The S&P 500 (Index: SPX) saw its upward momentum during the trading week ending Friday, 1 August 2025. The index closed the week at 6,238.01, down a little over 0.9% from the preceding week.

The U.S. stock market entered the week with positive momentum, gaining almost 1.5% on Monday, but that changed on Wednesday as a divided Fed signaled it would not only would hold the Federal Funds Rate steady, it would likely continue that policy through September, when it had previously been expected to resume cutting the U.S. economy's base interest rate. As they did, Fed officials cited the strength of the U.S. economy and the continued belief among Fed Chair Jerome Powell and several other members that tariffs will push inflation higher.

On Friday, the S&P 500 dropped 1.6% after the July 2025 jobs report came out, which was much worse than expected. In addition, previous month's estimates of the number of employed Americans was revised sharply lower. The much-lower-than-expected employment situation numbers signaled the U.S. economy is not growing as much as expected, which means the outlook for publicly-traded U.S. businesses is worse than expected, which led to the drop in their stock prices.

The problem of the Bureau of Labor Statistics reporting overly-optimistic employment data only to substantially revise them downward later has become a chronic issue in recent years, as the BLS' employment situation report has become much less reliable for policymaking. President Trump reacted by firing the Bureau of Labor Statistics manager who has overseen the production of the BLS' employment situation report on Friday. The downwared revisions may also have influenced the unexpected announcement of a Federal Reserve official who had been among those backing Jerome Powell's "no rate cut" policy because the previously reported jobs numbers appeared so strong.

Here is the latest update of the alternative futures chart, in which we find the trajectory of the S&P 500 is near the bottom of the redzone forecast range we added to the chart a week earlier.

After so many weeks in which trade deals and tariffs have been the leading story, it's strange that President Trump's decision on Friday, 1 August 2025 to proceed with higher tariffs on nations that haven't cut deals with the U.S. didn't appear to carry more weight in the week's market moving headlines. Here are the headlines of note pulled from the newstreams of the week that was.

Monday, 28 July 2025

• Signs and portents for the U.S. economy:
• US and EU avert trade war with 15% tariff deal
• EU's von der Leyen: 15% the 'best we could get'
• EU, US to form metals alliance to counterbalance Chinese overcapacity
• Trump eyes 'world tariff' of 15-20% for most countries
• Trump says US is close to reaching a trade deal with China
• Oil rises 2% on US-EU trade deal, Trump's shorter deadline for Russia
• Fed minions still expected to hold off resuming rate cuts in July 2025;
• Fed expected to keep rates unchanged as it sifts through mixed economic data
• Bigger trouble developing in China:
• China's industrial profits fall further in June
• Exclusive: Chinese consumer complaints show widespread padding of car sales figures
• ECB minions say they need to see Eurozone economy turn for worse before delivering another rate cut, Germanys Prime Minister says 'hold my beer':
• ECB's Kazimir says big unexpected economic shift needed for September rate cut
• Germany's Merz says he did not expect better EU-US trade deal, German economy will suffer
• S&P, Nasdaq again close at record highs, trade choppy

Tuesday, 29 July 2025

• Signs and portents for the U.S. economy:
• US, China tariff truce holds for now but US says Trump has final say
• US goods trade deficit shrinks in likely boost to second-quarter GDP
• Fed minions thinking about changing how they do things at Fed:
• Fed's policy toolkit may be headed for fundamental changes
• Details of US trade deal being discovered in Japan:
• US-Japan trade deal guarantees lowest tariff rates for chips, pharma, Japanese official says
• Wall Street slides amid a post-earnings slump as investors await FOMC decision

