U.S. stock markets closed the week on a strong note Friday, buoyed by robust gains in technology shares.
The Nasdaq Composite climbed 0.98% to reach a fresh record high of 21,450.02, having hit an intraday peak earlier. Meanwhile, the S&P 500 added 0.78% to close at 6,389.45—just shy of its all-time closing high—and the Dow Jones Industrial Average rose 0.47%, or 207 points, finishing at 44,175.61.
All three major indexes posted weekly gains: the Dow rose approximately 1.4%, the S&P 500 advanced 2.4%, and the Nasdaq led with a 3.9% jump.
Apple (NASDAQ:AAPL) was a standout contributor to the tech rally, helping to lift both the Nasdaq and the technology sector within the S&P 500. Shares surged 13% over the week, marking the biggest weekly gain since July 2020, following the company’s announcement of a $600 billion investment in the U.S. over four years aimed at strengthening ties with the Trump administration.
Looking ahead, the market now turns its attention to July’s consumer price index (CPI) report due Tuesday, which is expected to show a 2.8% year-over-year increase, according to Reuters polling.
A higher-than-expected inflation reading could temper expectations for interest rate cuts, which have been priced in heavily after softer jobs data. Futures markets currently reflect over a 90% chance of a rate cut at the Federal Reserve’s September meeting, with at least two cuts anticipated this year, based on LSEG data.
Seasonal trends add another layer of caution, as August and September have historically been the weakest months for the S&P 500 over the past 35 years, with average declines of 0.6% and 0.8%, respectively.
Investors will also watch for any signs that President Trump’s tariffs are impacting consumer prices, as June data hinted at inflationary pressures in certain goods.
“While the weak July payroll report materially raised the probability of a September cut in the bond market’s eyes, we may need to see a softer CPI print this week to maintain such a high probability of a cut for September,” said Morgan Stanley strategist Michael Wilson.
Wilson added that a below-consensus CPI could spark a durable shift toward small-cap and lower-quality stocks that many investors have been anticipating. Conversely, a hotter CPI reading with tariff pressures appearing in core goods might lead to initial market leadership by more defensive, higher-quality sectors.
Other important economic data due this week includes Wednesday’s producer price index (PPI), followed by retail sales and the University of Michigan consumer sentiment index on Friday.
Q2 Earnings Wrap-Up
As the second-quarter earnings season winds down, results have generally been strong with a solid rate of beats and upward forecast revisions. Clearer sector trends are now emerging.
RBC Capital Markets noted that while many companies surpassing earnings expectations have not seen immediate stock price gains, three Russell 1000 sectors—Energy, Health Care, and Utilities—have bucked this trend with stronger price reactions following positive results.
Most S&P 500 sectors have seen upward revisions to earnings per share and revenue estimates, with Technology leading on both fronts, followed by Communication Services and Financials. Technology is also the only sector showing recent upward revisions to consensus operating margin forecasts for both Q2 and Q3, according to RBC, while overall market margin expectations have softened.
This week’s earnings calendar includes notable reports from AMC Entertainment (NYSE:AMC), Cisco Systems (NASDAQ:CSCO), JD.com (NASDAQ:JD), and Applied Materials (NASDAQ:AMAT), among others.
Analyst Views on U.S. Stocks
- JPMorgan: “Given the more mixed labor market data, expectations for Fed cuts have been brought forward. Markets now price a 90% chance of a rate cut in September, signaling a return to easing after a nine-month pause. The key question is how these cuts will affect the indices and sector leadership, especially after the significant rebound in cyclical sectors in both the U.S. and Europe.”
- Morgan Stanley: “We remain bullish over a 6-12 month horizon supported by improving earnings and cash flow. Our favored sectors include Industrials and Financials, and we prefer U.S. equities over international ones. Consumer discretionary remains underweight due to tariff concerns and weaker pricing power.”
- Yardeni Research: “Despite weaker economic data recently, the S&P 500 has kept rising. Possible reasons include investor confidence in a Fed easing in September (though we’re skeptical), receding recession fears, a rebound in productivity in Q2, and the ongoing economic boost from the Digital Revolution.”
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