Your Capital Markets Snapshot: US Equities Rebounded Strongly

Last week, US equities rebounded strongly, led by technology and consumer discretionary stocks, with the S&P 500 gaining over 2% and the NASDAQ hitting a new record high. Corporate earnings continued to deliver upside surprises, especially among AI-related firms. Overall, reported EPS growth for Q2 climbed to 11.4%. Treasuries experienced slightly weaker demand at auctions. Yields experienced a modest steepening as short-term rates continue to tick lower while long-term rates higher. Renewed expectations of an impending rate cut appear to be part of the causes of falling short-term yields. Uncertainty on US monetary,
trade, and taxation policies are contributing to rising long-term rates. The services sector, which accounts for around 70% of US GDP, showed mixed signals but still appears to be signaling the sector is expanding, albeit at a slowing rate. Tariffs increased from the April 10% baseline for more than 90 countries, including a new 100% rate on semiconductors, though exemptions softened the impact. Tariffs vary widely from 10% to 50%, but most countries are facing rates within the 10% - 20% range.