Stock Market Update Monday July 21, 2025

Stock Market Update Monday July 21, 2025 Equities Set Record Highs, But Rally Shows Cracks The S&P 500 notched a fresh all-time high today, but the close told a different story. A late-session reversal wiped out much of the day’s gains, with the index ending just barely positive and well off intraday highs. Market breadth was notably weak, and signs of speculative excess are starting to emerge. Small caps underperformed sharply— the Russell 2000 (IWM) reversed from green to close down nearly 1.5%, underscoring risk aversion beneath the surface.

Mega-Cap Tech Carries the Tape

Once again, mega-cap tech led the charge. Alphabet rallied over 2% ahead of earnings, while Apple and Amazon posted solid gains. The 'Magnificent Seven' cohort continues to buoy index-level performance, masking softness elsewhere.

Index Performance:

• S&P 500 (SPX): +0.1%

• Nasdaq 100 (QQQ): +0.5%

• Russell 2000 (IWM): -0.4%

Away From Stocks: Treasuries caught a bull-flattening bid, with the 30-year yield falling 6 basis points to 4.94% and the 2-year retreating to 3.85%. Crude oil slid below $66/barrel, gold surged to $3,399, bitcoin eased to $117,000, and the VIX ticked up toward 17, reflecting a modest rise in risk aversion.

Macro News:

Tuesday, July 22

• Fed Chair Powell – Opening Remarks at Banking Conference

Wednesday, July 23

• Existing Home Sales

Thursday, July 24

• Initial Jobless Claims

• New Home Sales

• S&P Flash U.S. Manufacturing PMI

• S&P Flash U.S. Services PMI

Friday, July 25

• Durable Goods Orders

• Durable Goods Orders ex-Transportation

  
  

Federal Reserve Chair Powell Under Political Pressure

Market watchers are closely monitoring political developments surrounding Federal Reserve Chair Jerome Powell. Reports surfaced last week indicating that a group of House conservatives met with President Trump and were informed of potential plans to remove Powell from his position. Although the White House walked back those statements, several administration insiders have continued to criticize the Fed's monetary policy stance, particularly its pace in adjusting interest rates amid evolving economic conditions.

Compounding this scrutiny are allegations of fiscal mismanagement related to cost overruns in the renovation of the Fed’s Washington D.C. headquarters. Some advisors have suggested these overruns could provide statutory grounds for Powell’s removal “for cause.” With the Federal Open Market Committee (FOMC) set to meet next week, speculation regarding leadership stability and monetary direction is expected to intensify across both political and financial media landscapes.

Congressional Schedule and Budget Outlook

Historically, Congress has adhered to an informal tradition of adjourning for the month of August to return to their districts for family time, constituent engagement, and campaign activities. This year, however, as lawmakers navigate high-stakes legislative battles—including the president’s expansive "One Big Beautiful Bill," which has encountered procedural and political hurdles—there are growing calls to amend that schedule. Over the weekend, President Trump publicly urged Senate Minority Leader John Thune to suspend the August recess to accelerate the confirmation of executive and judicial nominees.

Although many senators had anticipated using the recess period for personal and political engagements, the Senate may now be compelled to remain in session, at least partially, to align with the president's agenda and maintain legislative momentum. Looking ahead, Congress faces a critical fiscal deadline: passage of the budget for Fiscal Year 2026, which commences on October 1. Lawmakers are poised to leave Washington without approving any of the 12 annual appropriations bills necessary to fund government operations. Upon returning after Labor Day, both chambers will have just four legislative weeks to finalize appropriations. Failure to act would leave Congress with two primary options: (1) a Continuing Resolution (CR) to sustain funding at current-year levels, or (2) a partial government shutdown, which would take effect for any federal department lacking an enacted FY26 budget. Historically, shutdowns have carried political liabilities for both parties, and given the compressed timeline, government funding is expected to dominate the post-recess legislative calendar.

Cryptocurrency Policy Developments

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Last week marked a pivotal moment for digital asset regulation as Congress passed the Genius Act, a landmark bipartisan measure establishing a statutory framework for the issuance of stable coins. The legislation mandates that stable coin issuers maintain fully collateralized reserves, thereby bolstering investor protections and systemic confidence in the crypto ecosystem. The bill was signed into law in a White House ceremony, signaling the administration’s commitment to positioning the United States as a regulatory leader in digital finance. In tandem with the Genius Act, the House also approved the Clarity Act, a bipartisan bill that delineates jurisdictional authority between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over digital assets. Additionally, legislation prohibiting the Federal Reserve from issuing a Central Bank Digital Currency (CBDC) has been forwarded to the Senate, underscoring a broader legislative push to define the contours of U.S. monetary innovation.

Bottom Line: Broad-Based Technical Strength Suggests Bullish Outlook For July With all five major U.S. equity indices currently registering weekly buy signals, the market setup remains structurally bullish. We anticipate any pullbacks to be shallow and met with swift dip-buying activity, reinforcing the prevailing uptrend. The breadth of participation is particularly notable—broad sector rotation and upside momentum are supporting the latest push to all-time highs for the S&P 500 (SPX) and Nasdaq-100 (QQQ), with both the Dow Jones Industrial Average (DJIA) and equal-weighted S&P 500 (RSP) positioned to potentially confirm new highs in the coming week. This type of broad-based expansion across market cap and sector exposures strengthens the bull case and suggests durable internal support for the rally. Sentiment is gradually shifting, with investors beginning to re-engage and increase risk exposure. While this uptick in optimism reflects growing confidence in the trend, current positioning and sentiment readings are not yet at levels typically associated with euphoria or overbought extremes. As such, we do not yet see the conditions necessary for a market top, but sentiment will remain a key variable to monitor in the sessions ahead.

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