Markets Recover With S&P and NASDAQ at Record Highs Despite Tariff Headwinds

Wall Street rebounded from the previous week’s sell-off. Stocks jumped higher last Monday, aided by major dip-buying. However, investors pulled away from risk midweek, particularly following President Trump’s sweeping tariffs, which took effect last Thursday. Nevertheless, stocks experienced a major uptick last Friday to end the week higher. The S&P 500 and the NASDAQ hit record highs, while the Dow and the Russell 2000 also made solid gains. Speculation increased that the Federal Reserve would cut interest rates in September following the latest weak jobs report and the imposition of last week’s new tariffs. Information Technology, Consumer Discretionary and Consumer Staples led the market sectors. Bond values trended higher, pulling yields lower. Crude oil prices fell to a nearly two-month low amid concerns over growing tariffs.

Trade Deficit Falls in June, but Year-Over-Year Gap Widens

The latest report on the goods and services trade deficit was released on August 5 and showed that the goods and services deficit was $60.2 billion in June, down $11.5 billion, or 16.0%, from the revised May estimate. June exports were $277.3 billion, $1.3 billion, or 0.5%, less than May exports. June imports were $337.5 billion, $12.8 billion, or 3.7%, less than May imports. Since June 2024, the goods and services deficit increased $161.5 billion, or 38.3%. Exports increased $82.2 billion, or 5.2%. Imports increased $243.7 billion, or 12.1%.

Eye on the Week Ahead

Inflation data is on the docket this week with the releases of the July Consumer Price Index and the Producer Price Index. June saw the CPI increase 0.3%, while the PPI was flat.