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Markets hold after weak data and tariff shocks
Stocks drift with mixed data as earnings and rate cut expectations keep traders engaged.
Markets shrug weak data and tariffs as investors focus on profits and possible rate cuts.
Stock Market Defies Weak Data and Political Turmoil
U.S. stocks closed mixed, with the Nasdaq up 0.4% since last Tuesday while the S&P 500 slipped 0.6% and the Dow fell 1.4%. A weak jobs report and slower first-half growth raised recession concerns, but indexes stay higher than three months ago. Strong earnings from Meta and Microsoft helped support gains, and traders priced in possible Fed rate cuts. Tariffs affecting almost 70 countries and the firing of BLS Commissioner Erika McEntarfer added political overtones to the data scene.
Over the three months to July, job growth averaged about 35,000 per month, the weakest pace since 2020. First-half GDP rose at 1.2% annualized, well below last year’s pace. Despite the mixed data, investors kept faith in earnings momentum and broad market strength. If tariffs persist and hiring slows, the economy could face higher costs and slower growth, but many traders expect policy accommodation to cushion the slowdown in the near term.
Key Takeaways
"Markets like to focus on earnings"
Ed Yardeni on what drives stock gains amid soft data
"There’s nothing better for the market than a rate cut"
Steve Sosnick on policy signals guiding investors
"The mindset of the market is to embrace risk because that brings rewards"
Steve Sosnick on risk tolerance in markets
"The economy has largely averted widespread job losses"
ABC News summary of the jobs data
Markets are signaling a bias toward earnings resilience and policy signals over isolated data points. The firing of the BLS commissioner after a weak jobs release adds political risk that could shake confidence in official statistics, even as revisions remain routine. Tariffs complicate inflation dynamics and the Fed’s path, potentially forcing a difficult stance between supporting growth and keeping prices in check. If rate cuts materialize while tariff pressures linger, stagflation risks could rise and test the durability of the current rally. Still, the willingness of investors to chase profitable firms suggests a belief that earnings can sustain prices even when data paints a softer portrait of the economy.
Highlights
- Markets focus on earnings even when the data looks soft
- There’s nothing better for the market than a rate cut
- Markets shrug risk and chase profits regardless of the data
- Earnings are the ballast keeping this rally afloat
Political and data integrity risk from BLS firing and tariffs
The dismissal of the BLS Commissioner following weak jobs data, combined with broad tariff actions, introduces political risk and questions about data independence. Markets may react in the short term, but long-term trust in official statistics and policy signaling could be affected.
The road ahead will test whether optimism can outpace a growing mix of headwinds.
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