Markets ended the week lower as corporate earnings, Middle East developments, and new tariff announcements all vied for investors’ attention. Yields continued to rise with the 10-Year Treasury yield reaching as high as 4.72%, its highest level since January 2025, as investors continued to fret about the impact of renewed fighting between the US and Iran and its impact on energy prices and inflation. At the same time, the 30-Year Treasury yield reached 5.19%, its highest level since 2007.
Developments in the Middle East continued to trend in the wrong direction with the US striking Iran throughout the week, while Iran countered by targeting US military sites in neighboring countries. Energy prices responded predictably with US crude oil trading back above $93/barrel, its highest level since early June. However, the two sides appeared to pause their attacks over the weekend, providing hope that peace negotiations might resume.
President Trump announced new tariffs ranging from 10-12.5% on 60 trading partners saying they had failed to adequately enforce a ban on goods made using forced labor. The tariffs, which took effect Friday, effectively apply to all imports entering the US and replace prior tariffs invalidated by the Supreme Court in February. Separately, Trump announced a 50% tariff on ~$20B of Canadian goods, set to take effect in late August.
Through Friday, 27% of S&P 500 companies had reported second quarter earnings with 86% beating their consensus estimate. According to industry group FactSet, consolidated earnings growth is currently expected to be 38%, which would be the strongest since 3Q21. However, excluding Google-parent Alphabet, whose earning benefitted from a large unrealized gain on equity securities, consolidated earnings growth would still be forecast at 26%.
