Daily market snapshot

• Stocks rise and yields fall in volatile session - U.S. equity markets finished higher after the Nasdaq reached a new record high yesterday. Speculation that President Trump would fire Fed Chair Powell triggered some intraday volatility, but later markets recovered as Trump denied that he is seeking his removal. Investor sentiment remained upbeat, supported by a combination of softer-than-expected inflation data and strong corporate earnings. The health care sector led the gains, with shares of Johnson & Johnson surging over 5% after the company reported second-quarter earnings that beat expectations and raised its full-year sales outlook*. In the financial sector, Goldman Sachs posted its best-ever quarter for stock trading, while Morgan Stanley also benefited from April’s market volatility. On the trade front, the White House announced a new trade agreement with Indonesia, though details remain limited. Trump also hinted at potential new tariffs targeting the pharmaceutical and semiconductor sectors. In Europe, the EU Commission approved Germany’s multiyear fiscal plan, allowing for increased government spending through 2029. The plan includes new borrowing equivalent to roughly 20% of Germany’s current annual GDP.
   
• Producer prices flat in June, supporting rate-cut expectations - Both the headline and core producer prices (PPI) were unchanged last month versus estimates for increases, marginally boosting expectations that the Fed will be cutting interest rates later this year. From a year ago, headline PPI rose 2.3%, the lowest since September 2024, and core PPI came in at 2.6% from May's 3.2%*. Wholesale inflation was restrained by a decline in services, but goods prices saw the largest monthly increase since February. In the months ahead we expect an uptick in inflation as pre-tariff inventories are being drawn down and some companies pass through a portion of the higher costs of the imported products. But unlike the inflation surge in 2021, the potential increase in prices for goods could be temporary and may be offset by tame inflation for services. Fed officials will likely remain in wait-and-see mode until they have more clarity on how this process plays out. However, with policy currently restrictive and rates high, they may have some room to cut rates later this year as inflation trends back toward the 2% target in 2026 as tariff effects fade. 
   
• Earnings strength continues to underpin market gains - Despite ongoing uncertainty around trade policy and the Fed’s next moves, corporate earnings remain a key driver of market strength. The earnings season kicked off with strong results from major banks, and more companies are now reporting upside surprises. It is early days, but the solid results highlight the still positive macroeconomic environment, as the economy remains resilient and consumers continue to spend. Several Wall Street firms appear to be benefiting from the elevated volatility this year, which helped boost trading revenue, but they are also highlighting supportive consumer trends. More broadly, earnings growth for the S&P 500 is expected to slow in the second quarter to around 5% from the more than 10% in the prior two quarters*. However, for the full year, estimates call for 8.5% growth, which, if realized, would be above the index's long-term average of 6.5%*. Lingering uncertainties suggest that there could be some more volatility around these expectations, but next year's backdrop appears to be more favorable, as corporate profits may reaccelerate amid lower rates and modest fiscal stimulus from the tax bill.

Angelo Kourkafas, CFA
Investment Strategy

^*FactSet
 

• Equities closed mixed after June inflation comes in line with forecasts – Equity markets were mixed on Tuesday, with the S&P 500 and Dow Jones lower, while the Nasdaq climbed higher. This comes as the U.S. CPI inflation report for June was in line with forecasts. Earnings season also officially kicked off on Tuesday, with big banks like J.P. Morgan exceeding expectations. Despite today's moves, markets have been resilient, with the S&P 500 now up over 25% since the April 8 lows*. Meanwhile, Treasury bond yields also climbed today, with the 10-year yield up around 0.05% to 4.48%*. Yields have moved to the upper end of their recent range as equity markets have recovered. In our view, while stock markets may experience bouts of volatility in the weeks ahead as tariff headlines re-emerge, we continue to see pullbacks as opportunities to rebalance, diversify, and add quality investments at better prices.
   
