July 25, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The stock market has reached a new record high, driven by positive sentiment regarding trade negotiations between the U.S. and Europe. The Dow recorded a weekly increase of 1.3%, while the Nasdaq and S&P 500 saw rises of 1.2% and 1.6%, respectively. The S&P 500 achieved its fifth consecutive record closing high on Friday, and the Nasdaq Composite, which is heavily weighted towards technology, also reached a new all-time high. This week, Wall Street’s spirits were lifted by a trade agreement between the U.S. and Japan, which fostered optimism for further deals, while strong earnings from blue-chip and major tech companies marked a solid beginning to the earnings season. Investor optimism was also linked to the announcement that President Trump is set to meet with European Commission President Ursula von der Leyen on Sunday, raising hopes for a U.S.-EU agreement. Furthermore, deals were finalized with Japan, Indonesia, and the Philippines ahead of the impending August 1 tariff deadline. Investor sentiment has shifted, with 61% of retail investors expressing optimism about the markets, a rise of 12 percentage points from the last quarter, as reported by Morgan Stanley Wealth Management’s latest Retail Investor Pulse survey. This marks a turnaround from Q2, when bearish sentiment was in the majority.

July 18, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. This week, investor attention returned to tariffs as U.S. trade discussions took center stage in the news. The S&P 500 concluded the week with a gain of +0.6%, the Nasdaq surged by +1.5%, while the Dow ended with a slight decline of -0.1%. Both the S&P 500 and Nasdaq have reached new record highs in recent weeks, as investors displayed growing uncertainty regarding Trump’s tariff threats, alongside a belief that these policies may not adversely affect the U.S. economy as severely as previously anticipated. The Trump administration was considering a minimum tariff ranging from 15% to 20% in any agreement with the European bloc, which initially caused markets to decline before they partially rebounded. Furthermore, this week also experienced a wave of inflation data releases from major economies for June, including the U.S., Canada, and the UK. Specifically, goods prices have reversed their previous trend of deflation and have risen across all three countries. However, both the CPI in Canada and the U.S. still aligned with their respective central bank targets, despite the rising goods prices. Despite the rally in risk assets last week, the relationship between the dollar and Treasury yields has completely unraveled. Traditionally, these two have moved in sync; however, we are currently witnessing yields rise while the dollar falls to multi-year lows.

July 11, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Although major stock indexes reached record highs this week, they ultimately posted losses for the week due to renewed concerns regarding the future of trade policy and its potential implications for the U.S. economy. The Dow Jones experienced a sharp 1% decline this week, while the S&P 500 and Nasdaq saw decreases of 0.3% and 0.1%, respectively. A team led by David Kostin, Goldman’s chief U.S. equity strategist, now expects the S&P 500 to achieve 6,900 in the next 12 months, an increase from the previous forecast of 6,500. In the next three months, they anticipate a 3% gain, bringing it to 6,400 (up from 5,900), and over six months, a 6% gain to 6,600 (up from 6,100). “A positive outlook for earnings growth in 2026, the resumption of Federal Reserve rate cuts, and neutral investor positioning indicate potential for further market gains as the recent narrow rally expands,” stated Kostin and his team. However, it is noteworthy that the median index constituent remains over 10% below its 52-week high, resulting in one of the narrowest market breadth readings in recent decades. Once again, Goldman expresses optimism: “While narrow breadth often signals the risk of larger-than-average drawdowns, we believe a ‘catch-up’ is more likely than a ‘catch-down’ and expect the market rally to broaden in the next few months.” Goldman projects that S&P 500 earnings per share (EPS) will increase by 7% in both 2025 and 2026.

July 3, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Stocks finished the week at all-time highs after positive job reports, as the tech sector stocks maintain their upward momentum. The S&P 500 rose by 1.72%, the Dow jumped by 2.3%, and the Nasdaq grew by 1.62%. In June, nonfarm payrolls increased by 147,000, exceeding economists’ expectations of a 110,000 rise and slightly ahead of May’s upwardly adjusted figure of 144,000 (previously 139,000), according to new statistics from the U.S. Bureau of Labor Statistics. The unemployment rate decreased to 4.1%, falling below the consensus of 4.3% and May’s 4.2% figure. Despite the S&P 500 reaching new heights, the rally remains top-heavy. The Magnificent Seven continue to account for a significant portion of the index’s returns, making up over 40% of the gains since April.