Nasdaq Sets Fresh Record As Tariff Clouds Linger Over Midday Rally

Thursday, July 17 2025 — Midday Update

At the halfway point of the session U.S. equities are extending yesterday’s rebound, powered once again by the megacap technology cohort and a clean sweep of upside surprises from several bell-wether earnings reports. The tone is risk-on, yet beneath the surface traders are quietly re-pricing tariff risk, Fed independence and sector-specific pinch points that could dictate whether today’s advance sticks through the close.

Market Overview#

Intraday Indices Table & Commentary#

The Nasdaq Composite has already punched through a fresh all-time high at 20,911.83, and the ^SPX is flirting with the widely watched 6,300 level highlighted in multiple technical notes this morning. Volatility benchmarks tell the other half of the story: both the CBOE Volatility Index and its Russell 2000 counterpart are sliding toward multi-month lows, a sign that option sellers view tariff headlines and Fed drama as background noise rather than imminent catalysts. Volume, however, is lighter than the 30-day average, hinting at summer lethargy and the risk of exaggerated afternoon swings.

Momentum remains concentrated. According to Monexa AI’s breadth tracker, just 54% of S&P 500 members are in positive territory at midday even though the benchmark itself is near record ground. That “thin rally” pattern has persisted all quarter and, if anything, has intensified as mega-caps absorb the lion’s share of AI-related flows.

Macroeconomic Analysis#

Economic Releases & Policy Updates#

The calendar was sparse but meaningful. June retail sales rose a stronger-than-expected 0.8% month-on-month, confirming what today’s broad gains in consumer-facing stocks are already telegraphing: the U.S. shopper remains resilient despite price pressure from renewed tariffs. Business inventories were unchanged for a second straight month, suggesting supply chains are tighter than some feared and leaving little cushion if demand spikes.

Policy chatter grabbed equal airtime. Markets spent the first hour digesting fresh television interviews in which President Trump reiterated there are “no immediate plans” to remove Fed Chair Jerome Powell, effectively papering over yesterday’s swirl of dismissal rumors. The quick walk-back steadied the U.S. Dollar Index, now up 0.3 percent on the session, and nudged the 10-year Treasury yield off morning lows toward 4.49 percent. Bond desks note that any hint of political interference in monetary policy has tended to weaken the dollar and steepen the curve; for now those fears are dormant, but not gone.

Global & Geopolitical Developments#

Overnight Asian trade was subdued, with most benchmarks hugging flat lines ahead of TSM earnings and on renewed uncertainty about next-round U.S. tariff escalation. Australia’s ASX 200 bucked the trend, climbing on soft labor data that heightened bets for a Reserve Bank rate cut. In energy markets Brent crude is little changed near $87, but traders remain sensitive to reports that U.S.–UAE AI chip shipments face national-security review — an under-the-radar cross-current that could complicate supply-chain planning for heavy energy consumers in data-center construction.

Sector Analysis#

Sector Performance Table#

Technology is doing the heavy lifting. Mega-caps such as MSFT (+1.42%), NVDA (+1.29%) and AVGO (+2.36%) are offsetting weakness in specialized software names like ANSS and TTWO. The divergence underscores how AI hardware beneficiaries continue to monopolize flows, while discretionary software budgets remain more sensitive to macro headlines.

Energy is the surprise relative-strength winner, powered by a three-handle jump in natural-gas futures and bargain-hunting in exploration names. APA (+3.22%) and FANG (+2.98%) headline the trade, with investors rotating into oil-beta as a hedge against tariff-driven inflation.

In stark contrast Healthcare is flat — and would be deeply negative if not for offsetting gains in a smattering of drugmakers. ELV is hemorrhaging 11 percent after its Medicaid book blew through cost assumptions, while ABT is sliding nearly nine percent despite a headline beat as investors focus on tightened full-year guidance. Capital‐light service providers such as IQV are among the few bright spots.

Utilities’ modest loss is primarily a valuation bleed-off following a robust three-week run; rate-sensitive funds pivoted to Treasuries once the Powell saga fizzled.

Company-Specific Insights#

Earnings, Guidance & Key Movers#

The session’s marquee print belonged to Taiwan Semiconductor Manufacturing Ticker: TSM. The foundry giant posted a 60.7 percent year-on-year jump in net profit and a 38.6 percent revenue surge, thanks to unrelenting demand for 3-nanometer and 5-nanometer AI silicon. Gross margin clipped 58.6 percent, better than feared given currency headwinds. Management did, however, warn that Q4 visibility could dim if President Trump’s next tariff tranche lands on finished electronics. Traders initially pushed the ADR above $250, but some of that gain is fading as analysts model potential 50–60 bps margin erosion if tariffs stick.

Dow component PepsiCo PEP is pacing the Consumer Defensive space, up nearly seven percent after posting a top- and bottom-line beat, driven by price discipline outside North America. Management acknowledged some elasticity in U.S. snacks, vowing to lean harder on innovation and portion control to maintain share as tariffs seep into input costs.