• CPI inflation continues to remain contained – Consumer price index (CPI) inflation for June came out on Tuesday morning in line with forecasts. Headline CPI was 2.7% year-over-year, a tick above expectations of 2.6% and higher than last month's 2.4%*. Core CPI, excluding the more volatile food and energy, was 2.9% year-over-year, in line with forecasts and slightly higher than last month's 2.8%. On a monthly basis, headline inflation was 0.3%, in line with forecasts, but core CPI came in at 0.2%, slightly below the 0.3% expectations*. Certain food categories, including meat and dairy, new and used cars, and airline fare prices all fell monthly*. Overall, while tariff rates have moved higher since the start of the year, we have seen inflation rates remain contained, in the 2.5% to 3.0% range*. Tariff rates are likely to move higher in the weeks ahead, but companies may have built inventories or adjusted supply chains to offset some of these higher rates. Nonetheless, we would expect inflation to move higher in the months ahead, perhaps above 3.0%, although this may be a one-time price adjustment that eases over the next 12 months.
   
• Earnings season kicks off on a positive note – Corporate earnings kicked off in earnest on Tuesday morning, with big banks like J.P. Morgan, Citibank and Wells Fargo reporting second-quarter earnings. Thus far, banks have exceeded earnings forecasts, with banks like J.P. Morgan benefiting from higher trading and investment-banking revenue. Overall, S&P 500 earnings growth for the quarter is expected to be close to 5%, well below the 11% estimate that was forecast at the start of the year*. Nonetheless, full-year earnings growth is expected to be high-single-digits in 2025, and potentially re-accelerating to double-digits in 2026*. In our view, a combination of the Fed potentially lowering rates, modest fiscal stimulus from the tax bill next year, and some deregulation, should all be supportive of economic and earnings growth in 2026.

Mona Mahajan
Investment Strategy

^*FactSet
 

• Stocks rise despite new tariff announcements – Equity markets reversed an early pullback to close higher on Monday despite President Trump announcing 30% tariffs on the European Union and Mexico over the weekend.* New tariffs are set to take effect August 1. Bond yields ticked up, with the 10-year U.S. Treasury yield at 4.43%, below its May peak near 4.60%.* Communication and financial stocks posted the largest gains, while the energy and materials sectors lagged. In international markets, Asia finished mixed overnight, as China's trade surplus grew to a higher-than-expected $115 billion in June, despite the effects of tariffs.* Europe was down on the new 30% U.S. tariffs on exports from the European Union.* The U.S. dollar advanced against major international currencies. In commodity markets, WTI oil traded lower as markets assess the possibility of U.S. sanctions on buyers of Russian crude.*
   
• Markets await CPI inflation data – Consumer price index (CPI) inflation for June will be released on Tuesday, with estimates calling for the headline figure to rise to 2.6% annualized, from 2.4% the prior month. Core CPI inflation, which excludes more-volatile food and energy prices, is expected to increase to 3.0% year-over-year, from 2.8% in May.* Inflation is forecast to rise over the coming months as tariffs begin to flow through to end consumers, putting upward pressure on prices. However, most of this impact should be near-term price hikes that aren't a driver of ongoing inflation, in our view. Bond markets are pricing in inflation of about 2.37% over the next 10 years, indicating that long-term inflation expectations remain well anchored.**
   
• Earnings season kicks off this week – Corporate earnings for the second quarter will start to be released this week, led by the major banks. Earnings growth is expected to slow to 3.7% year-over-year for the S&P 500, down considerably from 12.8% in the first quarter*, likely affected by disruptions from policy uncertainty and tariff shifts in recent months. Markets will likely watch carefully to see how tariffs are impacting corporate revenue and profit margins. Earnings growth is expected to be led by the communications and technology sectors, while energy and consumer discretionary companies are forecast to experience the steepest earnings contraction. Earnings growth is forecast to rise over the quarters ahead, combining for 8.5% growth for 2025.* While we believe this figure could be revised lower as tariffs likely weigh on corporate profit margins, earnings should be sufficient to support stock prices over time, in our view.

