Following a busy last week, the stock market has responded positively, with the S&P 500 poised to finish up roughly 2% for the week. This is the first week that President Trump’s new reciprocal tariffs have been in effect, with an average tariff rate ranging from 15% to 20%. As the news has been filled with economists and analysts offering diverse views on the efficacy of tariffs, only time will tell how they will impact the economy and the stock market.
The earnings season is coming to a close, with almost 90% of S&P 500 companies having reported. Of those reported, 81% of S&P 500 companies beat earnings estimates. This is slightly higher than the 10-year average of 75%. As always, of particular importance are the earnings results of the Magnificent Seven stocks. So far, so good. Microsoft, Apple, Amazon, Meta, and Alphabet each beat their earnings estimates, with Tesla being the only one to come up short. Nvidia’s earnings announcement is not until late August.
The tech company that specializes in providing ad automation to large companies, The Trade Desk, announced on Friday that its CFO has resigned. Along with this news, the company forecasted a significant slowdown in growth, which combined to send its stock down nearly 40% on Friday. A substantial reason for the estimated slower growth is the expected impact of tariffs. One industry that is being heavily impacted by the newly effective tariffs is the automotive industry. Toyota made headlines this week by projecting that tariffs would cause a $9.5 billion hit on sales. Stellantis and GM are also facing a significant uphill battle in navigating and adjusting to tariffs. DoorDash reported earnings on Wednesday and is showing no signs of slowing growth. The online food ordering and delivery company boasts an annual revenue growth rate of 25%, with the majority of this growth attributed to Gen Z and millennials. These two generational groups comprise roughly 80% of total orders.
In economic data news, this week has been a time of digesting last week’s news, which a University of Cincinnati professor of economics called “the Super Bowl for economic data.” To recap what data came out last week, GDP grew at a rate of 3% last quarter, President Trump’s reciprocal tariffs went into effect, there was a downward revision of 258,000 jobs for May and June which signaled a slowdown in the labor market, and the chances of a Fed rate cut in September have dramatically increased. This week, it was announced that disposable income grew by 0.3% in June, while personal income decreased by 0.4% in May. Consumer credit rose by 2.3% in Q2, with nonrevolving credit up 2.9%. Notably, the international trade deficit decreased from $71.7 billion in May to $60.2 billion in June.
In 1889, history was made in Naples, Italy, by chef Raffaele Esposito. It is said that Esposito created the first archetypal Margherita Pizza for Queen Margherita of Savoy, and it became so popular in the royal court that it was named the Margherita pizza. Esposito ensured that the pizza represented the colors of Italy, featuring the three main ingredients: basil, mozzarella, and tomato. However, Esposito may be shocked to learn that today in Rome, there exist pizza vending machines. This machine, named Mr. Go, makes fresh pizza from scratch by mixing flour and water, pressing it into disc-shaped pizzas, and covering it with sauce and cheese all in under three minutes. There have been highly mixed reviews ranging anywhere from delight to utter horror. Some customers have said that it’s acceptable if you’re in a hurry, while others are saying the vending machine pizza is of low quality and tastes more like an Italian bread wrap. However, for many Italians, watching a pizzaiolo make pizza in a wood-fired oven is priceless in the experience of having pizza. I am sure Chef Esposito would agree.