Will Earnings Keep This Rally Going?

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

DJIA 52-wk: +10.93% | YTD: +4.30% | Wkly: -1.02%

S&P 500 52-wk: +11.48% | YTD: +6.43% | Wkly: -0.31%

NASDAQ 52-wk: +11.89% | YTD: +6.60% | Wkly: -0.08%

iShares Tech-Software Sector ETF 52-wk: +22.09% | YTD: +7.35% | Wkly: -3.41%

Tariff Tensions Weigh on Stocks

Markets were hit hard at the start of the week (July 7) after President Trump escalated trade actions—threatening steep tariffs on Canada, the EU, and BRICS countries. The Dow dropped ~0.9% (−422 pts), the S&P 500 fell ~0.8%, and the Nasdaq slid ~0.9%, while Tesla plunged 6.8% amid geopolitical and political friction The Times+5YouTube+5Interactive Brokers+5The Times+9AP News+9The Wall Street Journal+9.

The sentiment remained muted through July 9, despite fresh trade threats (Brazil, EU, Mexico), which kept volatility elevated.

Tech & AI Resilience

Nvidia hit another milestone, reaching a $4 trillion valuation, helping the Nasdaq and S&P recover mid-week Nasdaq.

Broader tech and growth sectors saw rotation and steady inflows despite the geopolitical backdrop The Guardian+15FingerLakes1+15Investors+15.

Select Sector Highlights

Defense & crypto stocks (e.g., MicroStrategy, MARA) performed well amid bitcoin strength and increased Pentagon drone spending Investopedia.

Commodities and energy prices climbed as oil and gold futures gained on supply constraints and safe-haven flows Investopedia.

Financials and industrials lagged due to tariff concerns and weaker cyclical outlooks The Guardian+15The Wall Street Journal+15Investors+15.

Economic Data & Recession Signals

Despite strong labor data and resilient consumer sentiment, rising recession indicators across areas like income, spending, and industrial output prompted caution Barron's.

Index Performance Snapshot

By week’s end:

S&P 500 recovered to near record territory (~6,280), reclaiming most of earlier losses Investors+15The Wall Street Journal+15Saxo Bank+15en.wikipedia.org.

Nasdaq Composite closed at an all-time high of 20,630.66 on July 10 en.wikipedia.org.

Dow Jones remained volatile, reflecting sensitivity to interest-rate and geopolitical updates.

Tariff Risk Is Elevated

Market swings continue tied to incoming tariff timelines (August 1) and trade negotiations.

Tech-Led Stability

Even amidst macro strains, AI and semis (e.g., Nvidia) offer momentum.

Diversification Matters

With signals flashing across sectors, maintaining balance—mixing growth with value and alternatives—is prudent The Wall Street Journal+10edwardjones.com+10Barron's+10Investopedia.

Monitor July 10–11 CPI/PPI data for inflation cues.

Keep tabs on Q2 earnings from JPMorgan, Netflix, Nvidia, TSMC, and AMD.

Track trade talks—especially nearing August 1 tariff deadlines.

Americans spent the equivalent of what they would on two Black Fridays over the course of Amazon.com’s
(AMZN +1.24%).

Prime Day event, ending the four-day shopping extravaganza on a high note. U.S. retailers drove $24.1 billion in online spend from Tuesday through Friday, up 30.3% from 2024, according to new data from Adobe (ADBE-2.18%) released Saturday morning. This is more than double the $10.8 billion that people spent on Black Friday last year, Adobe said.

Just how much individual retailers benefited from the shopping week is still up for debate. Amazon, the event’s pioneer, likely won big. Data-aggregator Numerator suggests a little over 52,000 households shopped on Amazon.com, placing more than 150,000 orders that averaged $53.34 each.

But competitors like Walmart (WMT -0.48%), Target, and Costco Wholesale (COST +0.02%) put up a good fight by scheduling their own discounts events the same week, which skimmed off sales from Amazon.

“There was just a greater awareness about, ‘Oh, this is a shopping period,’ but I’m not sure if the spoils went to Amazon, or if they went to others,” said Deborah Weinswig, CEO of Coresight Research, a retail-focused research company.

Not only were more deals available across various retailers this year, but the four-day period gave consumers more time to do research and compare prices, which may have led them to make the final purchase on other retailers or decide against it altogether, Weinswig said. Data from Numerator found that over half of Prime Day shoppers compared prices with other retailers before placing their orders, and that 49% said they also planned to shop Walmart Deals this week.

Momentum Commerce, a company that manages Amazon sales for dozens of brands, such as Crocs and Therabody massagers, said its clients noticed that Prime Day spurred strong growth on other online platforms, a new trend this year.

