By Christine Idzelis
Stock-market volatility has dropped this week amid tariff-related developments
Wall Street’s so-called fear gauge dropped this week as U.S. stocks continued to set record highs, with investors appearing encouraged in part by the White House’s progress on the global trade front.
The Cboe Volatility Index VIX saw a weekly decline of 9% to end Friday at 14.93 – the gauge’s lowest close since February, FactSet data show.
The U.S. stock market saw an “impressive” run of consecutive record highs this week, as investors got more clarity on tariffs against the backdrop of a “nice, solid earnings season” so far for S&P 500 SPX companies, said Chris Haverland, global equity strategist at Wells Fargo Investment Institute, in a phone interview Friday.
The S&P 500 booked its fifth straight record closing peak on Friday, while the technology-heavy Nasdaq Composite COMP also notched a new all-time high. The Dow Jones Industrial Average DJIA ended just 0.2% below its record close on Dec. 4, according to Dow Jones Market Data.
The market seems to be “taking comfort” in President Donald Trump getting more trade deals done this week, including with Japan, Indonesia and the Philippines, according to Haverland. Additionally, European Commission President Ursula von der Leyen said in a Friday post on X that following “a good call” with Trump, “we have agreed to meet in Scotland on Sunday to discuss transatlantic trade relations, and how we can keep them strong.”
Check out: Trump’s trade deals: Here are the countries that have made agreements, and those that haven’t
Meanwhile, as more companies rolled out their second-quarter earnings results this week, there was only “a little bit” of margin deterioration from tariffs, which has helped a high percentage of businesses beat expectations so far, according to Haverland. The bar had generally been low heading into the latest corporate earnings season due to concerns about the potential impact from levies, he explained.
Google parent Alphabet Inc. (GOOGL) (GOOG) was among companies to report earnings this week, with the Big Tech company’s stock seeing a weekly gain of 4.4%, according to FactSet data.
Alphabet’s “strong results and raised [artificial-intelligence] spending have supported the AI narrative,” said Louis Navellier, chief investment officer at money-management firm Navellier & Associates, in emailed comments Friday. “Stocks continue to have the wind at their back on the strength of above-average earnings beats and optimism over tariff outcomes.”
Big Tech stocks, which have an outsize weight in the S&P 500, were mostly up this week.
The Roundhill Magnificent Seven ETF MAGS – an exchange-traded fund that holds seven closely watched Big Tech stocks including Alphabet, Microsoft Corp. (MSFT), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Nvidia Corp. (NVDA), Tesla Inc. (TSLA) and Facebook parent Meta Platforms Inc. (META) – ended Friday up 1% on the week. Alphabet easily had the biggest weekly rise in the ETF’s portfolio, with only Tesla in the red for the week, FactSet data show.
Read: Why Tesla analysts are mostly upbeat about earnings, but investors aren’t happy
Next week, all eyes will be on the Federal Reserve, which will announce on July 30 its decision on where to set interest rates. The Fed has been monitoring the impacts of tariffs on the U.S. economy, including the potential for them to increase inflation for consumers.
Read: Trump went to the Fed to pressure Powell. Did he chicken out instead?
Investors are widely expecting that the Fed will keep its benchmark rate at the current target range of 4.25% to 4.5%. Federal-funds futures were indicating on Friday a 97.4% probability of that outcome from the central bank’s two-day policy meeting next week, and a 62.4% chance that the Fed will cut its policy rate by a quarter of a percentage point in September, according to data from the CME FedWatch Tool, at last check.
“We expect the Fed to hold next week,” said Haverland. “We expect one cut this year.”
-Christine Idzelis
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