Market Outlook: What to Watch for the Week of July 14–18
The markets enter next week walking a tightrope between resilient bullish momentum and growing macro risks.
While equities have largely survived recent trade war escalation, next week’s calendar, including CPI, PPI, retail sales, and the start of earnings season, will pressure-test that growth.
Expect volatility. Not just because of geopolitics, but because technicals are stretched, investor sentiment is divided, and several sectors are priced for perfection.
Let’s break it down.
1. The New Trade War: Higher Stakes, Lower Clarity
Markets ended last week on edge as the U.S. administration pushed forward with a fresh wave of tariffs—this time targeting key trade partners like the EU, Mexico, Brazil, and potentially Canada. A 30% tariff package has already gone live, with another tranche scheduled for August 1 unless negotiations shift course.
Despite the headlines, major indices held up. The S&P 500, Dow Jones, and Nasdaq all remain near record highs. However, relative strength indicators are flashing warning signs. The S&P and Nasdaq-100 are now firmly in overbought territory, and short-term momentum has slowed.
But the issue isn’t that tariffs are back. It's that markets don’t seem to be as phased as they should. But that could change quickly. Roughly 25% of S&P 500 companies are directly exposed to tariff-related costs, and analysts estimate up to 70% of those costs are being passed on to consumers.
This backdrop sets the stage for a potentially dramatic turn of events if upcoming data or earnings show cracks in corporate profit margins or consumer spending strength.
2. Earnings Season Begins: Big Banks Lead the Way
This is the real kickoff.
Monday opens Q2 earnings with the largest U.S. financials reporting this week: JPMorgan, Citigroup, Goldman Sachs, Wells Fargo, and Morgan Stanley. Early projections point to modest year-over-year earnings growth for the S&P 500 as a whole. But that number hides volatility under the surface.
Banks will face scrutiny on several fronts:
Net interest margin trends, especially after recent Fed guidance suggesting a potential pivot in late 2025
Loan growth and credit quality, especially in commercial real estate and consumer lending
Capital return plans, dividends, and buybacks
Guidance is key. Markets have already priced in relative strength from the banks this quarter. Any hint of top-line deceleration or expense inflation could trigger “sell-the-news” reactions.
Later in the week, watch for reports from Johnson & Johnson, PepsiCo, Novartis, GE Aerospace, and TSMC. Netflix will also post earnings, and the stakes are high. It’s one of the few Big Tech names that hasn’t participated fully in this year’s AI-led rally. Markets are watching for signs of user growth, pricing power, and international margins.
Semiconductor names, particularly TSM 0.00%↑ , will also be scrutinized. While AI demand remains strong, tariff risks and supply chain distortions could affect guidance.
Bottom line: next week isn’t just about beats or misses. It’s about forward commentary - particularly margin management in the face of rising costs.
3. Inflation & Spending: The Real Economy Gets Tested
Tuesday brings June CPI. Economists expect a modest uptick, with headline inflation rising to 2.7% year-over-year. A higher-than-expected CPI could rattle market expectations around Fed policy.
Wednesday follows with PPI, industrial production, and capacity utilization—vital reads on the health of manufacturing and input cost pressure.
Thursday features retail sales, homebuilder confidence, and business inventories. These are especially important in light of May’s soft consumer spending data. If June retail sales disappoint again, it may suggest tariff pass-through effects are already hitting household behavior.
Markets have been pricing in a soft landing - slow growth, falling inflation, and no recession. But that narrative depends heavily on consumers continuing to spend and inflation remaining contained. Any surprise in the data could shift bond yields and equity pricing quickly.
4. Oil and Commodities: Tight Markets Meet Trade Pressure
Oil prices rebounded into the end of last week after dipping mid-week on global growth concerns.
As of July 11, Brent crude rose 2.5% to $70.36/barrel, WTI up 2.8% to $68.45—driven by IEA warnings about a tighter physical market and fresh tariff impacts
Although OPEC+ increased output, inventory tightness persists due to strong summer refinery demand and backwardation .
A slight rebound in prices followed a mid-week dip after US tariff signals weighed on growth narratives
However, the oil complex is highly vulnerable to headlines right now. Any additional tariff actions—especially on energy or industrial materials—could hit demand forecasts and push prices down again.
Watch for U.S. crude inventory data on and natural gas storage levels. These reports could swing sentiment rapidly, particularly if they come in much above or below expectations.
Energy remains one of the few sectors positively correlated with inflation surprises. If CPI or PPI come in hot and oil follows, it may reignite rate hike concerns and add volatility to rates and equities alike.
5. Technicals & Sentiment: Fragile at the Edges
From a purely technical standpoint, this market is stretched.
The S&P 500 and Nasdaq-100 are both testing upper trendline resistance, with momentum indicators (RSI, MACD) beginning to fade. Breadth has narrowed considerably. Most of the recent upside has come from mega-cap tech and AI-linked names.
The VIX increased around 7% last week, not a panic move, but enough to signal caution. Traders are beginning to hedge, albeit lightly, ahead of a potentially volatile macro week.
That said, bullish sentiment remains firm. Nvidia’s recent surge past a $4 trillion market cap and continued bullish flows into semis and cloud infrastructure have created a powerful upward force. It’s not irrational, but it’s fragile. If earnings or macro data disappoint, especially from tech or banks, it won’t take much to unwind frothy trades.
The Big Picture: What Really Matters This Week
This isn’t just another earnings week. It’s a stress test.
The market is balancing three forces right now:
Tariffs: The latest escalation raises input costs and depresses margins—yet investors seem numb. That complacency could be challenged quickly.
Earnings: The bar is low in terms of YoY growth, but high in terms of expectations. Any stumble—especially on guidance—could spark volatility.
Macro Data: If CPI comes in hot, the Fed might have to push back on cuts. If retail sales come in weak, the soft landing narrative takes a hit.
In short, it’s not just about what the numbers say—it’s about how markets interpret the combination.
A strong CPI print plus a miss from JPM 0.00%↑? Bearish.
A soft inflation number plus blowout NFLX 0.00%↑ earnings? Bullish.
We’re entering an inflection point. The second half of 2025 will either confirm the rally or begin to fracture it. This week could tip the balance.
Tactical Thoughts: How to Position
Here’s how investors might think about navigating this environment:
Trim cyclicals with trade exposure: Industrials, materials, and some financials face near-term margin risk. Reallocate selectively.
Stay long AI, but hedge: Semis and tech remain strong, but the crowded nature of these trades calls for cautious trailing stops or light hedging.
Watch real yields: 10-year real yields remain attractive for conservative portfolios. A strong CPI print could push nominal yields higher, hurting duration.
Expect chop: Range-bound action is likely until one side of the macro/earnings puzzle resolves. Use volatility as an opportunity, not a surprise.
Concluding Thoughts
Next week isn’t just about data or earnings in isolation. It’s about how the three macro layers (policy, earnings, and purchasing power) interact in real time.
Markets are still giving the benefit of the doubt. But the conditions that supported the 2025 rally—disinflation, low volatility, and tech outperformance—are being tested.
If those cracks widen, we’ll need to adjust. If not, and earnings plus data surprise to the upside, the next leg of the bull market could begin.
Either way, this is a week to watch closely.