This week marked new all-time highs for the S&P 500 and Nasdaq. While the S&P 500 and Nasdaq are only a few percentage points away from being up double-digits this year, the Dow Jones and Russell 2000 have yet to surpass their previous highs. With inflation being kept at bay, unemployment being low, and the broad market reaching new highs, the most significant potential economic disruption that remains are tariffs. The following month will be telling for the remainder of the year as we approach the new tariff deadline.
In tariff news, President Trump publicized letters to 22 countries, creating new tariff rates, including a 50% tariff on Brazilian imports. Late Thursday night, President Trump threatened Canada with a 35% tariff, excluding sectors such as steel, aluminum, autos, and copper, as these already have tariffs in place. A White House official stated no final deal on Canadian goods has been drafted yet. The European Union should be informed by the end of the week of its expected tariff rate. The initial 90-day pause in reciprocal tariffs, which was to end on July 8th, has now been extended to take effect on August 1st. As we have seen already this year, only time will tell if these tariffs will be implemented or if their purpose is to create new trade deals.
In company news, this week has been relatively muted as we await the beginning of a new earnings season next week. Airline stocks had a strong week thanks to Delta Air Lines' reporting of robust earnings, stabilization in bookings, and solid earnings guidance. Falling oil prices have also assisted airline stocks. Levi’s reported a strong quarter with earnings beat and strong 2025 guidance provided. One stock that made headlines again this week is Nvidia. It reached a market capitalization of $4 trillion on Wednesday, further solidifying its place as the largest company in the world. For perspective, this represents 7.5% of the total market capitalization of the entire S&P 500 index.
This week has also been relatively quiet in terms of new economic data, aside from a critical piece of data. This morning, it was announced that the US collected $27 billion in tariff revenue in June, a 301% increase from June 2024. This additional revenue brings the total tariff collections to $113 billion for the year, representing an 86% increase from last year. Treasury Secretary Scott Bessent stated this figure could reach $300 billion by the end of 2025. Initial jobless claims were reported on Thursday and dropped for a fourth straight week to 227,000, below the median forecast of 235,000. US consumer credit outstanding increased $5.1 billion in May, indicating no major concerns at present.
The tradition of celebrating independence with fireworks first began in 1777 in Boston and Philadelphia. It was John Adams who first put pen to paper on what the celebration should be like: a celebration with "pomp, parade, shows, and illuminations." Last week, Americans spent an estimated $2.8 billion on fireworks to celebrate the founding of our nation. $2.3 billion of that comes from consumer fireworks, with the rest from large-scale professional display shows. This number has doubled since 2019, amounting to $6.76 spent per American on fireworks. However, they are not the most expensive item for celebrating the nation. Fireworks come in third in Fourth of July spending (14% of total spending), with alcohol second (25% of total spending) and food first (61% of spending). The most popular Fourth of July food will not come as a surprise: hot dogs, with Americans eating roughly 150 million on Independence Day. Of the 150 million, Joey Chestnut (world hot dog eating champion) was able to contribute a small amount to that figure by eating 70.5 hot dogs in just 10 minutes, guiding him to his 17th title at Nathan's Famous Hot Dog Eating Contest. Whatever the official amount of Fourth of July spending was this year, what is certain is that next year's spending will certainly eclipse this figure, as plans are already in place to celebrate the 250th anniversary of the signing of the Declaration of Independence. Adams would not be disappointed with our present-day, Fourth of July festivities.
Ryan Motsinger