Brian Therien, CFA 
Investment Strategy

^{*FactSet **Federal Reserve Bank of St. Louis}
 

• Markets dip to close the week – U.S. equities fell today in the wake of further tariff announcements from the Trump administration*. The S&P 500 was down 0.3% at the close from its record high yesterday, with the Dow Jones down an even steeper 0.6% and the Russell 2000 down 1.3%*. Canadian equity-markets were also softer, losing 0.3% by the end of the day*. The sell-off extended into government bond markets too, with yields rising as investors worry about the inflationary impact of tariffs. The U.S. 2-year Treasury yield finished the day up 2 basis points higher (0.02%) and the 10-year yield was up 7 basis points, driving a steepening in the yield curve* and supporting a moderate appreciation in the dollar against a trade-weighted basket of currencies*. Oil staged a rebound from its steep decline yesterday*.
• More tariff threats – President Trump announced a higher 35% tariff rate on Canada last night, in response to ongoing complaints over fentanyl imports and Canada's 400% tariff on U.S. dairy products*. The rate will come into force on August 1 and apply to goods not compliant with the USMCA trade agreement*. It will apparently stack on top of other sectoral tariffs on steel and aluminum, but energy-related products will remain at 10%*. More broadly, the president signaled an intention to raise blanket tariff rates to 15%-20% from the 10% baseline tariff in place at present*. He also signaled that the EU would receive a tariff letter shortly outlining its tariff rate to come into force August 1 absent a trade agreement**. Markets had largely brushed off tariff announcements this week, in part reflecting confidence that many of these measures could be averted by trade deals, or further delays in implementation. However, the president is seemingly setting up August 1 as another key deadline around trade policy, and the risk of deeper disruptions to the economy and markets from tariffs is rising again, in our view.
• Earnings in focus next week - Earnings reports from the second quarter will start to roll in next week, with markets likely watching carefully to see how tariffs are impacting corporate profits and margins. Analysts are expecting 5% annual earnings growth for S&P 500 companies in aggregate, well down from the 13% in the first quarter of this year, according to FactSet consensus estimates*. Expectations have fallen to already capture some of the disruptions seen from policy uncertainty and tariff shifts in recent months. However, markets will be watching closely to see if this impact is more or less pronounced in the earnings data, and which segments of the corporate sector are worst affected.

Investment Strategy

^{*FactSet
**Bloomberg} 
 

Thursday, 07/10/2025 p.m.

• Stocks rally to new highs – The S&P 500 and Nasdaq hit new record highs today, as markets appeared to brush off tariff concerns, with Canadian equities also gaining on the day. Small-cap equities performed even better, with the Russell 2000 up 0.5%, extending its gains over the past five days to 1.7%. However, this index remains some 7% off its all-time high seen in November of last year*. Meanwhile, an early sell-off in U.S. government bonds was reversed after a well-received auction for 30-year Treasuries, and the U.S. dollar was stable against a trade-weighted basket of international currencies. In commodity markets, oil prices continued to slide following yesterday's stronger-than-expected U.S. supply data and more subdued demand forecasts from OPEC**. News reports suggest that OPEC+ countries are discussing a pause in planned production increases from October*.
   
• A new day, a new tariff – President Trump has threatened a 50% tariff on goods imported from Brazil, unless legal proceedings against former President Bolsonaro are halted*. The U.S. imported $42 billion in goods from Brazil last year*, implying a $21 billion effective annual tax on this trade if implemented and sustained at these levels. This follows a host of tariff announcements this week, with the administration setting new reciprocal tariff rates for many trade partners to come into force on August 1, unless trade agreements can be reached beforehand*. The president also clarified yesterday that the proposed 50% tariff on copper, the world's third most widely used metal, will go into effect at the same time**, driving a rise in copper futures prices*. The U.S. produces just half of the copper it consumes each year***, meaning that domestic industries using this metal in their production process would face steep increases in costs. For now, the market is seemingly looking through much of this tariff news in anticipation that trade deals, or further delays, mitigate their impact. However, the risk of deeper disruptions to the economy and markets from tariffs is rising again, in our view. 
   
• Few signs of labor-market distress – New claims for unemployment insurance fell again last week and continue to trend at low levels, with firms seemingly reluctant to let go of staff*. However, continuing claims, a measure of people receiving ongoing benefits, continues to rise, and at nearly 2 million stands at the highest level seen since late 2021*. This is consistent with cautious hiring, which may well reflect uncertainty in the corporate sector over the outlook for trade policy and the economy. The Fed is also struggling to see through this fog, and the minutes from its June meeting released yesterday suggest that most members are happy to wait and see how trade developments, and their impact on the real economy, evolve before changing policy****. This makes any cut at the upcoming meeting in late July unlikely, but a September move is possible, in our view, depending on how data on inflation and the labor market shape up over the summer.
   

Investment Strategy

^{*Bloomberg 
**FactSet
***Reuters
**** U.S. Federal Reserve Bank}