The EU trade deal only fuels this bull market as a major uncertainty has now been removed for investors. The deal shows that serious progress is being made on the trade situation and helps to justify the stock market’s strong gains since the April lows. It appears that many countries will still face a tariff of 10–15%, but that may be low enough to avoid inflation and high enough to still bring in revenue for the government.
With stocks at record highs, there are a number of items on the docket this week that could move stock prices, including the FOMC meeting, the August 1 trade deadline, PCE inflation data, big tech earnings, and Friday’s jobs report. This week may be an inflection point for markets, which are looking for their next catalyst.
The stock market is rising as earnings come in better than expected, as companies are proving to be more resilient than expected during this uncertain environment. The month of July is also a seasonally positive month for stocks, and it appears that this July is living up to that historical trend.
We do not expect the Federal Reserve to cut interest rates on Wednesday, but it’s possible that they make a stronger signal that rate cuts are on the horizon in the fall, especially as the inflation data continues to stay muted even in this tariff environment.
While stock market valuations are high, that in and of itself is not a reason why valuations can’t expand even further from here.
While big tech stocks and many Mag 7 names are leading this market, we believe it’s important for investors to be selective within the Mag 7. Each Mag 7 name has its own story, its own AI strategy, and its own stock performance so far this year.
The big question for 2026 is whether or not investors will remain comfortable with the elevated valuations in big tech and AI stocks. While AI has tremendous promise, the valuations in many of these stocks are trading as if all of the AI productivity has been delivered currently.
