Weekly Market Update – July 25, 2025

Quick Takes

• Strong corporate earnings and favorable trade deals set a positive tone for investors throughout the week and propelled stocks to more record highs. The S&P 500 and Nasdaq Composite closed at record highs again. 
• For the week, the S&P was up +1.5%, the tech-heavy Nasdaq closed +1.0% higher, and the small-cap Russell 2000 Index was up +0.9%. Overseas stocks also participated in the rally, with the MSCI EAFE Index up +1.9% and the MSCI Emerging Markets Index up +0.7%.
• Several trade agreements were announced during the week, including deals between the U.S. and Japan, Indonesia, and the Philippines. Reports that the U.S. and European Union (EU) were near a deal also proved correct after a U.S.–EU pact was announced Sunday morning.

Source: Bloomberg. Data as of July 25, 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.

Strong corporate earnings and trade deals boost stocks

Strong corporate earnings and favorable trade deals set a positive tone for investors throughout the week and propelled stocks to more record highs. The week opened with new closing highs for the S&P 500 Index on Monday, and the momentum continued the entire week. The index set new record closing highs on Tuesday, Wednesday, Thursday, and Friday. For the week, the S&P gained +1.5%. Friday was the 14th closing high for the S&P this year. The last time the S&P 500 had five consecutive days of new all-time highs was July 2024, when it made six straight record highs. For the last perfect calendar week (Monday – Friday) you have to go back to November 2021, when it ran for eight consecutive days. 

Though not a perfect week, other stocks indices also had impressive showings. The tech-heavy Nasdaq Composite Index also hit record highs on four of the five days last week, only missing on Tuesday. It was up +1.0% for the week. The small cap Russell 2000 Index is still waiting to join the record high club in 2025, but it was still positive for three days and up +0.9% for the week.

Stocks were buoyed by news of several new trade deals during the week, including announcements that the U.S. had reached agreements with Japan, Indonesia, and the Philippines. Reports that the U.S. and European Union (EU) were progressing toward a deal ahead of the August 1 tariff deadline that President Donald Trump had set also appeared to boost sentiment during the week, including for overseas stocks. The MSCI EAFE Index (developed market non-U.S. stocks) rose +1.9% for the week, and the MSCI Emerging Markets Index was up +0.7%. The EU reports turned out to be accurate as the U.S. and EU announced they reached a trade deal on Sunday morning.

Beyond the trade deals, there was also a slew of positive corporate earnings to boost stocks. According to FactSet, about a third of the S&P 500 companies have reported second-quarter results, and of those reporting, 80% have reported better-than-expected earnings surprises, which is above the 5- and 10- year average. For example, Magnificent Seven-member Alphabet (Google parent company) reported results on Wednesday and impressed investors by easily beating expectations and increasing its capex spending forecast. Of course, not everybody is beating consensus estimates. Fellow Mag 7 member Tesla reported weaker than expected results, sending its stock price lower by -4.1% for the week. 

With a light economic calendar and earnings and trade driving the headlines, there wasn’t much happening in the bond market. U.S. Treasury yields finished the week little changed, but reversed trends from the prior week. Intermediate- and long-term yields fell a bit while short-term yields were slightly higher. The benchmark 10-year Treasury yield ended the week down -3 basis points to 4.39% following the prior week’s +1 basis point rise. The total return for the Bloomberg U.S. Aggregate Bond Index was up slightly at +0.4% for the week (bond prices and yields move in opposite directions), as were non-U.S. bond returns (the Bloomberg Global Aggregate ex U.S. Bond Index).

Chart of the Week

The National Association of Realtors (NAR) reported that Existing Home Sales fell -2.7% in June to a seasonally adjusted annual rate of 3.93 million units, below expectations for a -0.7% drop to 4.00 million units and down from the +1.0% increase of 4.04 million units reported the prior month (revised up from 4.03 million units). Year-over-year existing sales were flat. The Median Existing Home Price rose to $435,500. Year-over-year, home prices were up +2.0% compared to a +1.6% annual rate the prior month. It is the fifth consecutive month of annual prices slowing. The Inventory of Homes for Sale decreased -0.6% from the prior month to 1.53 million units. Unsold Inventory sits at a 4.7-month supply, up from 4.6 the previous month. This still lags the 6.0-month supply typically associated with a more balanced market. Homes Listed for Sale remained on the market for 42 days on average, up from 41 days the previous month. First-Time Buyers were 30% of sales in the month, unchanged from the month before. Historically, these buyers make up closer to 40% of home sales, but affordability has been hit hard in the last two years due to fast-rising home prices and higher mortgage rates. All-Cash Sales ticked down to 29% of transactions from 27% the prior month. For the month, sales sank -8.0% in the Northeast, -4.0% in the Midwest, and -2.2% in the South, but were up +1.4% in the West.

