Markets begin a critical week facing fresh trade tensions and a pivotal earnings season test. The S&P 500 managed to post new all-time highs last week despite underlying market heaviness, with the index down 0.28% for the week while showing sector rotation into Energy (+2.41%) and Industrials (+0.52%). President Trump’s latest tariff salvo—announcing 30% rates on EU and Mexico effective August 1st—threatens to test financial markets’ growing insensitivity to trade threats at Monday’s open.
This week’s economic calendar is densely packed with inflation readings that could reshape Fed policy expectations. Tuesday’s CPI report takes center stage, with core inflation forecast to accelerate to 3.0% year-over-year from 2.8%. Wednesday’s PPI data and Thursday’s retail sales will provide additional context on pricing pressures and consumer resilience. Meanwhile, major bank earnings from JPMorgan, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley officially kick off Q2 earnings season, with several institutions warning of uncertainty despite recent better-than-expected results.
Goldman Sachs’ upgraded S&P 500 targets—6,400 in three months (+3%) and 6,900 within twelve months (+11%)—reflect growing Wall Street optimism, contingent on Fed rate cuts and continued large-cap strength. However, with Bitcoin hitting new all-time highs near $119,000 and crypto market cap approaching $4 trillion, risk appetite remains elevated but vulnerable to policy shocks.
Key Events This Week
Monday – July 14
- No Major Economic Reports Scheduled — Markets open with focus on tariff announcement reaction and earnings season positioning.
Tuesday – July 15
- Consumer Price Index (CPI) (8:30 AM ET): Week’s marquee event
- CPI MoM: Forecast: +0.3% (vs. +0.1% prior)
- CPI YoY: Forecast: +2.7% (vs. +2.4% prior)
- Core CPI MoM: Forecast: +0.3% (vs. +0.1% prior)
- Core CPI YoY: Forecast: +3.0% (vs. +2.8% prior)
- Empire State Manufacturing Survey (8:30 AM ET): Forecast: -9.0 (vs. -16.0 prior) — Manufacturing conditions expected to improve modestly.
- Fed Speakers: Governors Michelle Bowman (9:15 AM), Michael Barr (12:45 PM), Boston Fed President Susan Collins (2:45 PM), Dallas Fed President Lorie Logan (6:45 PM) — Critical for policy signals ahead of potential July action.
Wednesday – July 16
- Producer Price Index (PPI) (8:30 AM ET):
- PPI MoM: Forecast: +0.2% (vs. +0.1% prior)
- Core PPI MoM: Forecast: flat (vs. -0.1% prior)
- PPI YoY: Previous: 2.6%
- Core PPI YoY: Previous: 2.7%
- Industrial Production (9:15 AM ET): Forecast: +0.1% (vs. +0.2% prior) — Manufacturing output expected to moderate.
- Capacity Utilization (9:15 AM ET): Forecast: 77.4% (unchanged) — Production remains below historical norms.
- Fed Beige Book (2:00 PM ET): Regional economic conditions survey ahead of July FOMC meeting.
- Fed Speakers: Governor Michael Barr (10:00 AM), New York Fed President John Williams (6:30 PM)
Thursday – July 17
- Initial Jobless Claims (8:30 AM ET): Forecast: 233,000 (vs. 227,000 prior) — Gradual labor market softening continues.
- Retail Sales (8:30 AM ET): Forecast: +0.2% (vs. -0.9% prior) — Consumer spending expected to rebound after sharp May decline.
- Retail Sales ex-Autos (8:30 AM ET): Forecast: +0.3% (vs. -0.3% prior) — Underlying demand showing resilience.
- Import Price Index (8:30 AM ET): Forecast: +0.3% (vs. flat prior) — Tariff impacts on import costs.
- Philadelphia Fed Manufacturing Survey (8:30 AM ET): Forecast: -0.3 (vs. -4.0% prior) — Regional manufacturing conditions improving.
- Business Inventories (10:00 AM ET): Forecast: flat — Cautious corporate restocking continues.
- NAHB Housing Market Index (10:00 AM ET): Forecast: 33 (vs. 32 prior) — Builder sentiment remains subdued.
