Another Leg Up This Week?

* Analyzing the markets with Richie Naso, a Wall Street veteran of over 40 years and former member of the NYSE.

DJIA 52-wk: +10.62% | YTD: +5.54% | Wkly: +1.26%

S&P 500 52-wk: +17.03% | YTD: +8.62% | Wkly: +1.46%

NASDAQ 52-wk: +21.61% | YTD: +9.31% | Wkly: +1.02%

Alphabet 52-wk: +15.68% | YTD: +2.05% | Wkly: +4.39%

S&P 500 (SPY) climbed about 1.5% for the week, closing at a new all-time high of ~6,388.64 on Friday. Tickeron reports.

Nasdaq Composite (QQQ) rose roughly 1.0%, ending the week near 21,108, also a record high. John Hancock reports.

Dow Jones (DIA) gained approximately 1.3%, closing around 44,901.9, just shy of its all-time peak. John Hancock reports.

Weekly Performance & Drivers

Major Index Gains

S&P 500 rose ~1.5%, hitting record closes every trading day this week—a pace not seen since mid‑2021. The Wall Street Journal reports.

Nasdaq surged ~1.0%, also reaching multiple fresh records amid big tech strength. John Hancock reports.

Dow gained ~1.3%, lagging slightly due to heavier weighting in financials vs. tech exposure. MarketWatch reports.

Key Catalysts

Strong earnings from mega-cap tech (Alphabet, Microsoft, Meta, etc.) drove optimism. Over 80% of S&P firms beat expectations, lifting projections for Q2 earnings growth to ~7.7% YoY. Reuters reports.

High-profile trade deals—notably with Japan, Indonesia, and the Philippines—fueled hopes for broader U.S.–China tariffs de-escalation. MarketWatch reports.

Volatility (Cboe VIX) dropped ~9%, the lowest since February—indicating strong investor confidence. John Hancock reports.

Healthcare led all sectors, up ~3.3%, followed by industrial stocks (2–2.3%) and financials (~1.7%). MorningStar reports.

Deckers Outdoor (UGG, Hoka) jumped ~11% on a strong earnings beat. AP News reports.

Intel did poorly, falling ~7–8.5% after disappointing results and layoffs. AP News reports.

A major merger got FTC-approved: Paramount’s acquisition of Skydance (est. $8B) lifted Paramount shares ~2%. Investopedia reports.

Treasury yields: 10‑year yield slipped to ~4.385%, the 2‑year moved up slightly (~4.50%), while the 30‑year briefly hit ~5.07% before settling lower by Friday. SWBC reports.

Commodities: Crude oil fell ~1.3%, weighed down by expectations of increased Venezuelan & Iraqi exports; gold declined ~0.6%. LPL reports.

Dollar lost ground for the week—weakest of the month—boosted by U.S.–China trade optimism; it later rebounded modestly after clarity around Trump’s remarks on Fed independence. LPL reports.

Trade talks: Ongoing negotiations with China, Canada, Mexico, and EU ahead of the August 1 trade deadline. The Wall Street Journal reports.

Treasury auctions: $173B in U.S. debt issuance may pressure bond demand and affect yields amid mounting margin debt levels ($1T) Reuters reports.

First is fiscal policy. With the passage of the One Big Beautiful Bill Act (OBBBA). There’s been much debate over the size of the bill, its price tag, and its potential effect on deficits and U.S. debt. I won’t rehash those arguments here. From an investment perspective, markets in the short term did not appear very fazed by its passage. Many believed the bond markets would go haywire at the prospect of soaring debt combining forces with inflationary pressures from tariffs.

Provisions in OBBBA could bolster corporate earnings, which may neutralize some of the tariff headwinds. These include expensing for capital equipment and R&D investments, more favorable treatment of interest expenses, and full write-offs for new factory construction. Together, these measures could incentivize a wave of domestic investment, particularly in manufacturing and technology-intensive sectors, generating hundreds of billions of dollars in savings for US corporations.

Next is monetary policy. The Fed is now expected to begin easing as soon as September, as disinflationary forces such as softening wage growth, falling rents, and weak travel demand are outweighing the inflationary pressure from tariffs—creating room for a policy shift. The labor market also seems to be giving the Fed some wiggle room, in my view. While broadly stable, it’s showing signs of strain. Job openings are declining, and it’s getting harder for unemployed workers to find new positions. These dynamics, combined with seasonal quirks and immigration-related workforce disruptions, may give the Fed enough justification to act sooner.

