Liberation Day” tariffs were announced. Readings above zero indicate economic expansion. The indexes for New Orders climbed to +18.4 from +2.3, and Shipments improved to +23.7 from +8.3. The Employment index rose to +10.3 from -9.8. Both inflation gauges increased, with Prices Paid and Prices Received up to +58.8 from +41.1 and +34.8 from +29.5, respectively.
• June Housing Starts increased +4.6% month-over-month to a seasonally adjusted annual rate of 1.321 million units, beating expectations for a +3.5% rise to 1.300 million units. That compares to a -9.7% drop, or 1.263 million units from the prior month (revised higher from 1.256 million units). However, single-unit starts were down -4.6% to 883 million units, compared to 926 million units the prior month. Multi-family units jumped +30.0% after being down -29.7% the prior month. Housing starts peaked at 1.8 million in April 2022. New construction single-unit starts were down -1.4% in the Midwest, – 6.3% in the West, -2.9% in the Northeast, and -5.1% in the South. Building Permits, one of the leading indicators tracked by the Conference Board and indicator of future construction activity, were up +0.2% to an annualized rate of 1.397 million units. That beat expectations for 1.387 million units and compared to the prior month’s -2.0% decline to 1.394 million units. The bad news was that single-unit permits fell -3.7%, but multi-family units were up +7.3%. Regionally, single-unit permits rose +1.8% in the flat in the Northeast, but fell -3.2% in the Midwest and South, and dropped -6.9% in the West. The bottom line is that single-unit starts and permits showed weakness, and that is where gains are needed to help alleviate the affordability challenges buyers face. 
• Homebuilder confidence was up modestly in July, as the National Association of Home Builders (NAHB) Housing Market Index (HMI) ticked up to 33 from 32 the prior month, matching expectations. A year ago, the index stood at 41. The index is based on a 0-to-100 scale, where any number over 50 indicates a good reading, and below 50 is considered negative sentiment. The Current Sales component was up +1 point to 36, while Sales Expectations in the Next Six Months rose +3 points to 43, and Traffic of Prospective Buyers dipped -1 point to 20 — the lowest reading since the end of 2022. For the month, 38% of builders reported cutting home prices, compared to 37% the prior month. That’s the highest level since 2022, when the survey started tracking this figure. The average price reduction was unchanged at 5%, where it’s been every month since last November. The use of sales incentives beyond price cuts was also unchanged at 62%.
• Weekly MBA Mortgage Applications sank -10.0% for the week ended July 11, following a +9.4% rise the prior week. The Purchase Index plunged -11.8% after rising +9.4% the prior week. The Refinance Index fell -7.4% after a +9.2% gain the prior week. The average 30-Year Mortgage Rate rose to 6.82% from 6.77% the prior week.
• Weekly Initial Jobless Claims were down -7,000 to 221,000 for the week ended July 12, better than expectations for 233,0000. The prior week was revised higher by +1,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose 2,000 to 1,956,000 for the week ended July 5 after the prior week’s reading was revised lower from 1,965,000.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.