Markets in vacation mode, but risks haven’t gone away
By Jeff Powell, CEO
With our Chief Investment Officer Thierry Hasse spending some time in the south of France — likely enjoying fresh croissants, local wine and a peaceful pace with spotty internet at his family’s summer cabin — I’m stepping in with this week’s market update. While Thierry enjoys the slower rhythms of Provence, markets here at home seem to be in their own version of vacation mode: calm, buoyant and largely unbothered.
CEO Jeff Powell
Last week, the Nasdaq and S&P 500 reached record highs. Tech stocks, especially those tied to artificial intelligence and semiconductors, continued to lead, while economic data offered just enough strength to reinforce the current optimism. Bond yields drifted gently lower. Tariff headlines? Largely ignored. Earnings season? Off to a stable start. If you only read the surface, you’d assume we’re in smooth sailing territory.
But here’s the thing: just because markets are relaxed doesn’t mean risks have packed up and left town.
Looking Back: Momentum Marches On
Let’s take a quick look at what moved the markets:
Nasdaq and S&P 500 set fresh records, driven by gains in semiconductor and AI-related stocks, including Nvidia and AMD. The Nasdaq rose 1.5% on the week, while the S&P 500 added 0.6%, both closing at all-time highs on Friday (Reuters, July 18, 2025).
Retail sales came in stronger than expected for June, increasing 0.3% month-over-month—above the 0.1% consensus estimate — suggesting continued consumer resilience (Reuters, July 16, 2025).
Inflation data remained stable, with the Core Consumer Price Index rising 0.2% in June and 3.4% year-over-year, in line with expectations. These figures support market expectations of a potential Fed rate cut later this year (Wall Street Journal, July 17, 2025).
Bond yields dipped, with the 10-year U.S. Treasury yield falling to around 4.42% by week’s end, easing from prior levels as investors priced in the possibility of easing monetary policy (AP News, July 19, 2025).
Tariff concerns re-emerged, with the administration reiterating plans for a potential Aug. 1 increase in import tariffs on goods from the EU, Canada and Mexico. Markets brushed off the noise, viewing the announcement as posturing rather than imminent policy, though escalation could change that — potentially hitting sectors like automakers or tech firms reliant on EU components with higher cost pressures.
While last week’s calm set a positive tone, the coming days bring events that could test this optimism.
What We’re Watching This Week
With earnings season heating up and key economic indicators ahead, here’s what we’re paying attention to:
- Corporate Earnings: Big Names on Deck
This week brings results from Tesla, Alphabet (Google), Coca-Cola, IBM, GM and Intel. Beyond the numbers, we’ll be listening closely to commentary on profit margins, consumer behavior, and global supply chains. - Tariff Timeline
An August 1 deadline approaches for potentially steep U.S. tariffs on goods from the EU, Mexico and Canada. Markets have so far shrugged, but any signs of escalation could shift sentiment quickly. - PCE* Inflation Reading
The Fed’s preferred inflation gauge lands Thursday. A cooler (lower) number keeps rate-cut hopes alive; a hotter (higher) number could spark renewed concern about inflation and tariff impacts, potentially delaying easing.
*The Personal Consumption Expenditures Price Index tracks how much U.S. households are spending on goods and services. It reflects changes in prices over time and also accounts for changes in consumer behavior (like switching to cheaper alternatives). The Fed favors PCE because it better reflects shifts in consumer spending patterns than CPI. - Momentum vs. Fundamentals
The current rally has been led by a concentrated group of stocks, which can create short-term momentum but also longer-term risk—if these leaders falter, broader market corrections could follow. This concentration underscores why our diversified portfolios aim to protect against sudden shifts in market leadership, helping ensure your plan is prepared for whatever comes next.
In the Week Ahead
Thierry will return next week, likely well-fed, well-rested, and ready to dive back into the data. Until then, our Investment Committee is wide awake — even if the markets are still half asleep. We’ll be watching earnings results, policy developments, and investor behavior closely in the days ahead. Our team is ready to adjust portfolios as needed based on these developments.
The information contained herein represents the views of Elevage Partners at a specific point in time and is based on information believed to be reliable. No representation or warranty is made concerning the accuracy of any data compiled herein In addition, there can be no guarantee that any projection, forecast, or opinion in these materials will be realized. Any statement non-factual in nature constitutes only current opinion which is subject to change. These materials are provided for informational purposes only and do not constitute investment advice. Any reference to a security listed herein does not constitute a recommendation to buy, sell, or hold such security. Past performance is no guarantee of future results. The historical returns of any securities and/or sectors mentioned in this commentary are not necessarily indicative of their future performance.