The Week That Was, The Week Ahead: Macro & Markets, July 20, 2025

Everything to Know about Macro and Markets

The S&P 500 (SPX) and the Nasdaq-100 (NDX) inched down from Thursday’s record highs, though still closing the week up 0.59% and 1.25%, respectively. The Dow Jones Industrial Average (DJIA) finished the week nearly flat at –0.07%.  

No Place For Cuts

Stocks declined on Friday, consolidating after the S&P 500 and the Nasdaq reached all-time highs on Thursday. While the healthcare sector – and particularly UnitedHealth (UNH) – continued to weigh down the DJIA index throughout the week, the S&P 500 and the tech indexes surged from  Wednesday’s dip thanks to positive economic data, strong earnings, and relief following President Trump’s admission that he is not planning on firing Federal Reserve’s chair Jerome Powell, although he isn’t happy about his strict monetary stance.

While other indexes hovered around the zero line on Friday, pulled in different directions by apparent strength of the economy, the resulting reduction in rate-cut expectations, as well as high earnings variability – the Dow was decisively in the red on reports that Trump is pushing for larger tariffs on the European Union. According to media reports, Trump has demanded a minimum tariff of between 15% and 20% in any deal with the EU, as the bloc strives to reach a trade agreement before August 1 deadline for implementing a 30% levy.

Traders are now assigning nearly zero chances for a rate cut at the Federal Reserve’s next meeting on July 30, as the economy continues to demonstrate enviable health and corporate sector appears strong, while inflation is grinding down despite the tariffs – but at a much slower pace than policymakers would like to see. Fed Governor Christopher Waller said that the Fed should cut rates now – saying that the economic momentum is slowing and risks to employment are elevated. However, Waller and Michelle Bowman are the only rate committee members who have opined in favor of a July cut.  

The Economy Is Fine

Last week, another batch of data confirmed that the U.S. economy continues to be healthy, even if moderate weakness is emerging in some pockets. Retail sales rebounded in June, indicating that tariffs are not significantly impacting consumer spending, at least not yet. The print confirmed what was earlier reflected in the earnings commentary of the largest U.S. banks, with JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) reporting increases in their consumer banking revenues, stemming from higher credit-card debt – while delinquencies remain stable year-over-year.

Meanwhile, initial jobless claims fell last week to their lowest level in three months, confirming the “Goldilocks” state of the economy. The Philly Fed business outlook jumped to one of the strongest readings in the past three years, confirming robust business activity. That was reaffirmed by a stronger-than-expected gain in industrial production in June.

Earlier in the week, CPI and PPI reports showed that core price increases remain subdued. Import prices fell in June, helping ease tariff-related worries. Importantly, Friday’s UoM consumer survey showed plunging one-year inflation expectations, along with the continued decline in the long-term expectations. Moreover, July’s preliminary consumer sentiment index came in better-than-expected for the fourth month in a row, continuing its strong rebound from April’s lows.     

Stocks That Made the News

▣ Netflix (NFLX) kicked off Q2 Big Tech earnings season with a “beat and raise” report. However, a strong EPS beat and increased full-year revenue guidance – coupled with a reiterated plan to double ad revenue in 2025 – weren’t enough to excite the markets, with heavy profit taking ensuing following the post 40%+ rally year-to-date. Investors were disappointed as the streaming giant’s Q2 revenue only narrowly surpassed estimates, while the key reason for forecast increase was a weaker dollar and not rising strong customer demand.

▣ TSMC (TSM) also saw heavy profit taking on Friday after a strong run year-to-date. The world’s dominant chip builder reported strong revenue growth and record EPS and ROE. It also noted that Nvidia (NVDA), the company’s largest client, has received government approval to resume sales of H20 AI chips to China – which is a positive news for TSMC as China is one of the key global markets for semiconductors. TSMC said that demand for AI chips was “getting stronger and stronger,” lifting its revenue guidance for Q3 and full year. However, the company said it is being more conservative in its forecasts, as it weighs the possible impact of tariffs and “a lot of other uncertainties.”   

▣ GE Aerospace (GE) stock soared after it posted a nearly flawless earnings report, beating revenue and EPS estimates and posting a robust backlog and surging cash flows. The company revealed significant advancements in technology, including AI-enabled tools, and plans to increase capacity by 40% by the end of the decade. Despite tariff and macro uncertainties, along with other headwinds, GE raised its 2025 revenue and EPS guidance and increased its outlook through 2028. With a nearly 60% rally year-to-date, the stock seems unstoppable, supported by analyst enthusiasm.

