Weekly Market Commentary - July 7
Week In Review
In a holiday-shortened week, major U.S. equity indices continued to drift higher, with market sentiment
boosted by successful trade negotiations, a resilient labor market, and the enactment of President Trump’s “One Big Beautiful Bill Act” by both the House and Senate. On Wednesday, the White House announced a preliminary trade deal with Vietnam that imposes a lower-than-expected 20% tariff on Vietnamese exports to the U.S. and levies a 40% tariff on goods re-exported through that country.3 While potentially reigniting trade tensions with China, market momentum was strong on the news, with the S&P 500 index closing at a record high, as investors saw the framework as a harbinger of future trade progress. Equity markets found support in the most recent economic data as well. Nonfarm payrolls increased by 147,000 in June, far exceeding forecasts, while the unemployment rate fell to 4.1%. Robust job growth reduces economic uncertainty but also lowers the probability of a rate cut in July. Passage of President Trump’s platform legislation that extends tax cuts and funds higher energy and defense spending also helped equity prices. The S&P 500 rose +1.7% on the headlines. Given the full recovery from the April sell-off, equity valuations might warrant a more defensive stance.
This Week
The imposition of higher duties on imports from trading partners was set to begin this Wednesday, but
President Trump confirmed on Sunday that tariffs will go into effect August 1st, not July 9th . Trade updates and tariff uncertainty could raise market volatility and instigate a risk-off sentiment.
Portfolio Theme
Last week, we discusse
the possibility of superior price appreciation in international equities. If U.S. equity market volatility increases due to the ambiguity surrounding trade policy, international dividend-paying stocks may generate higher income and a measure of stability. Simplicity offers diversified portfolios that may mitigate the reliance on any single market.
_________________________________________
Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from Capital Group.
1 Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.
2 Index Statistics: P/E Ratio – Displays the forecasted P/E ratio of the representative index ETF. Yield - Dividend-per-share divided by current share price. Table statistics are updated weekly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX). Past performance does not guarantee future results.
3 Reuters.
Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.
