Anna's Markets Recap

_{Just facts, you think for yourself}

Saturday, 5:21 AM

July 26, 2025

Good morning news friend! Here is a quick recap of what happened in the markets this week. 📰🌟

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What Moved Markets Last Week

U.S. equity markets pushed to new records, driven by a relentless focus on Artificial Intelligence that overshadowed mixed economic signals. The S&P 500 advanced 1.50% to close at an all-time high of 6,389, and the tech-heavy Nasdaq Composite also reached a new peak at 21,141. The Dow Jones Industrial Average, however, slipped 0.1%, indicating a narrow rally.

The market's strength persisted despite some signs of economic cooling. Initial jobless claims for the week ending July 19 saw a modest increase to 226,500, aligning with a gradually moderating labor market. In a positive sign, the University of Michigan's preliminary Consumer Sentiment Index for July climbed to a five-month high of 61.8, buoyed by easing inflation fears.

In fixed income, the 10-year U.S. Treasury yield finished the week around 4.39%, easing slightly. Futures markets are now pricing in a 69% probability of an initial Federal Reserve rate cut at the September meeting, as the central bank is widely expected to hold rates steady for the near term.

Tech and Growth

The technology sector was defined by a stark divergence in earnings, separating companies with tangible AI returns from those with more speculative roadmaps.

• Alphabet (GOOGL) reported strong Q2 results, with revenue climbing 14% to $96.4 billion and Google Cloud revenue surging 32%. The key announcement was a $10 billion increase in its 2025 capital expenditure forecast to $85 billion, a direct response to soaring demand for AI and cloud services. The stock reaction was muted, rising just 1%, as investors weighed the impressive growth against the significant cost of future expansion.

• Tesla (TSLA), in sharp contrast, missed expectations, with Q2 revenue falling 12% to $22.5 billion. A 13.5% drop in vehicle deliveries and a 51% decline in high-margin regulatory credit revenue hit the bottom line. CEO Elon Musk warned of "a few rough quarters" ahead and pivoted the narrative toward long-term autonomous driving ambitions. The market rejected the vision for now, sending the stock down more than 8% post-earnings.

• NVIDIA (NVDA) received a major boost after the White House lifted restrictions on the export of its H20 AI chips to China. The news, which reopens a critical market, sent the stock surging 4% to a new record high and lifted the broader semiconductor sector, including Broadcom (AVGO).

Banks and Financials

With the Federal Reserve's policy rate expected to remain stable, the financial sector saw investors search for new growth drivers. The most compelling narrative emerged around Berkshire Hathaway (BRK.B), which was recast as an essential "picks and shovels" play for the AI revolution. The thesis posits that Berkshire's energy and railroad assets are uniquely positioned to benefit from the massive infrastructure build-out required for AI data centers.

Major banks were relatively quiet following the prior week's strong earnings. JPMorgan Chase (JPM) and Bank of America (BAC) ended the week with modest gains. In the payments space, Mastercard (MA) renewed its key co-branded credit card partnership with American Airlines and announced a new "AI Card Design Studio," signaling its intent to integrate AI into its product offerings.

Consumer Goods and Healthcare

Innovation and regulatory risk were the dominant themes in the defensive sectors.

• Eli Lilly (LLY) had a strong week, closing its acquisition of Verve Therapeutics to expand into genetic medicines and receiving a positive opinion from European regulators for its Alzheimer's drug, donanemab. The dual catalysts sent the stock up over 5% for the week.

• Johnson & Johnson (JNJ) submitted a New Drug Application for a first-in-class psoriasis treatment and announced a strategic agreement to co-promote an injectable for osteoarthritis knee pain.

• UnitedHealth Group (UNH) confirmed it is the subject of a Department of Justice investigation into its business practices, particularly concerning its Medicare Advantage program. The news crystallized a significant legal risk, causing the stock to fall nearly 5% in a single session and overshadowing its operational performance.

Among consumer staples, Costco (COST) saw a gradual stock price decline throughout the week, while Walmart (WMT) closed the application period for its "Open Call" event for U.S.-based small businesses.

Energy and Industrials

The energy and industrial sectors were marked by a key strategic resolution and mounting consumer-side pressures.

• Exxon Mobil (XOM) announced it would accept the international arbitration ruling in the dispute over the Stabroek block in Guyana, formally welcoming Chevron (CVX) as a partner. This resolves the final hurdle for Chevron's acquisition of Hess Corp. and removes a major uncertainty hanging over one of the world's most important new oil projects.

• Home Depot (HD) faced headwinds from both a cooling housing market and a planned consumer boycott. The boycott was organized in protest of the company's removal of its Diversity, Equity, and Inclusion (DEI) page from its website, illustrating how corporate decisions on social issues can create tangible financial risk in the current climate.

Commodities

Gold prices entered a consolidation phase as the market weighed geopolitical risks against a stronger U.S. dollar and diminished expectations for near-term Fed rate cuts. The precious metal fell 0.8% on Friday to close the week at approximately $3,341 per ounce.

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Baked with love,

Anna Eisenberg ❤️