Market Recap - Week of July 7 through July 11, 2025

Dear Friends,

Most weeks, I take a look at the past week and write about what’s happening in the market, along with key economic indicators and a chart of the week that takes a deeper dive into something you might not see elsewhere. Here we go…

Market Recap - Week of July 7  - July 11, 2025

The S&P 500 index edged down 0.3% this week amid the Trump administration's latest tariff threats.

The S&P 500 ended Friday's session at 6,259.75, slightly below record highs it had just reached a day earlier. The market benchmark hit a new intraday high on Thursday at 6,290.22 before ending the day's session at 6,280.46, its highest closing level ever. The index is up 0.9% for the month and 6.4% year-to-date.

President Donald Trump, on Thursday evening, said the US will raise its tariff on imports from Canada to 35% from a prior rate of 25%. Goods that comply with the nations’ free-trade agreement would be exempt for now, a White House official said, but investors were still concerned by the threat.

Trump also warned of plans to impose blanket tariffs of 15% to 20% on most trading partners, up from a 10% baseline rate, in an interview with NBC.

The financial sector had the largest percentage drop of the week, down 1.9%, followed by a 1.8% decline in consumer staples and a 1.2% slip in communication services. Real estate, health care, and materials also edged lower.

On the upside, the energy sector climbed 2.5%, followed by a 0.8% rise in utilities. Industrials, technology, and consumer discretionary also eked out slight gains.

Last Week’s Economic Reports

Last week, initial unemployment claims were reported down 5,000 to 227,000 for the week. May consumer credit data was released, showing that US consumer credit grew by $5.10B in May, less than expected and a deceleration from April's number.

S&P 500 Sector and Stylebox Returns

Thought of the week:

Economic forecasting has become an increasingly challenging task due to the ever-evolving tariff landscape. A major source of confusion has been the difference between statutory (or announced) and effective tariff rates. For example, the tariff paid by importers may be 25%, but when you calculate the effective rate by dividing tariff revenues by import values, it often appears lower. This occurs due to real-world complexities, including exemptions, quotas, shipping delays, and shifts in product mix.

This week's chart illustrates the significant changes in both statutory and effective tariff rates since the start of the year. The gap between these rates is wide due to implementation delays and a dramatic shift in import share composition, both by product and country. Imports from China, which are subject to the highest tariffs at an estimated effective rate of 40%, have plummeted, decreasing by 24% y/y from March to May 2025. In contrast, imports from the Eurozone, now facing an effective tariff of approximately 10%, have surged, largely driven by the front-loading of products like pharmaceuticals. The data shows that importers are actively seeking substitutes from other countries to circumvent these tariffs.

The terminal tariff rate remains uncertain, but a rate in the high teens is becoming more likely. The Section 232 investigations are almost complete, indicating more sector tariffs could be introduced, along with the already announced 50% copper tariff. Additionally, recent negotiations with Vietnam, which initially raised hopes for lower rates, concluded with a 20% tariff on products originating in Vietnam, exceeding the previously announced 10% during the 90-day pause. This outcome makes other negotiations look less promising. As a result, investors may need to exercise greater caution and actively manage their exposure to affected companies.

Source: JP Morgan

Up Next

Economic data due next week will include the June consumer and producer price indexes, as well as June retail sales, housing starts, and building permits.

Want more? You can always find our latest Monthly Market Update webinar here:

https://www.youtube.com/@Silverstone_Financial

All the Best,

Gordon Achtermann, CFP®

gordon@silverstone.financial

703-573-7325

Your Best Path Financial Planning

https://www.yourbestpathfp.com

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