Markets Stay Resilient as Economic Data Eases Fears
U.S. stocks closed relatively flat on Friday, as investors absorbed new economic data and ongoing tariff headlines without significant shifts in market sentiment. The Nasdaq Composite (^IXIC) edged up slightly to reach another record high, while the Dow Jones Industrial Average (^DJI) slipped 0.3% and the S&P 500 (^GSPC) hovered just below breakeven.
The day’s moves followed a strong Thursday session that saw both the S&P 500 and Nasdaq Composite reach record closing highs. Despite rising geopolitical uncertainty, markets appeared reassured by economic data suggesting continued consumer resilience, even as trade tensions escalated.
Consumer Sentiment Improves, Inflation Expectations Drop
One of the key developments Friday was the release of the University of Michigan consumer sentiment index, which showed inflation expectations falling from 5% in June to 4.4% in July. This dip likely contributed to the market’s relative calm, reinforcing the idea that inflation pressures may be stabilizing.
The data came as Wall Street continued to digest earlier reports showing retail sales and other economic indicators remain firm, despite the growing influence of President Trump’s tariffs. The lack of a major market reaction suggests investors are betting that the broader economy can withstand short-term policy turbulence.
Tariff Tensions Mount Ahead of Key Deadline
Still, concerns linger over the direction of trade policy. Reports emerged Friday that President Trump is advocating for blanket tariffs of at least 15% to 20% on European Union imports. The proposal complicates ongoing negotiations, with an August 1 deadline looming for a new wave of duties to be implemented.
The escalation adds another layer of uncertainty for global markets, although Friday’s muted stock reaction indicates investors may be waiting for concrete policy moves before adjusting their positions. Trade policy remains a wildcard as Trump continues to push aggressive strategies to rebalance international commerce.
Earnings Season Sends Mixed Signals
In corporate news, Netflix reported strong second-quarter earnings late Thursday, beating profit expectations and meeting revenue forecasts. However, the streaming giant’s stock struggled as investors were apparently hoping for a more optimistic full-year guidance to justify its high valuation.
By contrast, American Express (AXP) delivered robust quarterly results, reinforcing the notion that high-end consumers remain active spenders. The divergence highlights how selective the market has become during earnings season, with guidance and forward-looking signals playing a more critical role than current numbers alone.
Fed Tensions Linger in Background
Meanwhile, political attention briefly shifted to Federal Reserve Chair Jerome Powell, who has faced criticism from President Trump over a planned renovation of the Fed’s headquarters. Powell responded with a letter defending the project, attempting to maintain the Fed’s independence amid increasing political scrutiny.
Looking ahead, speculation is building around who may replace Powell once his term ends. Any new appointee will likely have to navigate a dual mandate: satisfying presidential expectations while preserving central bank credibility and stability.
