Weekly Market Update

Global Market News

Global Equities Slightly Lower

Global equities were slightly lower on the week, though the S&P 500 and Dow Jones notched record highs on Thursday before dropping back down by Friday’s close. The S&P 500 and Nasdaq ended the week down 0.10% and 0.19%, respectively, and the Dow Jones also declined 0.19% on the week. The U.S. 10-year Treasury note dropped modestly to 4.23%, while the price of West Texas Intermediate crude oil rose to $64.01 per barrel. Volatility, as measured by the CBOE Volatility Index, increased over the week to 15.36.

U.S. GDP Revised Up, Inflation Rises

The U.S. economy grew at an annual rate of 3.3% in Q2, higher than the previously estimated 3%, with notable upward revisions in consumer spending, private sales, and business investment. In other economic data news, inflation remained steady in July, with the Fed’s preferred measure, the personal consumption price index, rising modestly by 0.2% from the month before (2.6% on an annual basis) and in line with expectations. Personal income and spending both increased, and markets now anticipate an 85% chance of a rate cut at the Fed’s upcoming September meeting.

International Developments

Modi to Meet Xi Amidst U.S. Tariff Effects

Indian Prime Minister Narendra Modi is set to meet with Chinese President Xi Jinping on August 31^st during the Shanghai Cooperation Organization summit in Tianjin. While Sino-Indian relations have been strained since the Himalayan border skirmishes in 2020, this meeting could represent a shift in loyalties for India. Recently, Trump imposed a 50% tariff rate on India for their continued purchase of Russian arms and oil. This move serves to undermine investors seeking to shift production to India following Trump’s trade war with China, and to shift manufacturing back to the U.S., but will also likely have the adverse effect of jumpstarting a China-India partnership.

UK, France, & Germany Reactivate Sanctions on Iran

The United Kingdom, France, & Germany have reinstated sanctions against Iran over their nuclear program. The sanctions had been previously lifted in 2015, when Iran reached a deal with the three European countries that would curtail the Islamic Republic’s nuclear ambitions. These renewed sanctions include bans on arms sales, missile development, and nuclear-related technologies. In reaction, Iran has threatened to pull out of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) and escalate its uranium enrichment.

Israeli Parliament Approves New Settlement as IDF Prepares For Gaza City Invasion

Israel has called up approximately 55,000 IDF reservists as part of the planned occupation of Gaza City. Critics note the large Palestinian population present, low troop morale, & international backlash as difficulties for the mission, named Gideon’s Chariot II. This coincides with multiple breaking events in the Gaza conflict, such as the UN recognizing a man-made famine in Gaza and the Israeli government approving a new settlement plan which would bisect the West Bank. Israeli Finance Minister Bezalel Smotrich stated Wednesday that “The Palestinian state is being erased from the table,” describing the move, which has already been denounced internationally by the UK, France, Japan, the EU, & the UN.

US Social & Political Developments

Trump Angles to Dismiss Fed Gov. Cook Ahead of September Rates Decision

After an unsuccessful request for her resignation, President Trump said that he was dismissing Federal Reserve Governor Lisa Cook in a post on Truth Social. In response on Thursday, Cook filed a suit in federal court challenging her attempted removal. While a president is legally allowed to remove a Fed governor “for cause,” Cook claims that her dismissal is without due process and a blatant attempt to undermine the independence of the Fed. The cause cited by the administration is that Cook lied on her mortgage applications in 2021; Cook claims that because the incident occurred in 2021, prior to her appointment as a Fed governor, it cannot serve as cause for her dismissal. The case was heard by U.S. District Judge Jia Cobb in Washington, D.C. yesterday, though no ruling has been issued yet. Legal experts expect the case to escalate to the U.S. Supreme Court.

Trump Invokes Controversial Budget Maneuver to Block $4.9B in Foreign Aid

The Trump administration announced plans to cut nearly $5 billion in foreign aid using a rarely used budget tactic known as a pocket rescission. The maneuver, not attempted since 1977, would block funds for USAID, State Department programs, international peacekeeping, and democracy promotion efforts if Congress does not act before the fiscal year ends September 30th. The White House framed the move as a step to reduce “woke, weaponized, and wasteful” spending, but critics argue it sidesteps Congress’s constitutional authority over federal spending. Lawmakers from both parties, including Sen. Susan Collins and Senate Majority Leader Chuck Schumer, warned the action could be illegal and risk triggering a government shutdown. The cuts align with Trump’s broader effort to curtail U.S. foreign aid and wind down USAID.

Corporate/Sector News

Stop-Work Order on Orsted Cans $4B Project in Rhode Island

Orsted received a stop-work order earlier this month for its $4 billion wind farm project off the coast of Rhode Island. The project was approximately 80% completed, with 45 of the 65 turbines installed. The stop-work order was handed down by the Trump administration, citing concerns over a previously commissioned review. Orsted, a Danish company, has had its stock fall by more than 30% since the beginning of the year, largely due to the project’s halt. The order has sparked backlash from environmental groups and renewable energy advocates, who argue the decision undermines progress toward U.S. clean energy goals.

Keurig Dr Pepper Agrees to Buy JDE Peet for $18B

Several key developments in the AI sector were reported this week. Perplexity AI made headlines with a bold $34.5 billion all-cash bid to acquire Google’s Chrome browser, aiming to capitalize on antitrust pressure and reshape the browser market with AI-driven search. Google announced a $9 billion investment in Oklahoma to expand its AI and cloud infrastructure, including new data centers and workforce development programs. Apple revealed plans for a slate of new AI-powered devices, including a life-like Siri, smart speakers with displays, and even a tabletop robot companion, signaling a major push into smart home and personal AI tech. Meanwhile, Anthropic struck a landmark deal with the U.S. government to offer its Claude AI platform to all three branches for just $1, aiming to accelerate federal AI adoption and support President Trump’s AI Action Plan.

AI Momentum Drives Record Market Highs

The S&P 500 and Dow Jones closed at record highs on Thursday, driven by strong investor confidence in artificial intelligence infrastructure spending despite Nvidia’s earnings falling slightly short of lofty expectations. Nvidia’s 56% surge in quarterly revenue reassured markets that AI demand remains robust, boosting other tech stocks like Alphabet, Amazon, and Broadcom. Meanwhile, companies like Snowflake and HP saw significant stock gains due to AI-related growth, while Hormel Foods tumbled after issuing a weak profit forecast.

Corporate Profile

Intel: Government Stake Fuels Foundry Restructuring Efforts

Intel (INTC) is a leading American semiconductor company that designs and manufactures computer chips for PCs, data centers, and emerging technologies. The U.S. government recently took a 10% equity stake, providing $5.7 billion in cash as part of a broader effort to strengthen domestic semiconductor capacity. The deal, which includes warrants tied to Intel’s foundry ownership, comes as CEO Lip-Bu Tan restructures by separating the firm’s design and manufacturing units, cutting staff, and seeking major customers. Intel has also raised $2 billion from SoftBank and signaled the possibility of additional outside investment in its foundry business.

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Video of the Week

Why China’s New Export Terminal in Brazil Is a Threat to U.S. Farmers

Source: Wall Street Journal