Investor confidence holds firm

Last week marked the halfway point of summer. One might expect a seasonal lull on the stock market – but that was not the case. Activity remained high, volatility persisted and, most importantly, the market stayed strong, with indexes climbing to fresh highs.

The main benchmark of the U.S. market – the S&P 500 – rose 0.59% over the week, closing near record levels thanks to solid gains in the technology sector. The index ended Friday at 6,296.78, just below its all-time closing high of 6,297.36 set on Thursday. However, Friday also brought a new intraday peak of 6,315.61. As a result, the S&P 500 is up 1.5% in July and 7.1% since the start of the year.

The NASDAQ Composite, which tracks high-tech companies, continued its steady climb, setting new records almost daily. Last week, it added another 1.51% and edged closer to the 21,000 mark. On Friday, NASDAQ closed at 20,895.66 – its eleventh record high of the year.

Notably, this momentum is building against a mixed macroeconomic backdrop. On the one hand, U.S. consumer sentiment in July rose to a five-month high. On the other hand, one-year inflation expectations have now declined for a second consecutive month. At the same time, preliminary data from the University of Michigan survey show the consumer sentiment index is still 16% below its December 2024 level and well under its historical average.

ITS indexes are also setting new records. Both the ITS World Index (ITSW), which tracks global companies, and the ITS Shariah Index (ITSS), focused on Shariah-compliant securities, gained 1.5% over the week and closed at all-time highs. Year-to-date, both have outperformed the S&P 500: the ITSS is up 8.35%, while the ITSW has delivered a double-digit gain of 11.08%.

The week also saw the start of the second-quarter earnings season. As usual, the first results came from major U.S. banks. Some posted better-than-expected figures but remained cautious about the outlook. JPMorgan Chase (JPM) reported profits ahead of forecasts, helped by a rebound in investment banking amid improved market sentiment. However, CEO Jamie Dimon warned that the U.S. economy still faces serious risks – including pressure from trade tariffs.

Wells Fargo (WFC), another banking giant, also beat expectations but cut its full-year forecast for net interest income. Investor response to the banks’ results was generally muted, reflecting continued uncertainty over the strength of current market trends.

Donald Trump’s aggressive trade policy became a central topic just as earnings season gained momentum. Still, more than 80% of the companies that have reported so far have beaten analyst forecasts – a welcome signal amid the uncertain outlook for the remainder of 2025.

Technology stocks continued to lead the market. Without their contribution, the week’s results would have looked very different. The tech sector recorded the highest growth (+2.2%), followed by utilities (+1.62%), consumer cyclicals (+1.05%) and industrials (+0.99%).

Among individual names, Palantir Technologies Inc. (PLTR) stood out, gaining 8.03% over the week – one of the best performances in the S&P 500. Interest in the stock was fuelled by news that Knightscope (KSCP) had signed a two-year contract with Palantir under the FedStart programme, aimed at boosting sales to U.S. federal agencies. An upgrade from Mizuho – from “underperform” to “neutral” – also encouraged investor buying.

In summary, despite ongoing uncertainty, market optimism persists. This is largely driven by the strong performance of companies involved in AI infrastructure, cloud services and digital platforms. As a result, stock indexes continue to push to new highs, and the rally shows no signs of slowing down.

 

 

Market outlook for 21 July

This week promises to be both busy and intriguing, primarily thanks to the accelerating corporate earnings season that kicked off last week.

Over the coming days, companies from a range of key and closely watched sectors will report their second-quarter results – including telecommunications (VZ, T, TMUS), defence and aerospace (RTX, LMT, NOC), airlines (AAL) and rail freight (UNP), as well as the technology sector. In tech, all eyes will be on the results from GOOGL, IBM and INTC. Add to that Tesla’s (TSLA) report, due after the market closes on Wednesday, and it is clear what will be shaping investor sentiment this week.

Markets and analysts will also be watching Tuesday’s speech by Federal Reserve Chair Jerome Powell with great interest. He is scheduled to speak in the morning (Washington time) at the opening of a major banking conference. Following recent criticism from President Trump and rumours of a possible resignation, his remarks will attract even closer scrutiny than usual.

On the macroeconomic side, this week’s main focus will be housing market data – covering both new and existing home sales. These figures are often seen as early indicators of broader economic momentum and will no doubt attract analysts’ attention, though they are unlikely to have a significant impact on overall investor sentiment.

As the week gets underway, the backdrop is broadly positive. No major negative developments emerged over the weekend, and global stock markets have opened on a firm footing. Most exchanges are trading higher, with the exception of Japan, where the Nikkei 225 is down 0.2% amid investor caution ahead of the upcoming parliamentary elections. However, this remains a local issue with little bearing on global sentiment.

Futures on major U.S. indexes are up around 0.25% by midday on Monday, pointing to a potentially upbeat start to the trading session. This raises the prospect of new record highs. If nothing disrupts sentiment, we may well see the Dow Jones Industrial Average (DJIA-30) join the rally by midweek – it remains the only major U.S. index yet to set a new peak during the current run.

One stock to watch today is fintech firm Block Inc. (XYZ), whose shares jumped nearly 10% in after-hours trading on Friday. The move followed the announcement that the company will be added to the S&P 500 index – replacing Hess, recently acquired by oil major Chevron (CVX). The change takes effect before trading opens on Wednesday.

All in all, this summer continues to favour investors – and there is every hope that the positive trend will hold for a while longer.