Concerns about tariff deadlines were largely alleviated in July as deals with some major trading partners added clarity. U.S. stocks finished up about 2% for the month. International stocks are outperforming for the year but were down 1% in July. 

Tariffs continue

While there will be many different rates, a general 15% import tax has formed as the new baseline, including deals with the EU and Japan at that level. The UK secured a 10% rate while talks continue with China, Canada, and Mexico. Certain industries and products will have their own higher rates. To be clear, tariffs settling in at around 15% will be impactful, but not as much as feared in spring. According to various economic estimates, current trade duties could reduce U.S. GDP by somewhere between .5% and 1%, while also potentially increasing inflation. It will be telling how companies describe the impact of tariffs on earnings calls in the coming quarters. 

Earnings update

The final week of July also featured earnings results from several important mega-tech companies. Results were mixed, but good enough overall to sustain momentum for U.S. growth stocks. Microsoft, Meta, and Alphabet exceeded expectations, while Amazon’s cloud growth did not. Apple also posted strong results, but the share price was not rewarded as investors continue to be skeptical of the company’s AI strategy. Nvidia, currently the most valuable company in the world, appears to benefit from capital investment plans by major technology companies. The company reports earnings on August 27.  

Bullish breakouts

Similar to late 2021, current market conditions reflect elevated investor optimism and increased speculative behavior. This includes strong demand for growth-oriented equities, high levels of options trading and margin usage, renewed enthusiasm for digital assets, and heightened interest in speculative, retail-driven stocks — such as Opendoor and Kohl’s — echoing prior market attention on companies like GameStop and AMC. In 2021, extreme valuations across many growth stocks preceded broad declines that also impacted high-profile leaders, including the so-called Magnificent Seven. While past performance does not guarantee future results, reduced speculation may improve conditions for long-term investors.