Healthcare delivered the session’s biggest whipsaws. Elevance Health ELV missed consensus by double digits as Medicaid utilization spiked, puncturing the managed-care defensive thesis and dragging the broader health-plan sub-index lower. Diagnostics titan Abbott ABT also topped estimates but clipped its EPS range, citing foreign-exchange drag and slower-than-expected elective-procedure volumes.

Outside the earnings lane, CFG is up over four percent after Citigroup raised its target to $65, arguing the super-regional’s net-interest margin should widen into year-end. And SNA is rallying more than six percent, extending Wednesday’s breakout as industrial tool demand re-accelerates in auto repair channels.

Short-Interest and Flow Watch#

UBS’s crowding data published pre-market showed Tesla TSLA, Rivian RIVN and QuantumScape QS as the three most shorted auto names into next week’s earnings. That backdrop explains why TSLA’s muted −0.8 percent dip is garnering outsized attention: bears appear unwilling to press positions as chatter swirls that a domestic infrastructure credit could surface in parallel to tariff talks.

Extended Analysis — Intraday Shifts & Momentum#

From the opening bell the tape has demonstrated a textbook “bad news is good news” rotation. Elevated tariff rhetoric and the lingering possibility of a Fed shake-up would ordinarily cap risk appetite. Instead, traders latched on to June retail sales as proof that the consumer can eat higher prices, while simultaneously treating any political drama as an excuse for lower bond yields and thus higher valuations on discounted cash-flow models.

Yet lurking beneath the surface several divergences are sharpening, echoing cautionary technical notes published by Morgan Stanley and Bank of America earlier this week. The S&P 500 equal-weight index is still lagging the headline gauge by almost 240 basis points month-to-date, reflecting narrow leadership. Option desks flag that VIX has now closed below its 20-day moving average for nine straight sessions, a feat last achieved in late-2021 — a period that preceded a sharp volatility spike when positioning became one-sided. Put-call ratios are scraping year-to-date lows at 0.62, leaving very little tail-risk insurance on the books.

Sector dispersion is likewise sending mixed signals. While Technology and Energy share cabin space at the top of today’s leaderboard, their performance is driven by entirely different fundamentals: margin expansion from AI pricing power versus real-asset hedging against tariff-stoked inflation. The market’s willingness to pay a premium for both narratives simultaneously suggests a complacent bid for growth and protection at once, a posture that rarely endures unchallenged.

Foreign-exchange desks are also on alert. The dollar’s 80 basis-point three-day rebound aligns neatly with reports that the White House is considering a 25 percent tariff on an expanded electronics list as early as August 1. Historically, higher tariffs have strengthened the greenback on a knee-jerk basis before giving way to inflation-adjusted weakness. Should that second-order effect manifest, corporate import costs would rise further and pressure margin guidance into the thick of Q2 season.

For now, options flow suggests the afternoon pivot point will revolve around 6,300 on the S&P 500. Dealers are long gamma above that strike, which should dampen volatility so long as the index hovers within ±0.3 percent. A decisive push through — or rejection from — that level could amplify moves into the close as hedges are adjusted.

Conclusion — Midday Recap & Afternoon Outlook#

By every headline metric U.S. equities look unstoppable: record highs for the Nasdaq, fresh S&P peaks, a volatility backdrop back to pre-pandemic lows and a consumer that refuses to flinch at higher prices. Yet deeper inspection reveals an edifice supported by a handful of tech titans, budding cracks in Healthcare and Real Estate, and a macro framework that feels one tweet away from rekindled tariff risk.

This afternoon’s focus will hone in on two catalysts. First, how far the S&P can distance itself from 6,300 before option-market gravity pulls it back. Second, whether late-day headlines around the Fed or trade negotiations spark demand for downside hedges that would reverse the morning’s volatility bleed. Earnings after the bell from Netflix, GE Aerospace and Cintas provide further event-risk inflection.

Key Takeaways#

1. Tech still owns the tape. AI hardware demand propelled TSM to a blockbuster quarter and keeps NVDA et al. bid, but selective mid-cap weakness hints at valuation fatigue.
2. Tariff overhang is real. CPI is stalling near 3 percent with durable-goods categories already feeling price pass-through; corporate guidance that leans on second-half margin expansion could be vulnerable.
3. Healthcare stumbles. Profit warnings from ELV and conservative guidance from ABT illustrate how policy-shift risk and cost inflation are squeezing what was once a defensive harbor.
4. Breadth remains thin. Only a slim majority of S&P components are green despite index records, keeping the rally susceptible to rotation shocks.
5. Volatility is inexpensive. VIX south of 17 offers low-cost insurance; traders unwilling to chase highs may consider adding optionality ahead of next week’s Fed blackout and tariff deadline.

For now the path of least resistance is up, but the checklist of late-summer risk events is growing, not shrinking. Staying nimble — and demanding genuine earnings delivery rather than multiple expansion — remains the prudent play into the afternoon and beyond.