That said, Amazon sales continued to be the highlight. The company expects revenue across its brands will increase 9.7% from last year across the four-day event, even though sales were soft the first and second day of the event compared with last year’s summer Prime Day event. Demand accelerated in the last two days of the 2025 bonanza, with sales up 165% year over year on Thursday alone. It’s worth noting that Prime Day only lasted two days last year.

Flywheel, another company that helps brands such as Fender guitars and Liquid I.V. sell on Amazon, said that the sales on the first three days of Prime Day 2025 surpassed the entire two-day event last year. (According to Numerator, Liquid I.V. packets were the third-most popular items sold on Amazon throughout Prime Day).

“With Prime Day 2025 spanning four days instead of two, what once felt like a flash sale became more of a browsing marathon,” said Mike Feldman, senior vice president of commerce at Flywheel.

The company’s data suggests that although people were exploring the deals on Tuesday and Wednesday, many waited until later in the week to pull the trigger.

“We’re seeing a surge in attributed sales as shoppers shift from browsing to buying, making their final moves before the clock runs out,” Feldman added.

Peak average discounts across all retailers ranged from 11% to 24% off an item’s listed price, Adobe found. The best sales were for apparel, electronics, toys, and televisions, which drove many shoppers to “trade up” to higher-ticket items, Adobe said, particularly electronics and appliances. Momentum Commerce said its brands’ discounts got deeper over the course of the week, which helped “prime consumers for a big shopping day on Day 4.”

Back-to-school items were also in hot demand, as were household essentials. Two-thirds of Prime Day items sold for under $20, Numerator found.

About two-thirds of people who shopped Amazon on Prime Day were highly satisfied with the deals, according to Numerator data, but Coresight’s Weinswig has another take on it. The Coresight data actually suggests that consumers found better prices elsewhere—which may end up hurting Amazon in the long run.

“I feel like it actually almost did them a disservice this year because it illustrated to the consumer pricing in a way I don’t think that they’ve seen it [before],” she said.

That said, Weinswig acknowledged that there are many metrics of success for a retailer like Amazon other than sales, such as membership sign ups, web traffic, and even advertising dollars streaming in from merchants that wanted their products highlighted through the event. And let’s not forget that Prime Day wasn’t a U.S.-only event—people in more than 20 countries were shopping the deals.

Amazon doesn’t typically release Prime Day sales results, but the company often provides a broad update on how the event panned out a few days after the event, highlighting both sales and membership sign-ups.

Historically, Amazon shares have gotten a slight lift following Prime Day, gaining an average of 1.11% the week after the event ends and 3.29% the month after, according to Dow Jones Market Data. The stock closed 1.2% higher on Friday, fueled by both Prime Day performance and two analysts’ price-target increases stemming from their optimism that the company still has ample growth opportunities in both e-commerce and cloud computing.

Luxury Isn’t What It Used to Be. Here’s How to Play the Stocks Now.

All that glitters isn’t gold. Luxury stocks are proof.

It doesn’t take an auction of the original Birkin bag, which might soon sell at Sotheby’s for seven figures, to signal that luxury items still have cachet. For investors, though, the luxury sector in recent years has resembled an “it” bag stuffed with tissue paper—glamorous on the outside but coming up empty for shareholders. Companies like Burberry Group and Chanel used the Covid-era boom to raise prices to maintain exclusivity and avoid brand dilution, but then found that they had priced out customers once inflation spiked and people started going out again.

Since then, a combination of weakness in China and hit-or-miss merchandising has led to lackluster results, while tariffs could be a further headwind. LVMH Moët Hennessy Louis Vuitton, which has given up its crown as Europe’s most valuable company, has seen its stock drop about 40% over the past two years, while Gucci owner Kering has fallen more than 50% and Prada has declined more than 10%.

Luxury, though, may be about to shine again. The One Big Beautiful Bill disproportionately benefits the wealthy, according to the Congressional Budget Office, giving the equivalent of a 2.3% tax cut to top earners, who are also getting richer as the stock market rises. Europeans are feeling more confident, and Chinese shoppers are, if not exactly upbeat, at least feeling less gloomy.

All that is good news for luxury, which has seen an uncharacteristic boom/bust cycle in recent years. What’s more, the stocks now look cheaper than they have in years, potentially setting them up for a nice contrarian bounce.

“The main consumer base for this industry probably feels in pretty good shape,” says Markus Hansen, a portfolio manager at Vontobel Asset Management. “Markets are near all-time highs; every asset class is doing well.”

Luxury stocks aren’t out of the woods yet. Many companies are likely to be hit with slowing sales, margin pressures, and a still-disillusioned shopper. The stocks, however, have been punished so much that purely on a valuation level, they are starting to look attractive.