▣ The weakness in health insurance stocks weighed on the market at the end of trading week. Humana (HUM), a leading provider of Medicare Advantage plans, lost its lawsuit challenging the U.S. government’s decision to reduce its star rating. The loss prevents Humana from reversing billions in Medicare bonus payment cuts for 2026, directly threatening future profits. Other health insurers like UnitedHealth (UNH) and Centene (CNC) also experienced losses, as the decision signaled broader risks to insurer profitability tied to Medicare quality ratings. At the same time, Elevance Health (ELV) has seen its stock drop following rating downgrades and analyst price-target reductions. Elevance had released Q2 earnings that missed expectations, and it sharply reduced its full-year profit forecast, blaming rising medical costs in its Medicaid and Affordable Care Act (ACA) segments.

▣ Pharmaceuticals, on the other hand, fared better than feared following the announcement of new U.S. drug price control policies – particularly President Trump’s executive order mandating “Most Favored Nation” (MFN) pricing, aimed at aligning U.S. drug prices with those in other developed countries. The administration provided a clarifying statement citing careful and gradual implementation, helping broad pharmaceutical ETFs to recover from the initial decline.

▣ Interactive Brokers (IBKR) stock jumped following its Q2 2025 results release. The leading automated electronic brokerage platform delivered an across-the-board positive surprise, with substantial beats on both earnings and revenue, driven primarily by explosive client growth and surging trading activity.

▣ Abbott Laboratories (ABT) stock fell sharply as modest beats on revenue and earnings in Q2 were overshadowed by a reduction in full-year organic sales growth guidance. Despite guidance disappointment, several analysts maintained or even raised their buy ratings and target prices on ABT, helping the stock to claw back some losses.

▣ PepsiCo (PEP) surged following its Q2 2025 report as both earnings and revenue beat Wall Street expectations, and management reiterated its full-year guidance, expressing confidence in both North America’s recovering results and sustained international momentum. The producer of Pepsi-Cola and Doritos, along with other iconic brands, demonstrated its ability to outperform expectations and maintain stability – even as industry peers face sluggish demand and cost headwinds.

▣ Another “beat-and-raise” – an unexpected one – arrived from United Airlines (UAL). United, one of the “Big Four” U.S. airlines, beat analyst expectations, delivering modest revenue growth and smaller-than-expected EPS decline year-over-year. The company highlighted a sharp acceleration in booking demand beginning in early July, which drove its optimistic comments about expecting a “strong finish to the year.” UAL upgraded its full-year EPS guidance, noting that even the raised outlook may prove conservative. The stock jumped as United not only overcame operational challenges, but also pointed to a noticeable turnaround in market demand, suggesting the worst of the uncertainty might be over for the airline sector.

▣ The stock of ASML Holding (ASML) fared worst among mega-caps last week following its earnings release. The undisputed leader in EUV chip lithography machines – required for manufacturing the world’s leading-edge semiconductors – reported strong Q2 results that beat expectations on sales, earnings, and net bookings. However, the management shook the markets with its cautious and uncertain forward-looking comments, stating that they cannot guarantee revenue growth in 2026 due to macroeconomic and geopolitical uncertainties, especially related to tariffs and trade tensions. Near-term outlook also disappointed, with ASML guiding for Q3 revenues below analyst consensus and narrowing full-year 2025 sales expectations slightly below bullish forecasts.     

Upcoming Earnings and Dividend Announcements

The Q2 2025 earnings season is in full swing, with many notable releases scheduled for this week.

The highlight of the week will be the reports from Alphabet (GOOGL) and Tesla (TSLA) on Wednesday, which will open the earnings season for the Magnificent Seven tech mega caps.

Also in focus will be earnings releases from Verizon (VZ), Coca-Cola (KO), Philip Morris (PM), RTX (RTX), Danaher (DHR), Texas Instruments (TXN), Intuitive Surgical (ISRG), Chubb (CB), Lockheed Martin (LMT), General Motors (GM), IBM (IBM), T-Mobile US (TMUS), ServiceNow (NOW), Amphenol (APH), Blackstone Group (BX), Honeywell International (HON), and Intel (INTC).    

Ex-dividend dates are coming this week for Paychex (PAYX), Caterpillar (CAT), CVS Health (CVS), Dell Technologies (DELL), Lowe’s (LOW), Pfizer (PFE), Albertsons Companies (ACI), and other dividend-paying firms.

For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.