Home Prices Hit Record High, Dragging Down Sales

U.S. Median Existing-Home Price

Source: National Association of Realtors, The Wall Street Journal.

The Week Ahead

This week has a packed schedule, the likes of which hasn’t been seen in a long while. The economic calendar is packed with the usual end of month reports like Personal Income and Spending, the PCE Price Index, Wholesale Inventories, and Trade Balance. But we also get some of the early first reports of the new month, like JOLTS Job Openings, Manufacturing PMIs, final July Consumer Sentiment, and on Friday, the Employment Situation Report for July. In addition to all that, we get the initial estimates for Q2 data on Gross Domestic Product (GDP) and the Employment Cost Index (ECI). 

Beyond the onslaught of economic data, this week will also be the heaviest week of Q2 earnings reports, with 38% of the S&P 500 companies reporting results. That includes four of the Mag 7 firms (Microsoft, Apple, Amazon, and Meta). Other prominent companies reporting earnings this week include Procter & Gamble, Visa, Mastercard, Chevron, and Exxon Mobil. 

Still want more action? The Federal Open Market Committee (FOMC) meets on Tuesday and Wednesday, culminating with the July rate decision and Fed Chair Jerome Powell’s press conference Wednesday afternoon. Friday also marks the August 1 tariff deadline, and although the European Union is no longer outstanding after announcing a trade deal on Sunday, July 27, numerous other countries are set to receive tariff letters.

Did You Know?

STRONG START TO EARNINGS SEASON – The second quarter Earnings season kicked off two weeks ago. Through July 25, 167 of the 498 S&P 500 companies reported results. So far, they are showing an annual earnings growth rate of 8.3% which is well above the estimate of +4.9% on June 30. (Source: Bloomberg, FactSet)

THE SUBSCRIPTION ECONOMY – CNET’s second annual “subscription survey” found that the average American spends $90/month on subscriptions, including $17/ month on subscriptions they don’t use. Millennials spend the most on subscriptions at $101/month, but that’s down from the $119/month they reported spending a year ago. (Source: CNET)

EVEN TAMER PRODUCER PRICES – Headline and Core PPI both came in weaker than expected for a record fifth straight month in June. Since 1998, there has never been another period when both reports concurrently came in weaker than expected for more than two months in a row. (Source: Bespoke)

This Week in History

BRETTON WOODS – On July 22, 1944, the Bretton Woods Agreement was signed in New Hampshire, pegging major foreign currencies to the U.S. dollar, fixing the gold price at $35 per ounce, and laying the groundwork for the International Monetary Fund and the World Bank. (Source: The Wall Street Journal)

