Markets Close at Record Highs Led by Technology Stocks

On July 24, 2025, US equity markets set new records, buoyed by strong gains among major technology stocks. The S&P 500 and NASDAQ both ended the day at all-time highs, reflecting both positive investor sentiment and robust quarterly earnings from tech giants. Alphabet, parent company of Google, reported impressive second-quarter results, affirming soaring demand for artificial intelligence (AI) investments across the digital ecosystem. This offset weaker performance from electric vehicle leader Tesla, whose Q2 earnings lagged market expectations and raised concerns about the pace of innovation and margin pressures in the auto tech sector.

While the technology sector attracted most of the investor attention, performance outside large-cap tech stocks was more subdued. The Dow Jones Industrial Average (“The Dow”) retreated moderately, and the Russell 2000, a key gauge of small-cap stocks, also posted losses—demonstrating a bifurcated market where mega caps continue to outperform.

Internationally, markets responded positively to the broader environment, with Japan’s Nikkei 225 surging further after the announcement of a major US-Japan trade agreement. European and Korean stock markets also gained on speculation that similar trade pacts could soon be finalized, providing a welcome lift to global risk sentiment and helping to reduce financial market volatility.

Trade Agreements: Progress and Impact

The centerpiece of this week’s market optimism has been mounting progress on the trade policy front. The new US-Japan trade agreement, announced this week, marks the sixth such deal completed since the so-called “Liberation Day,” signaling a shift away from trade brinkmanship and toward more negotiated settlements. Reports suggest that parallel agreements with the European Union and South Korea are close to being inked, each expected to set a standard 15% tariff rate on imports, down from the much steeper tariffs previously threatened for implementation on August 1st.

Korea, in its upcoming trade pact with the US, is also expected to announce significant investments into American industries, echoing the terms agreed with Japan. These deals could help restore stability and predictability to global supply chains and encourage new cross-border investments after months of escalating uncertainty. However, a 15% tariff still represents a considerable leap from prior rates, raising costs for US importers and global exporters alike.

Not all partners have fared equally: Vietnam, for instance, revealed that its agreement with the US would impose a 20% tariff on goods primarily produced in Vietnam, and a 40% tariff on goods transshipped from China. Projections suggest that Vietnam’s exports to the United States could fall by up to a third as a result, highlighting the disruptive potential of even moderate trade barriers.

Meanwhile, US President Donald Trump signaled that the new 15% tariff benchmark is unlikely to be the ceiling. Certain trade partners might still face tariffs as high as 50%, leaving uncertainty-and headline risk-undiminished for some sectors.

Economic Data: Mixed Signals Amid Tariff Headwinds

Despite the significant changes in global trade policy, US jobless claims data offered a measure of resilience. Initial claims for unemployment insurance ticked slightly lower last week, indicating that layoffs have not yet accelerated in response to tariff uncertainty. However, continuing unemployment claims edged higher, suggesting that those who do lose jobs are finding it harder to re-enter the workforce.

The broader growth outlook for the US economy remains subdued. Dragged by persistent trade friction and elevated input costs, real GDP is now tracking at around a 1% annualized growth pace for the first half of 2025, according to Federal Reserve estimates. Market strategists at major banks, such as JPMorgan and Goldman Sachs, broadly agree that tariffs are squeezing corporate margins, stifling hiring, and threatening to erode consumer purchasing power as firms pass higher costs along in the form of increased prices.

The Federal Reserve has taken a patient stance, keeping rates steady while monitoring inflation and labor market developments. With inflation showing signs of cooling toward the Fed’s target range, consensus expectations no longer call for imminent rate cuts, but rather a steady ‘wait and see’ approach through the remainder of 2025.

In Canada, the challenges are even more pronounced. The latest retail sales report disappointed forecasts, and unemployment has risen in recent months. Canadian officials, including Prime Minister Mark Carney, are working urgently to finalize a deal with the US to shield the Canadian economy from the negative spillovers of a deepening trade dispute with its top trading partner.

Outlook: Navigating the Second Half of 2025 and Beyond

Looking forward, most forecasters expect the US and global economies to remain under pressure in the second half of 2025 if tariffs remain in place. Corporations may shift capital spending plans, slow hiring, or pass cost increases along to end consumers. However, the resilience of corporate balance sheets and a flush consumer sector may cushion the downside and prevent a recession, especially as wage growth remains robust and borrowing costs manageable.

There is also cautious optimism that economic momentum could rebound in 2026. If the initial shock of new tariffs is absorbed and offset in part by anticipated tax cuts and deregulation efforts, business confidence and consumer activity could recover, setting the stage for a resurgence in both investment and hiring.

Long-term investors are encouraged to remain diversified, focus on quality assets, and take a measured approach amid increased volatility and uncertainty. As always, close attention to economic data, policy announcements, and company fundamentals will be critical for navigating rapidly shifting capital markets.

Investment Strategy and Professional Guidance

For wealth management clients and investors, the overarching guidance remains unchanged: maintain a disciplined, diversified portfolio aligned with long-term goals and risk tolerance. Systematic investing and a patient, long-term orientation continue to be effective strategies, especially during periods of macroeconomic and geopolitical turbulence.

The Edward Jones Investment Policy Committee meets regularly to review economic developments and update asset allocation guidance. Their focus remains on quality, diversification, and a time-tested approach to building wealth amid uncertainty. As always, investors should consult with their financial advisors before making significant changes to their investment portfolios.