Everything to Know about Macro and Markets
Stocks ended the week on a soft note, still managing to lock in back-to-back weekly gains. The S&P 500 (SPX) rose 0.94% for the week, and the Nasdaq-100 (NDX) inched up 0.43%. The Dow Jones Industrial Average (DJIA) was the standout, delivering a weekly gain of 1.74%.
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A Week of Contrasts
After a red Monday, all three major indexes reached all-time highs on Tuesday. This followed in-line CPI data, which bolstered bets that the Fed would deliver its first rate cut of 2025 in September – traders have priced in nearly a 100% chance of a 25-bps easing. Stocks extended gains on Wednesday: the S&P 500 and Nasdaq hit new ATHs again amid remarks from Treasury Secretary Scott Bessent urging a 50-bps cut based on downward revisions in payroll data.
Wall Street analysts began forecasting up to three cuts this year, citing a softer labor market, limited tariff pass-through to consumer prices, and the appointment of Trump’s temporary Fed board pick. But those forecasts were questioned Thursday when PPI, which tracks wholesale price trends, came in hotter than expected, denting sentiment and clouding the Fed outlook.
Other economic reports pulled markets in opposing directions: July’s industrial production was lackluster – although not recession-bellwether weak – while retail sales beat forecasts, underscoring resilient consumer demand despite high borrowing costs. Meanwhile, the UoM consumer sentiment unexpectedly slipped and inflation expectations rose, muddying the outlook for Fed cuts in September.
On Friday, the Dow’s gains were dominated by UnitedHealth’s surge following Berkshire Hathaway’s disclosure of a large stake in the embattled healthcare giant. Meanwhile, the S&P 500 and Nasdaq’s advances were tempered by tech weakness amid cautious corporate outlooks and persistent tariff concerns, particularly in semiconductors.
This week featured leadership rotation: healthcare and small-caps rose, while semiconductors and tech lagged under the weight of inflation and trade worries. With mixed inflation and consumer data re-injecting uncertainty into the Fed policy outlook, all eyes now turn to Jackson Hole. Jerome Powell’s speech on August 22 is the marquee event, expected to instantly influence markets. A dovish tone could broaden the rally, boosting small caps, rate-sensitive areas, and tech. A hawkish stance – highlighting inflation risks or caution – could trigger sharp corrections and volatility, especially in growth and rate-sensitive sectors.
Adaptability, Profitability, and Capex
Economic data remains mixed – but corporate signals are broadly bullish, despite overbought pockets and uneven strength. As Benjamin Graham famously said, “in the short run, the market is a voting machine but in the long run, it is a weighing machine.” Prices may swing on sentiment or episodic events, but over time, earnings growth is what ultimately matters.
On that front, Q2 2025 earnings have been compelling: over 90% of companies have reported, with average EPS growth near 11% year-over-year – versus expectations of 3-4% at the quarter’s start. This follows a similar pattern seen in Q1 season. In the second quarter, 84% beat expectations, surprising by an average of 9%.
U.S. companies’ adaptability – particularly in counteracting tariff shocks – is helping shield both the economy and equity markets. Notably, S&P 500 forward 12-month EPS estimates are now at record highs, driven largely by tech megacap profitability and reinvestment. AI capex alone has contributed more to GDP growth in H1 2025 than consumer spending. While over the long term, consumer demand has been the undisputed engine of growth – megacaps’ AI and cloud investment plans signal continued acceleration of their role in fueling the expansion.
The sterling Q2 earning-growth results have broadly dispelled investor fears over trade policies weighing on the economy and corporate performance. FactSet reports that “recession” mentions in earnings calls dropped nearly 70% from Q1 2025, hitting their lowest levels since 2005. Polymarket’s 2025 recession odds plunged from over 65% in May to 12%, signaling there’s no longer a belief that levies on imports mean a recession is imminent.
Tariffs still get airtime, even if much less than in Q1 – but the C-suite and market participants now see them as manageable. Factors such as lower energy prices and decelerating housing-related inflation are further diluting the tariff impact. Strategists now expect any tariff impact on inflation to be delayed and muted, with economic growth holding relatively firm.
Stocks That Made the News
▣ UnitedHealth (UNH) soared over 22% on the week after Berkshire Hathaway ($BRK.B) disclosed a new stake in the beaten-down healthcare provider. Warren Buffett’s conglomerate acquired 5.04 million UNH shares valued at $1.57 billion.
▣ Applied Materials (AMAT) plunged 13% despite delivering record performance last quarter, as the chip equipment provider offered weaker-than-expected guidance amid weak China demand, stalled export license approvals, and uneven orders. Despite the near-term challenges, the company remains optimistic about mid-single-digit growth for fiscal 2025, driven by investments in U.S. manufacturing and advancements in semiconductor technology.
▣ Intel (INTC) was on the winning side of the semi trade, popping by over 22% on the week following reports that the Trump administration was mulling the potential for the government to take a stake in the embattled company to aid domestic chip manufacturing expansion.
▣ Palantir Technologies (PLTR) declined after Andrew Left, head of short-selling firm Citron Research, said he was betting against the company in light of its lofty valuation, which he called “absurd.”
▣ Amazon (AMZN) rallied as analysts applauded analysts applauding its expansion into free same-day grocery delivery nationwide for Prime members. Evercore ISI said that this expansion deepens Amazon’s customer engagement by strengthening a high-frequency purchase category into the Prime ecosystem, increasing stickiness and customer lifetime value.
▣ Oracle (ORCL) also bucked the down trend on Friday, rallying on news of expanded partnership with Alphabet’s (GOOGL) Google Cloud. Under the collaboration, Oracle will integrate Google’s Gemini AI models into Oracle Cloud Infrastructure (OCI). This allows Oracle’s enterprise customers to access Google’s Gemini AI capabilities – including multimodal understanding, coding assistance, and workflow automation – via OCI services, enhancing productivity and workflow automation. The deal – similar to one that Oracle struck with Elon Musk’s xAI back in June – is expected to significantly broaden Oracle’s AI offerings, advancing its strategy of offering a menu of AI options rather than trying to push its own technology exclusively.
Upcoming Earnings and Dividend Announcements
The Q2 2025 earnings season is winding down, but several notable releases are still scheduled for this week. These include: Palo Alto Networks (PANW), Home Depot (HD), Medtronic (MDT), Keysight Technologies (KEYS), TJX Companies (TJX), Lowe’s (LOW), Analog Devices (ADI), Target (TGT), Walmart (WMT), Intuit (INTU), Workday (WDAY), and Ross Stores (ROST).
Ex-dividend dates are coming this week for United Parcel (UPS), Southern Co (SO), Novo Nordisk (NVO), Prudential Financial (PRU), Chevron (CVX), Archer Daniels Midland (ADM), Equinix (EQIX), and other dividend-paying firms.
For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.