Major stock indices reached new record highs during the week, with the S&P 500, Dow, and Nasdaq all touching unprecedented levels before retreating in the final trading sessions. This surge was apparently fueled by strong earnings reports in the artificial intelligence sector following Nvidia’s quarterly results and hopes that the Federal Reserve may soon cut interest rates. However, late in the week, momentum faded as disappointing tech earnings and renewed caution about economic data weighed on investor sentiment, while sector rotation was evident, with money flows shifting away from mega-cap technology toward more cyclical and value names.
The past week featured several notable economic releases, including reports on Durable Goods, GDP, and Core PCE. The Durable Goods release on Tuesday indicated that orders for non-defense capital goods, excluding aircraft — a widely regarded proxy for business investment — rose by 1.1% month-over-month, substantially exceeding expectations. On Wednesday, the second-quarter GDP report showed that the U.S. economy continued to expand at a moderate pace, with real GDP growth underpinned by resilient consumer spending and a marked increase in imports. Thursday’s labor market data revealed jobless claims that were lower than anticipated, while Friday’s Core PCE Price Index (the Federal Reserve’s preferred measure of underlying inflation) registered a 2.9% year-over-year increase, its fastest annual pace since February.
Bond yields dropped, with the 10-year Treasury yield nearing cycle lows around the 4.2% mark. The US Dollar softened over the week, supporting commodity prices on the global stage. Gold made headlines with a new record high above $3,500/oz, as investors presumably sought safe havens amidst uncertainty and speculation around rate cuts. Oil traded just below $64 per barrel by week’s end, pressured by supply concerns and mixed demand signals, while industrial metals showed a mixed response, with copper rebounding on tariff shifts but struggling due to weak Chinese demand.
Collectively, last week’s economic data reinforced concerns over the future path of Federal Reserve policy, as moderate growth, a resilient labor market, and persistently elevated inflation continue to pose challenges for policymakers. At the same time, renewed worries about stretched valuations in the technology sector and unsustainable fiscal dynamics in major economies added to investor unease.