- Fed Speakers: Governors Adriana Kugler (10:00 AM), Lisa Cook (1:30 PM), Christopher Waller (6:30 PM), San Francisco Fed President Daly (12:45 PM)
Friday – July 18
- Housing Starts (8:30 AM ET): Forecast: 1.30 million (vs. 1.26 million prior) — Construction activity expected to pick up.
- Building Permits (8:30 AM ET): Forecast: 1.39 million (unchanged) — Future construction pipeline remains stable.
- Consumer Sentiment (Preliminary) (10:00 AM ET): Forecast: 62.0 (vs. 60.7 prior) — Modest improvement in consumer confidence expected.
Major Earnings This Week
- Tuesday: JPMorgan Chase (JPM)
- Wednesday: Wells Fargo (WFC), Citigroup (C)
- Thursday: Goldman Sachs (GS), Morgan Stanley (MS), Bank of America (BAC)
- Friday: Netflix (NFLX), Taiwan Semiconductor (TSM), BlackRock (BLK)
Market Insights
Inflation Acceleration Concerns: Tuesday’s CPI reading represents a critical inflection point for Fed policy. The forecasted acceleration in core inflation to 3.0% year-over-year would mark the highest reading since April and potentially derail July rate cut expectations. With markets pricing in increasing dovishness, any upside surprise could trigger significant repricing across rates and equity markets.
Tariff Fatigue vs. Market Reality: Financial markets have demonstrated remarkable resilience to Trump’s escalating tariff threats, but the 30% rates on EU and Mexico may test this insensitivity. The August 1st effective date provides a negotiation window, yet import price data Thursday will offer early evidence of tariff impacts on producer costs and consumer prices.
Banking Sector Earnings: Big bank results will provide crucial insights into credit conditions, loan demand, and net interest margin pressures. Previous quarters showed better-than-expected results alongside warnings of uncertainty—a pattern that may persist as institutions navigate rate cut expectations and potential credit normalization.
Technical Market Dynamics: Despite new highs, the S&P 500’s underlying breadth remains mixed. The percentage of stocks above their 50-day moving averages has flattened while 200-day breadth slowly improves—suggesting a market dependent on large-cap leadership rather than broad-based participation. This dynamic leaves markets vulnerable to sector rotation or leadership changes.
Fed Policy Crossroads: With six Fed speakers scheduled throughout the week, policy communication will be crucial. The divergence revealed in June meeting minutes—between tariff-fueled inflation concerns and labor market weakness—suggests internal debate about the appropriate policy response. Tuesday’s CPI data will likely influence this calculus significantly.
Crypto Market Exuberance: Bitcoin’s surge to near $119,000 and crypto’s approach to $4 trillion market cap reflects elevated risk appetite but also potential froth. This level of speculation often coincides with market peaks, warranting caution about broader asset bubble concerns.
Technical Outlook
The S&P 500’s ability to achieve new highs despite weekly declines reflects the market’s internal struggle between momentum and distribution. The 50-day moving average spread has remained elevated for over a month, suggesting potential consolidation ahead. Goldman Sachs’ bullish targets assume continued Fed accommodation and large-cap leadership—assumptions that this week’s data could challenge.
Treasury yields remain sensitive to inflation expectations, with the 10-year hovering around key technical levels. Any meaningful CPI surprise could trigger significant curve steepening if markets begin pricing out rate cuts or increased inflation risk premiums.
Bottom Line
This week presents a confluence of market-moving catalysts that could determine the trajectory for the remainder of Q3. Tuesday’s inflation data will likely set the tone for Fed policy expectations, while major bank earnings provide the first substantive test of Q2 earnings season optimism.
The market’s demonstrated resilience to tariff threats faces a fresh challenge with the EU/Mexico announcement, while underlying technical conditions suggest vulnerability to shifts in leadership or sentiment. Goldman Sachs’ upgraded targets reflect growing Wall Street optimism, but this confidence rests on assumptions about Fed policy and earnings growth that this week’s data will either validate or challenge.
With Bitcoin at record highs and crypto markets approaching $4 trillion, risk appetite remains elevated but potentially unstable. Investors should prepare for increased volatility as markets navigate the intersection of trade policy, monetary policy, and earnings reality in what could prove to be a defining week for 2025’s second half.
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