Jamie McGeever
Thu, Jul 24, 2025, 2:03 PM 7 min read
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By Jamie McGeever
ORLANDO, Florida (Reuters) -TRADING DAY
Making sense of the forces driving global markets
By Jamie McGeever, Markets Columnist
Key U.S. and global stock markets clocked fresh highs on Thursday as Alphabet's earnings lifted tech, while investors digested the European Central Bank's interest rate decision and the latest signals from the European Union on trade talks with the U.S.
More on that below. In my column today I ask if the stock market euphoria around the incoming U.S. trade deals is warranted. Remember, tariffs will be the highest since the 1930s and are set to raise inflation and lower growth.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. ECB keeps rates steady as it awaits clarity over trade 2. Big central bank rate cuts slow with tariffs andpolitics in headlights 3. Conditions as loose as 2021 call into question more Fedcuts: Mike Dolan 4. Meme stock surge underlines market froth, mostlycentered on retail investors 5. In earnings season, it's AI good, everything else, notso much
Today's Key Market Moves
* S&P 500, Nasdaq, FTSE 100 and MSCI All Country all hit newhighs again. * But the Dow and Russell 2000, less tethered to the AIfrenzy, fall 0.7% and 1.4%, respectively. * Some big U.S. names post big share price declines on Q2earnings: Tesla -9%, IBM -8%, Honeywell -5%. * Oil snaps a four-day losing streak to rise over 1%. * China's yuan hits its strongest level this year againstthe U.S. dollar, both onshore and offshore.
AI drives new highs
In the absence of major economic data surprises, monetary policy changes or trade deal news on Thursday, world markets took their cue from corporate earnings, which continue to point to strength in artificial intelligence-related activity.
Google's parent company Alphabet grabbed the spotlight, its second-quarter results highlighting that the heavy investment in AI is paying off.
Indeed, a trend may be emerging from the earnings season that shows businesses focused on AI are massively outperforming companies like airlines, restaurants and food manufacturers that cater more to actual people. This isn't just a U.S. thing, it's global.
Of course, this isn't a blanket rule but it will be worth keeping an eye on as the earnings season progresses. So far at least, investors are accentuating the positive and major indices are making new highs on a near daily basis.
On the policy front, the ECB kept its deposit rate on hold at 2.0% as expected, biding its time while Brussels and Washington try to negotiate a trade deal that could ease tariff uncertainty.