U.S. equities closed out the week with solid gains on Friday, led by the technology sector’s impressive performance.
The Nasdaq Composite surged 0.98% to a new record high of 21,450.02 after reaching an intraday peak earlier in the session. The S&P 500 rose 0.78% to 6,389.45, just below its all-time closing high, while the Dow Jones Industrial Average added 207 points, or 0.47%, ending at 44,175.61.
All three major indexes posted weekly gains: the Dow advanced about 1.4%, the S&P 500 climbed 2.4%, and the Nasdaq outpaced both with a 3.9% increase.
Apple (NASDAQ:AAPL) was a major catalyst behind the tech surge, propelling both the Nasdaq and the S&P 500 technology sector higher. The company’s shares jumped 13% on the week, marking its strongest weekly rise since July 2020, following its announcement to invest approximately $600 billion in the U.S. over the next four years—an effort aimed at deepening ties with the Trump administration.
Attention now shifts to Tuesday’s consumer price index (CPI) report for July, which is forecasted to show a 2.8% year-over-year increase, based on a Reuters survey.
An inflation reading above expectations could dampen enthusiasm for anticipated interest rate cuts, which have gained momentum following weaker jobs data. Futures markets currently price in over a 90% likelihood of a Federal Reserve rate cut in September, with two or more cuts expected this year, according to LSEG data.
Seasonal trends also warrant caution, as August and September have historically been the weakest months for the S&P 500 over the past 35 years, with average losses of 0.6% and 0.8%, respectively.
Investors will monitor whether tariffs imposed by President Trump are contributing to consumer price increases, as June data suggested some inflationary effects on certain goods.
Morgan Stanley strategist Michael Wilson commented, “While July’s soft payroll report significantly boosted the bond market’s expectations for a September cut, a softer-than-expected CPI will likely be necessary to keep those odds high.”
Wilson added that a CPI reading below consensus could trigger a more sustained rotation into small-cap and lower-quality stocks, which many investors have been anticipating. Conversely, a hotter CPI print, particularly with tariffs pushing core goods prices higher, would probably prompt investors to favor quality and defensive sectors initially.
Key economic reports this week also include Wednesday’s producer price index (PPI), retail sales data, and Friday’s University of Michigan consumer sentiment index.
Q2 Earnings Season Nears Completion
As second-quarter earnings announcements wind down, results have remained largely positive, with strong beat rates and upward revisions becoming more apparent.
RBC Capital Markets highlighted that although many companies exceeding earnings estimates have not seen immediate share price appreciation, three sectors within the Russell 1000—Energy, Health Care, and Utilities—have bucked that trend with notable post-earnings gains.
Most S&P 500 sectors have seen earnings and revenue estimates revised upward recently, with Technology leading, followed by Communication Services and Financials. Technology also stands out as the only sector with recent upward revisions to consensus operating margin forecasts for Q2 and Q3, even as overall market margin expectations have softened.
This week, several notable companies report earnings, including AMC Entertainment (NYSE:AMC), Cisco Systems (NASDAQ:CSCO), JD.com (NASDAQ:JD), and Applied Materials (NASDAQ:AMAT).
What Analysts Are Saying
- JPMorgan: “Mixed labor market data has accelerated expectations for Fed rate cuts, with markets pricing a 90% chance of easing at September’s meeting, ending a nine-month pause. The main question is how these cuts will influence market indices and sector leadership, particularly after cyclical sectors have rebounded strongly in the U.S. and Europe.”
- Morgan Stanley: “We remain optimistic over a 6- to 12-month timeframe due to recovering earnings and cash flow. Our preferred sectors include Industrials and Financials, with a bias toward U.S. stocks over international markets. Consumer Discretionary remains underweight amid tariff-related pressures and reduced pricing power.”
- Yardeni Research: “Despite recent weaker economic data, investors have shrugged off the news, pushing the S&P 500 higher. Possible reasons include expectations for Fed easing in September (though skepticism remains), easing recession concerns, a rebound in Q2 productivity, and the ongoing benefits of the Digital Revolution supporting economic growth.”
AMC Entertainment Holdings stock price
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