Weekly Market Update

Market Update: Stocks Slip Amid Tariff Uncertainty

Stocks slipped this week as President Trump granted another 90-day extension for steeper China tariffs and traders eyed a key inflation reading. The Dow Jones Industrial Average fell 0.5%, while the S&P 500 dropped 0.2%. Despite the decline, strategists remain optimistic about the market's prospects, citing strong earnings growth and a potential rate cut from the Federal Reserve.

Key Takeaways:
• President Trump extended China tariff deadline until November 9
• Stocks slipped on Monday as traders eyed inflation reading
• Strategists remain bullish on market prospects, citing strong earnings growth and potential rate cut

Earnings Season Update

A stronger-than-expected second-quarter earnings season has Wall Street increasingly confident that the S&P 500 has room to run higher in 2025. Citi's Scott Chronert boosted his year-end target to 6,600 from 5,950, citing accelerating earnings growth and a potential rate cut.

AI Trade Continues to Drive Market

The AI trade remains a key driver of the market, with nearly all of the top-performing stocks in the S&P 500 having some sort of AI growth story attached. Citi's Scott Chronert believes the longer-term opportunity in the market remains in identifying companies that will eventually benefit from AI boosting margins and productivity.

Rate Cut Hopes Ebb Amid Inflation Shock

Hopes for a large rate cut from the Federal Reserve have begun to ebb amid economic data showing higher-than-expected wholesale inflation. The Dow Jones Industrial Average fell slightly, while the S&P 500 rose just above the flatline.

Goldman Sachs Warns of Underlying Risks

Despite the market's stability, Goldman Sachs warns that underlying risks could send stocks tumbling. The bank notes that a drawdown, or sharp market decline, is now elevated and could be triggered by factors like high stock valuations and a weakening business cycle.