Written: July 31, 2025, 15:00 U.S. Eastern Time

Tech stocks led Wall Street higher on Thursday as major companies like Microsoft and Meta Platforms delivered impressive earnings, propelling key indexes toward new records. The surge came even as inflation data and tariff uncertainties continued to weigh on the broader economic outlook.

S&P 500 and Nasdaq move toward new records

Stocks opened strong Thursday morning, extending their upward momentum fueled largely by optimism in the technology sector. As of 11:01 a.m. Eastern Time, the S&P 500 rose 0.2%, coming within range of its record high set earlier in the week. The Nasdaq Composite jumped 0.8%, supported by major tech stock gains, while the Dow Jones Industrial Average remained mostly flat.

The rally was primarily driven by earnings from large-cap tech firms, whose performance and future outlook continue to be shaped by advancements in artificial intelligence (AI).

Meta and Microsoft earnings exceed expectations

Meta Platforms, the parent company of Facebook and Instagram, surged by 11.2% after the company significantly beat Wall Street’s second-quarter expectations on both revenue and profit. Meta’s continued investment in AI technologies is seen as a long-term growth strategy that resonated with investors.

Microsoft shares also rose, up 4.4% on the day, following a strong earnings report. Particularly noteworthy was an encouraging update on Azure, Microsoft’s cloud computing division and a key component of its AI ecosystem. The results underscored the company’s leading role in the ongoing AI-driven transformation across sectors.

The tech momentum is expected to continue as Apple and Amazon prepare to release their earnings after the closing bell. These companies, along with Microsoft and Meta, have been the primary drivers behind the market’s recent rally, driven by growing investor confidence in AI’s future.

Strong earnings reported beyond tech

Outside of the technology sector, other major companies also posted solid earnings that helped sustain the market’s overall performance.

CVS Health rose 3.3% after exceeding Wall Street expectations and raising its full-year guidance. The healthcare giant’s strong quarterly results added further depth to a week already packed with corporate earnings reports across sectors.

Earnings remain a primary focus for investors as companies navigate a complicated macroeconomic environment shaped by inflation, interest rates, and trade policy.

Inflation edges higher, raising policy questions

Economic data released Thursday morning showed inflation ticked up slightly in June. According to the U.S. Commerce Department, the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation measure, increased by 2.6% compared to June of last year. That’s up from 2.4% in May and slightly higher than economists’ expectations.

Earlier this month, the Consumer Price Index (CPI) also indicated a rise in inflation, reinforcing concerns that price pressures remain sticky despite the Fed’s ongoing efforts to bring inflation closer to its 2% target.

In addition, weekly jobless claims data showed a small uptick in Americans filing for unemployment benefits. While not alarming on its own, it adds complexity to the Fed’s balancing act between supporting employment and controlling inflation.

Fed maintains interest rates amid economic uncertainty

Amid this backdrop, the Federal Reserve chose to leave its benchmark interest rate unchanged for a fifth consecutive meeting. Officials continue to monitor inflation trends carefully before making any decision on rate cuts.

While lower interest rates could support job growth and boost economic activity, the risk of reigniting inflation remains a central concern. Fed Chair Jerome Powell has reiterated that any decision on rates is made collectively by the Federal Open Market Committee (FOMC), despite political pressure.

President Donald Trump has publicly called for rate cuts to stimulate the economy, but the Fed has opted for caution, especially given the volatile economic signals and ongoing trade policy disruptions.

Trade tensions reemerge with tariff threats

Trade policy uncertainty added another layer of market risk this week. On Wednesday, President Trump signed an executive order imposing 50% tariffs on imports from Brazil, citing political motivations tied to the trial of Brazil’s former president Jair Bolsonaro, a known ally.

Trump has also threatened broader tariffs on goods from multiple countries unless new trade agreements are reached by Friday. Negotiations with China appear to have paused escalations for now, and a tentative deal with South Korea has been announced. However, businesses remain on edge as Trump’s trade decisions continue to defy traditional economic strategy.

Major U.S. companies including Ford and Hershey’s have warned in recent weeks that tariffs are affecting both current and projected earnings.

Rate cut expectations cooling ahead of September

Investor expectations for a Fed rate cut in September are fading. According to data from CME Group, traders now see only a 39.2% probability of a rate cut at the next meeting. That’s down from 58.4% a week ago and 75.4% a month earlier.

The shifting sentiment reflects growing doubts about whether inflation will cool enough in the near term to justify a cut, even as some sectors of the economy show signs of softening.

Bond yields ease amid cautious optimism

In the bond market, yields fell slightly. The 10-year U.S. Treasury yield dropped to 4.34%, down from 4.37% on Wednesday. Meanwhile, the 2-year yield declined to 3.92% from 3.94%.

Lower yields suggest that investors remain cautious about future growth, even as equities rally on strong earnings and AI optimism.

Global markets mixed as U.S. tech leads

Overseas markets were mostly mixed on Thursday. Asian stocks were generally flat, while European markets saw modest gains in response to the U.S. tech surge.

