Stocks and Bonds Mixed on Good Economic Data
Good morning,
The Dow (-0.1%), NASDAQ (+1.5%), and S&P 500 (+0.6%) were mixed last week, but mostly positive as the Dow was adversely impacted by a couple stocks falling sharply. Meanwhile, bonds were mixed with taxable bonds gaining 0.1%, but tax-free municipal bonds falling 1.1%. The 10-year Treasury yield rose 0.01% to finish the week at 4.43%.
There was a slew of economic data reported last week, and most of it was positive. Key inflation data – Consumer Price Index (CPI) and Producer Price Index (PPI) – showed that inflation is mostly in check. The CPI was in line with expectations, but slightly lower compared to expectations over the prior month. Meanwhile, the PPI was unchanged over the prior month, and the core PPI was at the lowest level since July 2024. These data suggest that the tariffs have had little to no effect on inflation so far, as feared by many economists. That said, we also haven’t finished the final chapter of tariffs, as the next “deadline” for many countries is lurking on August 1. Lastly, retail sales rose 0.6%, much better than economists’ expectations, which demonstrates that the consumer continues to remain resilient after a brief dip due to tariff uncertainty. The Fed looks closely at this data as it ponders the idea of cutting interest rates. Many believe that an interest rate cut will spur the economy and cause stocks to rise sharply, but others are concerned that a rate cut could cause inflationary pressure.
This coming week will be marked by an onslaught of corporate earnings reports, as earnings season heats up. These earnings reports will be closely watched by investors, as the original guidance was sketchy due to tariff uncertainty. Many companies provided no guidance or a much lower expectation, so many investors believe that they will exceed expectations at a higher rate than normal. It is also expected that future guidance will be less uncertain, as corporations are coming to grips with the tariffs, as the range of uncertainty has decreased. Between earnings and next week’s tariff deadline, this will be another interesting week. But then again, when hasn’t it been interesting in 2025?
Have a great day and week, and please remember that the 2nd episode of the video / podcast “Financial Planning: Explained” with my guest Brad Sorenson, CFA will air on Wednesday. That can be seen through our website, YouTube, iTunes, Spotify, and other media outlets.
Source: Yahoo Finance
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The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