Economic Review

• The Conference Board Leading Economic Index® (LEI) declined by -0.3% in June to 98.8, after no change in May (revised upward from –0.1% originally reported). That was in line with Wall Street expectations. Breadth of the index was decent with just three of the 10 indicators tracking negative for the month, while five were positive and two were unchanged. The decline was driven again by a sharp drop in Consumer Expectations of Business Conditions, which contributed the largest decline (-0.22) after contributing a -0.24 and -0.32 the prior two months. Like the prior two months, manufacturing New Orders (-0.19) was the next largest negative contributor to the monthly decline. Stock Prices led the gains with a +0.15% advance following the +0.33% surge in May. The Conference Board Coincident Economic Index® (CEI) rose by +0.3% to 115.1, a new all-time high, after being unchanged in both May and April. The Conference Board Lagging Economic Index® (LAG) was unchanged at 119.9, after increasing by 0.4% in May. “At this point, The Conference Board does not forecast a recession, although economic growth is expected to slow substantially in 2025 compared to 2024,” said Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at The Conference Board. 
• The Federal Reserve Bank of Chicago reported that U.S. economic activity improved in June but was still contracting. The Chicago Fed National Activity Index (CFNAI) rose to -0.10 from -0.16 the prior month (which was revised up from the originally reported -0.28). That beat Wall Street expectations for a reading of -0.15. Readings below zero indicate below-trend growth in the national economic activity. Two of the four broad categories of indicators used to construct the index improved from the prior month, but all four made negative contributions. The Production and Income category contributed -0.01 points, a +0.05 increase from the prior month. The Employment, Unemployment, and Hours category was down -0.04 to a -0.05 contribution. The Personal Consumption and Housing category was up +0.09 to -0.01. The Sales, Orders, and Inventories category contribution was -0.04, down -0.05 from the prior month. Overall breadth of the index improved some with 37 of the 85 individual indicators making positive contributions, while 48 indicators detracted from the index, but 53 components improved, while 32 indicators declined. The CFNAI three-month moving average decreased to -0.22 from -0.14 the prior month. During the last 20 years, there has been a 91% correlation between the three-month index level and the quarterly change in real GDP.
• The Commerce Department reported Durable Goods Orders for long-lasting items such as televisions, appliances and transportation equipment fell -9.3% in June, primarily because of aircraft orders. Wall Street was expecting a -10.7% drop while the prior month was revised up a tick to +16.5% from the originally reported +16.4%. Durable Goods Orders Excluding Transportation were up a modest +0.2%, above expectations for a +0.1% reading but down from the prior month’s +0.6% level (revised up from the originally reported +0.5%). On the negative side, the important Core Capital Goods Orders (capital goods excluding volatile sectors like transportation and defense), a proxy for business spending, sank -0.7%, well below expectations for +0.1% and down from +2.0% the prior month (revised up from +1.7%). Core Capital Goods Shipments, which are factored into GDP, rose +0.4%, beating expectations for a +0.2% gain and near the +0.5% reading the month before (revised up from +0.4%). The bottom line from the report is that the manufacturing side of the economy seems to be holding up despite heightened uncertainty about trade policies and high borrowing costs.
• The Richmond Fed Manufacturing Survey fell to -20 in July from -8 the prior month (revised lower from the -7 initial reading). That was far below expectations for an improvement to -2. The disappointing result came with all three component indexes dropping and remaining in contraction territory. The New Orders and Shipments components both fell -13 points to -25 and -18, respectively. The Employment index sank -10 points to -16. The Richmond Fed Service Sector Survey improved to -8 from -14 the prior month.
• The Kansas City Fed Manufacturing Survey improved to +1 in July from the unrevised -2 reading the prior month and beat expectations for a flat reading. Current business conditions were mixed, with the increase driven by nondurable manufacturing, while durable manufacturing activity continued to fall. The Production index fell while Shipments and New Orders rose. The Employment index continued to decrease with the Number of Employees and the Average Employee Workweek both contracting. The Prices Paid and the Prices Received indexes both expanded again, but at a slower pace than the prior month. The Kansas City Fed Service Sector Outlook Survey fell to -5 from +3 the prior month (unrevised). 
• The Commerce Department reported New Home Sales increased +0.6% in June to a rate of 627,000 units after the prior month’s -11.6% drop, or a 623,000 units annual rate (unrevised). That was far below expectations for a +4.3% increase to a 650,000-unit annual rate. New Home Sales data tend to be volatile month-on-month and are often revised. New-home sales remain far below the recent peak of over 1 million units in August 2020 but are running above the pre-pandemic average of 600,000. Year-over-year, sales of new homes were down -6.6% following a -6.3% annual rate the prior month. By region, sales in the South were up +5.1% for the month and -4.4% for the trailing year. In the Northeast, sales were down -27.6% for the month and -34.4% for the year. The West was down -8.4% for the month and -14.4% for the year. The Midwest saw sales rise +6.3% for the month and +9.0% for the year. The Median New Home Price decreased -2.9% to $401,800 from the prior year. The months of supply at the current rate of sales was 9.8, up from 9.7 the prior month. The key takeaway from the report is that the pace of sales remained near the lowest level of the year.
• Weekly MBA Mortgage Applications rose +0.8% for the week ending July 18, following a -10.0% drop the prior week. The Purchase Index was up +3.4% after falling -11.8% the prior week. The Refinance Index fell -2.6% after a -7.4% decline the prior week. The average 30-Year Mortgage Rate rose to 6.84% from 6.82% the prior week.
• Weekly Initial Jobless Claims were down -4,000 to 217,000 for the week ending July 18, better than expectations for 226,0000. The prior week was unrevised. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose 4,000 to 1,955,000 for the week ending July 11, worse than expectations for 1,954,000. The prior week’s reading was revised lower from 1,956,000.

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.