July 25th

Mixed Economic Signals Weigh on Markets

This week brought mixed economic data and corporate earnings, with key developments in trade, labor, and inflation shaping market sentiment.

The U.S. secured two major trade deals before the August 1 tariff deadline. On July 27, a U.S.-EU agreement set a 15% tariff on most EU imports, avoiding threatened 30–50% rates. On July 30, a U.S.–South Korea deal locked in a 15% tariff and secured $450 billion in investments, including $350 billion for tech and industrial projects and $100 billion for energy.

Markets started strong as consumer confidence rose to 97.2 in July, up from a revised 95.2 in June, beating forecasts. Optimism grew across age and income groups, reflecting positive views on business and inflation outlooks.

Labor Data and Inflation Surprise to the Downside

On Wednesday, the ADP report showed 104,000 private-sector jobs added, surpassing the 64,000 estimate. Earnings season continued, with Meta and Microsoft exceeding expectations, driven by strong digital advertising and AI-fueled cloud growth.

Sentiment shifted later in the week. Thursday’s PCE inflation data came in slightly high, with headline PCE at 2.6% and core PCE at 2.8% year-over-year, each 0.1% above forecasts. Friday’s BLS jobs report disappointed, adding just 73,000 jobs versus 100,000 expected, with May and June revised down by 258,000 combined, signaling a sharper labor market slowdown.

Markets Pull Back on Inflation and Jobs Concerns

Markets reacted to rising inflation, slowing jobs, and tariff concerns. By Friday’s close, the S&P 500, Dow Jones, and Nasdaq all posted weekly losses.

Looking ahead, trade policy, labor trends, inflation, and ongoing earnings will remain critical for equity markets in the coming weeks.