Market Movements and Macro Trends

Ray Marce

Alright, welcome back to Equity Research and this weeks market update for the week ending July 11th. I’m Ray Marce, here with Mark Dalli. Mark, it’s been a bit of a choppy week, hasn’t it? The S&P 500 finished down about 0.31%, closing at 6,259.75. Not a huge move, but enough to get people’s attention.

Mark Dalli

Yeah, Ray, and the Dow was even weaker—down about 1%, closing at 44,371.51. The Nasdaq, though, barely budged, just a 0.08% dip. It’s interesting, considering all the tariff noise in the background, that tech held up better than the broader market.

Ray Marce

Yeah, and you know, I was looking at the Treasury yields this week. The 10-year moved up from 4.35% to 4.43%, and the 30-year from 4.86% to 4.96%. It’s not a massive jump, but it’s enough to make you pause and think about what the bond market’s telling us. I remember back in 2022—maybe it was late 2021, actually—there was this tiny move in yields, and it completely shifted how I was positioning my portfolio. I mean, I went from overweight growth to trimming risk in, like, a week. It’s funny how those little moves can have outsized impacts, especially if you’re running a concentrated book like I do.

Mark Dalli

Absolutely. And those yield moves, even if they seem minor, can signal a lot about market sentiment. Investors are probably pricing in a bit more inflation risk, or maybe just bracing for whatever’s coming next on the policy front. And, you know, with oil holding steady at $68.45 a barrel and gold at $3,354 an ounce, it feels like the market’s just waiting for the next shoe to drop. Not panicking, but not exactly bullish either.

Ray Marce

Yeah, it’s that sort of cautious, sideways vibe. And I think, as we’ve talked about in previous episodes, sometimes it’s the anticipation of news—like tariffs or earnings—that drives more of the action than the actual data itself. This week, it was all about waiting for those big bank earnings next week, right?

Mark Dalli

Exactly. No major S&P 500 earnings this week, so everyone’s just kind of holding their breath. But those yield moves, and the way the indices reacted, definitely set the stage for what could be a more volatile stretch ahead.

Mark Dalli

Let’s dig into the economic data, because there were a couple of numbers that stood out. First, the June employment report—147,000 jobs added, unemployment ticking down to 4.1%. Not a blowout, but it’s steady. I’d say it’s a sign the labor market’s still got some resilience, even with all the macro headwinds.

Ray Marce

Yeah, and I think that’s what’s keeping the market from really rolling over. If you’d told me a year ago we’d be adding jobs at this pace with rates where they are, I’d have been skeptical. But here we are. And then there’s the budget number—$27 billion surplus for June. That’s a massive swing from the $316 billion deficit the month before. Mark, you’ve got more experience with fiscal cycles than I do. What’s your take?

Mark Dalli

Well, Ray, it’s a big headline, but you have to remember, June is often a surplus month because of quarterly tax payments. Still, the swing is notable. It gives the government a bit more breathing room, at least for now. But I wouldn’t read too much into a single month. The bigger question is whether this signals a shift in fiscal policy or just a blip. For investors, it’s more about what this means for rates and sector outlooks. If the government’s not borrowing as much, maybe there’s less upward pressure on yields, but with those yields still creeping up, it’s not a clear signal.

Ray Marce

Yeah, and I think for sectors, it’s a mixed bag. A strong labor market is good for consumer stocks, but higher yields can be a headwind for growth names. And if fiscal policy does tighten, maybe that’s a drag on infrastructure or defense. It’s all interconnected, and I think that’s why you’re seeing investors just kind of tread water this week—nobody wants to get caught on the wrong side of a sudden shift.

Mark Dalli

Right, and as we’ve said before, it’s about staying nimble. The numbers are decent, but the market’s looking for direction. Next week’s bank earnings could give us a better read on how these macro trends are playing out at the company level.

Ray Marce

Let’s talk about the global side, because tariff chatter was everywhere this week. President Trump’s threat of a 35% tariff on Canada made headlines, but the market reaction was, well, pretty muted. I mean, you’d expect more volatility, but it just didn’t materialize.

Mark Dalli

Yeah, and that’s interesting, isn’t it? Maybe investors are just numb to tariff threats at this point, or maybe they’re waiting to see if it actually happens. Meanwhile, if you look at international markets, the STOXX Europe 600 was up 1.15%, while the Nikkei 225 dropped 0.61%. So, you’ve got Europe shrugging off the noise, but Japan’s a bit more cautious.

Ray Marce

It’s a good reminder that these global moves don’t always sync up. And, Mark, you’ve got a great perspective on this—how have past tariff threats actually played out for sectors like banking? I know next week’s all about the big U.S. banks reporting.

Mark Dalli

Yeah, so, if you look back at previous tariff cycles—2018, 2019—bank earnings often took a hit, not so much from direct exposure, but from the uncertainty it created. Loan growth would slow, trading revenues could get choppy, and credit quality sometimes deteriorated if companies got squeezed. But, and this is key, the market reaction was often delayed. Investors would wait for the actual numbers before making big moves. So, with the big six banks reporting next week, I’d expect a lot of focus on their commentary around trade, loan demand, and credit risk. It’s a bit of a preview of how these macro tensions might filter down to the bottom line.

Ray Marce

Yeah, and I think that’s a good place to leave it for today. We’ve got a lot to watch next week—bank earnings, more on tariffs, and maybe some clarity on where the market wants to go. Mark, always a pleasure.

Mark Dalli

Likewise, Ray. Thanks everyone for tuning in. We’ll be back soon to break down those bank results and whatever else the market throws at us. Make sure to follow us in order to stay informed for your weekly market updates and earnings reports. Take care, Ray.

Ray Marce

Cheers, Mark. And thanks to all our listeners, remember The information provided on this podcast is for informational purposes only and should not be considered financial advice. You should consult with a qualified financial advisor before making any investment decisions. We look forward to seeing you next time on Equity Research.