Wednesday, 30 July 2025

• Signs and portents for the U.S. economy:
• US economic growth likely rebounded in second quarter, but with weak underlying details
• Don't read too much into the strong Q2 GDP report; underlying demand is still cooling
• Oil rises over 1% as investors weigh Trump's Russia stance, tariff threats
• Fed minions hold rates steady as expected, won't commit to rate cut in September 2025:
• Federal Reserve holds rates again, but two voters dissent
• Fed policy decision generates most governor dissents since 1993
• Overall effects of tariffs on prices still to be seen, Fed Chair Powell says
• Fed leaves rates steady despite Trump pressure, gives no hint of September cut
• Fed's Powell says no decision made yet on September rate cut
• Bigger trouble developing in China:
• China factory activity cools as demand abroad, at home weakens
• Eurozone GDP growth better than expected, ECB minions think getting China to export its deflation to Eurozone would be helpful:
• Euro zone growth holds up better than feared in second quarter
• Chinese trade diversion from US would cut euro zone inflation, ECB blog says
• U.S. stocks recoup some losses to end mixed, but Fed's Powell rattles investors

Thursday, 31 July 2025

• Signs and portents for the U.S. economy:
• Oil prices fall as Trump's Aug 1 trade tariff deadline looms
• US oil output rose to a record in May, EIA data shows
• Fed minions see small uptick in PCE inflation, speculation builds negative jobs news might force them to cut rates:
• Another blow to September Fed rate cut hopes after stubborn PCE inflation data
• Path to the Fed rate cuts Trump wants may involve higher unemployment
• Bigger trouble developing in China:
• China's weak job market stirs boom-era nostalgia on social media
• China's manufacturing activity shrinks as exports drag, S&P PMI shows
• BOJ minions hold Japan's interest rates steady, but hint they're still thinking about hiking them in future:
• BOJ keeps rates steady, revises up inflation forecast
• BOJ Governor Ueda's comments at news conference
• ECB minions get better economic data for Eurozone:
• German inflation falls further to 1.8% in July
• Euro zone unemployment holds at record low
• Wall Street slumps to a negative close as trade jitters counter earnings euphoria

Friday, 1 August 2025

• Signs and portents for the U.S. economy:
• US labor market cracks widen as job growth hits stall speed
• Jobs data in charts: Revisions lead to plunge in 3-month average of payroll growth
• Instant View: US job growth sharply slows in July, unemployment rate ticks higher
• Trump hits dozens more countries with steep tariffs
• Bessent says US has 'makings of a deal' with China
• Oil falls $2 a barrel on worries about OPEC+ supply, US jobs data
• Fed minions see minion quit after bad jobs news is released, faces building pressure for rate cuts:
• Fed rate cut odds go on a roller coaster ride after Powell, PCE, and jobs data
• Fed's Kugler to depart governor post early on Aug. 8
• After firing labor stats head, Trump calls on Powell to resign like Fed Governor Kugler
• Trump: Fed board should assume control if Powell won't lower interest rates
• Bigger stimulus developing in China:
• China's leaders vow support for economy, crackdown on disorderly competition
• China's central bank sets up new financial stability committee
• BOJ minions say US tariffs will likely have negative effect on Japan's business, economic growth, but are thinking about hiking Japan's interest rates again:
• BOJ warns US tariffs could hit firms' profits, delay capex plans
• BOJ gears up to hike rates again but leaves free hand on timing
• ECB minions see some improvement in Eurozone economy, may not need to keep cutting rates:
• Euro zone inflation holds at ECB target, supporting case for steady rates
• Euro zone manufacturing approached stability in July as PMI hits three-year high
• Wall Street sinks after 'worst major economic report in the post-pandemic era'

After the Fed held rates steady on Wednesday, 30 July 2025 and the big downward job revisions on Friday, 1 August 2025, the CME Group's FedWatch Tool forecasts the Fed will continue hold the Federal Funds Rate in a target range of 4.25-4.50% until its 17 September (2025-Q3) meeting, when it is expected to cut the rate by a quarter percent. Beyond that date, the FedWatch tool now anticipates additional quarter point rate cuts will take place at six-week intervals, on 29 October (2025-Q4) and 10 December (2025-Q4).

The Atlanta Fed's GDPNow tool projection of real GDP growth in the U.S. during the current quarter of 2025-Q2 dropped from +2.4% in the previous week to +2.1% this week.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bear holding a folder that says 'BAD JOBS REPORT' and a Federal Reserve official holding a folder that says 'NO RATE CUT' who are scaring a Wall Street bull"