As the week progresses, investors will continue to monitor a steady stream of earnings reports, economic data, and policy signals that could influence the trajectory of the market into the second half of the year.

Source: AP News – Rallies for Microsoft and Meta send Wall Street higher

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Exports to the U.S. have long been a contentious issue in trade talks between Japan and the U.S., particularly under President Donald Trump’s administration. Negotiators from Japan are currently in Washington, lobbying against the threat of higher tariffs on Japanese goods. Japan, a key U.S. ally and major investor, employs hundreds of thousands of Americans, making it an integral part of the U.S. economy.

In early April, President Trump announced plans to impose a 24% tariff on imports from Japan as part of broader trade measures against multiple countries. However, following panic in the financial markets, Trump placed a partial 90-day hold on the tariff hike while simultaneously raising existing tariffs on Chinese goods to up to 145%.

Despite the temporary delay, Japan still faces significant tariff challenges. A 10% baseline tariff on various imports remains in place, along with a 25% tax on Japanese car imports, auto parts, and steel and aluminum exports. These duties have already taken a toll and present a challenge for Japanese Prime Minister Shigeru Ishiba’s administration.

In response to the tariff tensions, some analysts speculate that Japan might make surprise concessions to ease trade relations. One potential move could involve increasing imports of American rice—an item of cultural significance in Japan. Historically, Japan has protected its rice industry, but rising domestic prices due to a shortage might prompt a shift in policy.

Despite the trade deficit, Japan’s exports saw a 5.9% increase over the past year, driven by strong shipments of computer chips and vehicles. Meanwhile, imports rose by 4.7%, with the weaker yen making imported goods more expensive.

Another factor contributing to the rise in exports is the recent surge in foreign tourism to Japan. Tourist spending counts as an export, further boosting Japan’s economic performance.

For the month of March, Japan recorded a trade surplus of 544 billion yen ($4 billion), with exports climbing nearly 4% from the previous year. This marked the sixth consecutive month of export gains, though the pace of growth slowed compared to February.

Exports to the U.S. rose by 3%, while shipments to other parts of Asia, such as Hong Kong, Taiwan, and South Korea, grew by 5.5%. On the other hand, exports to China fell, reflecting a shift in trade patterns due to ongoing U.S.-China tariff conflicts.

Min Joo Kang, a senior economist at ING, noted that the rerouting of exports within Asia to avoid U.S. tariffs likely contributed to the increased shipments to neighboring countries. This strategy is a part of Japan’s broader efforts to mitigate the impact of the global trade tensions.

As Japan continues to navigate its complex trade relationships with the U.S., the outcome of these negotiations could shape the future of its economic growth and global trade standing.

Source: AP News – Japan reports a $63 billion trade surplus with the US as it talks with Trump on tariffs

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Asian markets took a sharp nosedive on Monday, amplifying a global stock market rout sparked by US President Donald Trump’s escalating trade war.

In Japan, the Nikkei 225 plummeted over 8% right after the opening bell, dipping below the critical 33,000 mark for the first time since August 2024. The broader Topix index fared similarly, sliding more than 7.5%, though it managed to recover slightly from its steepest losses.

Japanese Prime Minister Shigeru Ishiba addressed the crisis, reaffirming that his government will continue urging Trump to reduce tariffs on Japan. However, he acknowledged that meaningful progress wouldn’t be immediate. “The government must do everything possible to mitigate the economic fallout,” Ishiba told parliament, emphasizing support for local businesses and job protection.

Trump’s latest move is a 24% tariff on Japanese imports, which is set to take effect later this week despite Japan being a key US ally under their defense treaty.

Meanwhile, the global ripple effect from the trade war has intensified, with Asian markets mirroring the worst two-day slump on Wall Street in five years. US stock futures tanked on Sunday evening after two days of heavy losses, which have already wiped out over $5.4 trillion in market value.

Trump’s sweeping tariff policies, which began taking effect over the weekend, have triggered strong pushback from global investors. The US’s newly imposed tariffs have been met with retaliatory action from China, which slapped a 34% tariff on all US goods on Friday, further stoking fears of a full-blown, destructive trade conflict.

On Sunday, Trump downplayed the market turmoil, stating he didn’t intend to crash markets, though he refrained from predicting what lies ahead. “What’s going to happen with the market? I can’t tell you,” Trump remarked aboard Air Force One. “But I can tell you, our country has gotten a lot stronger, and eventually it’ll be a country like no other.”

Across Asia, the damage was widespread. South Korea’s Kospi index plunged more than 4.8%, triggering a circuit breaker designed to prevent panic selling. Taiwan’s Taiex saw a staggering drop of 9.7%, with major exporters like TSMC and Foxconn halting trading after their shares plummeted nearly 10%.

In Australia, the ASX 200 index shed as much as 6.3%, while New Zealand’s NZX 50 index followed suit with a 3.5% loss.