Finally, there’s the deregulation factor. Under a new executive order, federal agencies must repeal at least 10 regulations for every new one introduced. Agencies have also been instructed to review existing rules for legality, constitutionality, and economic impact. Rules that are seen as impeding small business formation, innovation, or economic growth are top targets for repeal. In many cases, traditional public comment periods are being bypassed under legal exceptions, accelerating the process.

Sector-specific efforts are also well underway. The Department of Labor is rewriting or eliminating more than 60 workplace regulations, while the EPA is engaged in the largest deregulatory action in its history—rolling back rules related to energy production, auto manufacturing, and state-level environmental policy. Markets have responded favorably in key sectors like Financials, Industrials, and Energy, where lower regulatory burdens could translate to margin expansion and increased capital spending.

In Mitch Zacks view, markets have already processed the most pessimistic scenarios surrounding tariffs and have moved on. Fundamental drivers should take over going forward, and I think fiscal stimulus through the OBBBA, a dovish turn at the Fed, and a broad deregulatory push will provide tailwinds in the second half. This trifecta of pro-growth policies—if it persists—has the potential to support earnings, boost business investment, and keep the economy growing.

Of course, there are risks. Tariffs could escalate further and blunt markets with a negative surprise, and delayed inflation effects could delay rate cuts further. But with the Fed showing flexibility, businesses facing lower compliance burdens, and tax incentives flowing through to the private sector, the medium-term environment looks supportive of equities. The tariff story will likely take the back seat.

Why Memes Now?

This week, as meme stocks resurged into the forefront of market discussions, we published pieces that explained the current flowering of that phenomenon. On Tuesday we noted the goings on in Kohl’s (KSS) and Opendoor (OPEN), and yesterday we offered a “Mad Libs”-style rubric to help identify them. That said, someone pointed out how that while those articles certainly explain the “how” and “what”, I should expand on the “why”.

During a media visit a month ago I used a term that caught the host by surprise: “flight to crap”. It’s one that I started using during some of the post-covid excesses as the inverse of the “flight to quality” that occurs when concerns about risk come to the forefront. I explained to the anchor that we were seeing signs of it, with investors showing an increasing willingness to seek out risk via speculative stocks and asset classes. I used it again this week with a print journalist to describe the rationale behind the resurgence of meme stocks, and it seemed to get a bit of traction as a shorthand for traders buying low-priced and heavily shorted (usually with good reason) household names based solely on social media chatter. It seemed like an apt description.

The meme stocks are simply the latest manifestation of the nascent trend that I spoke about on TV a month ago. The risk seeking behavior can be seen in:

Increasing attention paid to high-volatility, high-volume stocks, which often rose on flimsy rationales.

The return of SPACs (“give me money and I’ll figure out something to do with it”).

The wave of new crypto treasury stocks (“feel free to pay me a premium above book to buy crypto that you can but for face value in the market or via an ETF) record margin debt.

VIX around 15 tells us there is little demand for protection. I see this behavior as a logical outgrowth of recent investor successes. For the better part of the past three years, investors have been rewarded handsomely for embracing risk, particularly those who did so during the April selloff. The understandable takeaway would be that risk pays, and thus the more risk one takes, the more one is rewarded – particularly when you’re playing with “house money”, the profits you’ve made through astute investing and/or trading.

But here’s the problem with chasing memes: all investments need fresh money to continue their advance. If you’re buying stocks with solid fundamentals, that money flow should continue. Whether or not you think a stock like Alphabet (GOOGL, GOOG) is priced correctly, it was clear from their latest report that they make oodles of dough. That’s rarely the case for stocks that are low-priced, heavily shorted, and up on a social media induced spike. There is usually a reason why those stocks are heavily shorted and low priced in the first place. It has become clear that the initial rush of money into recent memes had little to no follow-through, meaning that those who bought on the initial spikes were a source of liquidity for those who bought before the chatter. Traders don’t like being used as suckers, and that may be why we didn’t get a new meme today.

Hopefully I’ve been able to explain some of the “why” behind the recent meme stock flurry. I also hope that next week we can go back to discussing things like the FOMC meeting, megacap tech earnings, and other less effervescent topics.

Federal Reserve meeting on July 30: markets expect rates to remain unchanged, but concern over potential September cut prevails MarketWatch.

Upcoming PCE inflation data: Thursday’s release could move bond yields and equity sentiment.

Magnificent Seven earnings: Big Tech (Alphabet, Apple, Meta, etc.) set to report next week; closely watched by investors for AI‑driven growth updates MoneyWeek.

Seventy percent (70%) of all options written are calls. That’s the highest reading since the 2020-21 high. The VIX index also tells us that there is no fear. All red flags to me.

— Richie

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