Weekly Market Recap: Optimism Driven by Trade Progress, Earnings Strength, and Fed Caution

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Index Update:  U.S. stock futures were flat to slightly higher following record closes for the S&P 500 and Nasdaq, with all major indexes on track for weekly gains over 1%. Investor sentiment remained cautiously optimistic amid hopes for new trade deals, particularly with the EU, and a softer stance from President Trump toward Fed Chair Powell. While earnings season continued, Intel shares dropped sharply after missing profit expectations. Markets now look ahead to a packed earnings week and the upcoming Fed policy decision.

Market Movers:  On Thursday, the top gainers were AEye, Inc (+158.41%), followed by Mercurity Fintech Holding Inc. - Amer. (+53.12%). On the contrary Community Health Systems, Inc. (-25.26%) and Nova Lifestyle, Inc (-24.34%) declined the most the same day.

Commodities Update:  Crude oil prices continued to climb, with WTI rising above $66 and Brent above $69 per barrel, supported by optimism around potential U.S. trade agreements with the EU, India, Mexico, and Brazil. Expectations that easing trade tensions will boost global economic growth improved the outlook for oil demand. On the supply side, tightening diesel markets and disruptions in Russian oil exports, including EU sanctions and Russia's Black Sea port halt, added upward pressure on prices. Meanwhile, gold prices declined for a third straight session, falling to around $3,360 per ounce as easing tariff concerns reduced the metal’s safe-haven appeal. Strong U.S. labor market data reinforced expectations that the Federal Reserve will keep rates unchanged in the near term, although markets still anticipate a possible rate cut in September. Tensions between President Trump and Fed Chair Powell also attracted attention, though gold is still set for a modest weekly gain.

Macro Update:  The dollar index hovered near 97.5 but was set for a notable weekly decline as markets reacted to evolving trade talks and anticipated the upcoming Federal Reserve policy meeting. A potential U.S.-EU trade deal imposing 15% tariffs is in focus, alongside expectations that the Fed will keep rates unchanged while assessing tariff-related inflation risks. President Trump also eased concerns over Fed independence by confirming he has no plans to remove Chair Jerome Powell. Markets continue to price in rate cuts in both September and December, totaling 43 basis points by the end of 2025.

Bonds Commentary:  The 10-year U.S. Treasury yield held steady around 4.39% as investors weighed trade developments and anticipated the upcoming Federal Reserve policy decision. A potential U.S.-EU trade deal imposing 15% tariffs is in focus, following a similar agreement with Japan. The Fed is expected to keep rates unchanged while assessing the inflationary impact of these tariffs. President Trump also eased tensions with Fed Chair Powell, stating he has no intention to remove him. Markets are currently pricing in rate cuts in both September and December, totaling 43 basis points by year-end 2025.

Futures Update:  U.S. stock index futures moved slightly higher as investors remained optimistic following a generally positive week marked by strong corporate earnings and hopes for further trade agreements. All major Wall Street indices are poised to end the week with gains, with the Dow Jones and NASDAQ each showing nearly 1% growth, while the S&P 500 has risen by about 1.1%. A significant majority of S&P 500 companies reporting so far have surpassed earnings expectations, driving the S&P 500 and NASDAQ to new record highs.

Wall Street experienced a mixed performance on Thursday following a strong session the day prior. The S&P 500 gained 4.46 points, or 0.07%, closing at 6,363.36. From a technical perspective, after a period of consolidation, prices are beginning to trend upward, hinting at the potential for further gains. However, the elevated levels suggest that a minor correction cannot be ruled out. The 14-period Relative Strength Index (RSI) remains near overbought territory, indicating that caution is advisable at current levels. Despite this, key moving averages are still well below current prices, providing support should volatility pick up. Important support levels are around 6,266, with resistance expected near 6,444.