The Major Markets closed mostly higher last week with the Dow Jones being the lone index to close slightly lower. Earnings season began to take hold last week with just under 200 companies reporting. As FactSet highlighted in their earnings insight on Friday, 12% of S&P 500 companies have now reported. 83% of these companies have seen a positive Earnings Per Share beat. Companies like JP Morgan, Citigroup, and Goldman Sachs reported strong results and were significant contributors to the Financials sector which in turn increased the overall growth rate for S&P 500.

In other economic news, the Consumer Price Index came out with a reading in line with expectations both month-over-month and year-over-year. Meanwhile, the Core CPI reading, which excludes food and energy, came in slightly below estimates. That said, these numbers were the highest since the beginning of the year and also high enough to make some analysts think that the Fed will continue to be cautious about cutting interest rates anytime soon.

The CME Group’s FedWatch tool saw probabilities of an unchanged Fed Funds rate firm up last week. As it stands now, the greater likelihood is that interest rates will hold at the current 425 -450 basis point level at the FOMC Meeting next week. Additionally, the odds of a 25-basis point cut in September fell slightly last week.

Last Week, a report came out that President Trump was looking to increase tariffs on the EU to 15-20%. This exceeds the arrangement that the UK was able to arrive at of 10%. Unless something changes, the EU along with many other countries face an impending tariff increase set to go into effect on August 1st.

Despite all the news around tariffs and possible inflation, the University of Michigan Consumer Sentiment saw the overall sentiment improve in July. Furthermore, inflation expectations fell as consumers have become more accustomed to the news around tariffs and increases in inflation has yet to really become a reality.