Prada trades for 14 times 2026 earnings, LVMH less than 20 times, and Moncler, Kering, and Richemont not far above 20. Valuations for the group have fallen to a 15-year low relative to the market, according to UBS strategist Andrew Garthwaite. The current valuation disconnect doesn’t happen very often, and when it does, luxury stocks outperform the market 76% of the time over the following one to three months, and 100% of the time over the following six months.

Cheap stocks can always get cheaper, but luxury stocks are also showing signs of earnings stability. Garthwaite notes that earnings revisions have edged higher, even though profits are expected to decline. What’s more, the stocks have fallen far more than earnings are expected to. If earnings can surprise to the upside, the stocks should have room to run.

It’s “time to be less negative,” Garthwaite writes.

Luxury stocks are like Tolstoy’s unhappy families—each is distinct—and investors would do well to stay picky. For instance, while all luxury companies have some entry-level items—a Hermès International lipstick, a Ferrari keychain, or a Prada candle, for instance—to establish relationships with younger consumers who can go on to become lifelong shoppers, companies whose products are at the highest price points haven’t been hurt as hard by the pullback in so-called aspirational customers.

“Luxury isn’t dead, but the person who had been propping it up since 2020 is now priced out,” says Gabriella Santaniello, founder and CEO of retail consulting firm A Line Partners. “But the true luxury customer, who enjoys it and can afford it, is still buying.”

Lap of Luxury

After years of underperformance, stocks catering to the wealthiest shoppers are starting to bounce back.

• Company / Ticker: Hermès International / HESAY
  Recent Price: $282.28
  YTD Change: 18.1%
  Market Value (billion): $298.0
  2026E P/E: 47.4
  Comment: The Birkin-bag maker is now the most valuable luxury stock.

• Company / Ticker: LVMH Moet Hennessy Louis Vuitton / LVMUY
  Recent Price: $113.97
  YTD Change: -12.8%
  Market Value (billion): $285.0
  2026E P/E: 18.9
  Comment: Once the biggest luxury stock, it continues to struggle.

• Company / Ticker: Richemont / CFRUY
  Recent Price: $18.98
  YTD Change: 25.0%
  Market Value (billion): $112.2
  2026E P/E: 22.1*
  Comment: Cartier remains a top brand.

• Company / Ticker: Tapestry / TPR
  Recent Price: $92.21
  YTD Change: 41.1%
  Market Value (billion): $19.2
  2026E P/E: 17.5
  Comment: The rare company that is successfully moving upscale.

• Company / Ticker: Burberry Group / BURBY
  Recent Price: $16.75
  YTD Change: 38.7%
  Market Value (billion): $6.0
  2026E P/E: 31.3*
  Comment: A nice turnaround story in the making.

Note: *Estimate for fiscal year ending March 2027; E=estimate

Source: Bloomberg

Hermès looks particularly interesting, according to HSBC analyst Erwan Rambourg. The company, whose perch atop the handbag food chain is undisputed thanks to its iconic Birkin and Kelly bags, looks set to grow sales by 9% during the second quarter, a rare sequential improvement among the luxury-goods purveyors. Hermès has been so successful that it is now valued at $302.4 billion, greater than LVMH’s $298 billion. Rambourg rates shares a Buy with a 2,800 euro price target, up 15% from a recent €2,434.

Cartier owner Richemont also looks like a big winner. The company posted its highest-ever quarterly sales for the December quarter, and should likely keep the growth up when it reports July 16. J.P. Morgan analyst Chiara Battistini notes that the company has brand momentum and offers “strong value” for the money, two factors that should allow it to “increase prices without losing volumes.” The stock has gained less than 10% over the past 12 months.

Elsewhere, A Line’s Santaniello says she loves Burberry’s recent merchandising decisions. The company has shifted back toward its roots, and a recent ad campaign positions it beyond its typical fall/winter core season. The stock’s 2025 outperformance—it has gained 39%—is a positive sign that its turnaround is finally taking hold, after it raised prices too aggressively and alienated its core customers. HSBC’s Rambourg is bullish, too, arguing that the worst is behind the company and it has plenty of opportunity to snap up market share.

In the U.S., Tapestry’s Coach brand has successfully repositioned itself further up the premium scale. That’s rare, given that—much like a social climber—overly ambitious brands can often fail to make the transition to a higher-tiered perception among consumers. Yet it still has plenty of room to price more competitively with European peers like LVMH, and the stock itself, at 17 times 12-month forward earnings, is relatively cheap, too.

Monitor July 10–11 CPI/PPI data for inflation cues.

Keep tabs on Q2 earnings from JPMorgan, Netflix, Nvidia, TSMC, and AMD.

Track trade talks—especially nearing August 1 tariff deadlines.

Tariffs and trade deals are important, but to me it’s all about the financial stocks earnings reports, especially with a market at these levels. Proceed with caution.

— Richie

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