As US stocks brace for another round of sharp declines, analysts warn that the S&P 500 is perilously close to entering bear market territory, defined by a 20% drop from its peak. This downturn signals mounting uncertainty, not only for investors but also for the broader global economy.

The question now is how long this turmoil will last and whether Trump’s trade policies will lead to long-term economic damage or if the markets can eventually recover from the turbulence.

Source: CNN – Asian markets plunge as Trump’s global tariff turmoil deepens

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President Donald Trump’s long-anticipated tariffs on Canada and Mexico officially took effect on Tuesday, igniting tensions in global markets and setting the stage for retaliatory measures from the U.S.’s North American neighbors.

New Tariffs and Global Reactions

Starting just after midnight, imports from both Canada and Mexico are now subject to 25% tariffs, with Canadian energy products facing a 10% duty. These measures are part of Trump’s broader trade strategy, which has already sparked significant global reactions.

Meanwhile, the Trump administration doubled the tariff on Chinese imports from 10% to 20% in February, prompting Beijing to retaliate on Tuesday with tariffs of up to 15% on a wide range of U.S. farm exports. Additionally, China expanded restrictions on about two dozen American companies, tightening controls and escalating tensions.

Canada Responds with $100 Billion in Retaliatory Tariffs

In response to the U.S. tariffs, Canadian Prime Minister Justin Trudeau announced a 25% tariff on $155 billion (Canadian) worth of American goods, beginning with an initial $30 billion worth of products. These retaliatory tariffs will remain in place until the U.S. rescinds its trade actions. Trudeau emphasized that Canada is committed to resolving the issue through ongoing discussions, but remains ready to implement further measures if necessary.

While Mexico did not immediately detail its retaliatory actions, it is expected to follow suit in some capacity. The escalating trade conflict has already begun to stir fears of higher inflation and the possibility of a full-scale trade war, as both countries and international markets prepare for a prolonged standoff.

Trump’s Trade Strategy: A Controversial Path to Prosperity

President Trump has been vocal about his belief that tariffs are a crucial tool for revitalizing the U.S. economy. He argued that imposing taxes on imports is the easiest path to national prosperity—despite warnings from mainstream economists about the long-term consequences. Trump said,
“It’s a very powerful weapon that politicians haven’t used because they were either dishonest, stupid, or paid off in some other form. And now we’re using them.”

The tariffs, initially set to take effect in February, were delayed by 30 days to allow further negotiations with Canada and Mexico. Trump has justified the tariffs as a means to combat drug trafficking and illegal immigration from both countries, although they have also been linked to a desire to address the U.S. trade imbalance. Trump has stated the tariffs could be reduced if the trade deficit closes, though this is unlikely to be resolved quickly.

Unpredictability and Economic Volatility

The U.S. tariffs have created a sense of economic uncertainty, with many wondering what moves Trump will make next. Michael House, co-chair of the international trade practice at the law firm Perkins Coie, described the situation as “chaotic” and “unpredictable.” He added,
“We don’t know, in fact, what the president will do.”

The global economy is now facing a fog of uncertainty, as retaliatory tariffs from Canada and China threaten to worsen the situation. Even after Trump’s announcement, Canadian officials remained in contact with their U.S. counterparts, signaling that diplomatic talks are ongoing despite the heightened tensions.

Domestic Reactions and Growing Concerns

The new tariffs have sparked concern among both Democratic and Republican lawmakers in the U.S., particularly those with close ties to industries that will be directly impacted. Senator Susan Collins of Maine expressed concern about how the tariffs could affect Maine’s economy, given the state’s reliance on Canadian processing for products like lobsters and blueberries.

Despite these concerns, Trump has continued to defend his approach, claiming that inflation caused by tariffs would not be as severe as some economists suggest. He pointed to recent business investments, such as the $100 billion commitment from Taiwan Semiconductor Manufacturing Company to produce chips in the U.S., as evidence that his strategy is working.

Impact on U.S. Industries

While some businesses welcome the potential for more domestic manufacturing, others are sounding alarms. Greg Ahearn, CEO of The Toy Association, warned that the 20% tariffs on Chinese goods could be “crippling” for the toy industry, which relies heavily on imports from China. Ahearn noted the sophisticated manufacturing processes involved in producing toys and emphasized that it would take years, not months, for U.S. factories to catch up.

“That can’t be replicated overnight,” Ahearn cautioned, highlighting the challenge of reshoring complex production processes that have been built up over decades.

The Road Ahead: Tit-for-Tat Escalation

As the situation develops, Damon Pike, a trade expert at BDO, suggested the risk of further escalation is high. Both Canada and the European Union have their own lists of potential retaliatory measures ready, setting the stage for a tit-for-tat battle that could drag on for months or years.

With rising tensions and the threat of additional tariffs on industries like automobiles and pharmaceuticals, the world economy faces a period of heightened volatility and uncertainty as President Trump continues to push his trade agenda.

Source

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