Monday Morning Market Sparks 07/28/25

28 Jul 2025 — 2 min read

Stocks surged again. The S&P 500 and Nasdaq hit record highs for a second week in a row, supported by improving trade clarity and strong earnings from names like Alphabet.
Value edged out growth. Despite mega-cap dominance, the rally broadened—helping portfolios that are diversified across styles and sectors.
Earnings season turned a corner. Over 80% of S&P 500 companies are beating expectations, with earnings growth tracking above 5%. Forward earnings estimates are moving up again.
Housing market is feeling the squeeze. Existing home sales fell and remain pressured by high mortgage rates and prices. Supply of homes (14.5 months) is the highest since 2011.
New home sales ticked up, but missed forecasts. Meanwhile, the number of homes for sale is the highest since 2007. Not exactly a sign of strong demand.
Durable Goods Orders had their biggest drop since early pandemic days, but were better than feared. However, Core Capital Goods orders (a proxy for business investment) missed.
Global PMIs were mixed. U.S. manufacturing fell back into contraction (PMI 49.5), while services remained strong. France is still the laggard in Europe.
Bond markets stayed steady. Treasuries posted modest gains, and credit spreads tightened—signaling calm despite coming macro events.

Beyond trade deals, a wave of market-moving economic data and decisions is coming:

JOLTS Job Openings (Tuesday): Key read on labor demand.
Q2 GDP 1st estimate (Wednesday): Could confirm resilience in growth—or not.
Fed Decision (Wednesday): No cut expected, but Powell’s press conference may hint at a September move.
Core PCE Inflation + Income/Spending (Thursday): The Fed’s favorite inflation gauge.
Nonfarm Payrolls (Friday): A strong report would reinforce the "soft landing" narrative.

Trade optimism is rising, but be careful not to over-extrapolate. The market welcomed the EU deal and others (Japan, Indonesia, Philippines), but the full implementation—and economic impact—will take time.
A “melt-up” scenario isn’t out of the question. Forward earnings are hitting new highs. If the S&P 500 reaches $300 in EPS this year, a 22–23 P/E puts the index in the 6600–6900 range. Not a forecast, but a plausible path if sentiment and earnings stay hot.
Speculation is creeping in. Meme stock activity is up, high-beta names are crowded, and Bitcoin-style "mania math" is back in headlines. It’s a good time to remind clients of discipline over drama.
Equity valuations are high—but not totally irrational given rates and earnings. Still, this is a time to lean into quality, not chase heat.
Monetary policy is quietly easing already. Despite no rate cut yet, financial conditions are the loosest since before the Fed started hiking in 2022.

When investors feel overly confident, it’s a good time to revisit diversification.
When clients chase hot returns, it’s a moment to recenter on planning and risk.
The best-performing portfolios over time are often the most boring in the short term—and that’s okay.

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” — Sir John Templeton

We may not be in euphoria yet—but we’re creeping closer. Keep clients invested, diversified, and anchored to their plan.

Invest well, be well.

Check out more commentary at: www.rustysbridge.com

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