July 2025 Financial Markets Snapshot

Doug Oosterhart, CFP®
Jul 29
4 min read

Updated: Sep 2

July 2025 was a whirlwind of activity in the financial and stock markets, marked by record-breaking index highs, shifting trade policies, and robust corporate earnings. From tariff truces to Federal Reserve deliberations, the month offered a mix of optimism and uncertainty for investors. Here’s a recap of the most noteworthy events shaping the markets in July 2025.

Record Highs for S&P 500 and Nasdaq

The U.S. stock market continued its upward climb, with the S&P 500 and Nasdaq Composite hitting new all-time highs. On July 28, the S&P 500 edged up fractionally, marking its sixth consecutive record close, while the Nasdaq gained 0.3%, notching its 10th record close in 11 days. Strong corporate earnings and easing tariff concerns fueled this rally, providing a bullish backdrop for investors.

Tariff Tensions and Trade Agreements

Trade policy was a central theme in July. On July 27, the U.S. and European Union struck a deal, reducing tariffs on most EU imports to 15%—half the rate initially set for August 1. The EU’s commitment to purchasing $750 billion in U.S. energy and military equipment bolstered market confidence. Meanwhile, a U.S.-China tariff truce extended a 90-day pause on reciprocal tariffs, stabilizing markets temporarily. However, the looming August 1 deadline for higher tariffs (25%–40%) on key trading partners kept volatility in check, as investors braced for potential disruptions.

Federal Reserve’s Steady Hand

The Federal Reserve maintained its interest rate stance in July, with Chair Jerome Powell emphasizing a data-driven approach amid political pressures. Market expectations for a 25-basis-point rate cut in September rose to 69% from 64%, though total anticipated cuts for 2025 were slightly trimmed. Investors now expect one to two rate cuts in the second half of 2025, with further easing projected for 2026 toward a neutral rate of 3%–3.5%. Inflation risks tied to tariffs and solid economic data shaped the Fed’s cautious outlook.

Corporate Earnings Shine

The second-quarter earnings season was a standout, with 33% of S&P 500 companies reporting by late July. An impressive 82% of these companies surpassed analyst estimates by an average of 6.2%. Investors eagerly awaited reports from tech giants like Microsoft, Meta Platforms, Apple, and Amazon, focusing on AI-related spending and tariff impacts. Notable performers included Tesla, which gained 3% after securing a $16 billion AI chip deal with Samsung, and energy firms like ExxonMobil and Chevron, which rallied amid rising crude oil prices.

Key Economic Indicators

Several economic data points influenced market sentiment:

Consumer Confidence: The July Consumer Confidence Survey climbed to 96.6K, up from 93.0K in June, signaling stronger consumer optimism.
GDP Growth: Second-quarter GDP grew at a 2.0% annualized rate, a significant improvement from Q1’s -0.5%, highlighting economic resilience.
Job Market: The July ADP Employment Survey reported 112.5K jobs added, rebounding from June’s -33.0K. However, nonfarm payrolls grew by only 117.5K, below June’s 147.0K, with unemployment rising slightly to 4.2% from 4.1%.
Inflation: The PCE Deflator rose to 2.5% year-over-year (from 2.3%), with core PCE holding steady at 2.7%, indicating persistent inflationary pressures.

Volatility and Sector Shifts

The Cboe Volatility Index (VIX) dipped below 15 on July 24, its lowest since February, reflecting low market fear but raising concerns about potential bearish signals, as seen in past corrections. Sector performance shifted, with industrials, financials, and utilities outperforming, unlike the tech-dominated gains of 2023–2024. Energy stocks, such as Diamondback Energy (+4%) and Devon Energy (+3.5%), surged due to rising oil prices and the EU energy deal.

Stablecoin Legislation Boosts Crypto

The U.S. Genius Act in July solidified stablecoins as a payment method, reinforcing the dollar’s dominance. While the stablecoin market cap grew, its impact on short-term Treasury yields remained minimal. Bitcoin continued to act as a distinct return driver, according to BlackRock, adding another layer of intrigue to the crypto market.

Global Market Dynamics

Globally, markets showed mixed responses. Japan’s Nikkei 225 and Canada’s TSX, still recovering from April’s tariff-driven crash, stabilized but remained sensitive to trade developments. In Europe, Germany’s decision to relax its “debt brake” rule, exempting defense spending and announcing a €500 billion infrastructure fund, lifted market sentiment and supported regional indices.

Geopolitical Context

While the Iran-Israel conflict de-escalated in June due to U.S. intervention, lingering geopolitical risks kept investors on edge. Nevertheless, equity markets remained resilient, buoyed by strong fundamentals and clearer trade policies.

Looking Ahead

July 2025 showcased a resilient U.S. stock market, navigating a complex landscape of trade uncertainties, Federal Reserve policies, and robust corporate earnings. As investors look to August, the focus will remain on tariff resolutions, upcoming earnings from tech giants, and the Fed’s next moves. Opportunities in undervalued stocks and sectors like financials and energy offer potential for those willing to dive in.

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