Record Highs, Trade Truces & Earnings Shockwaves – Wall Street’s Wild 48 Hours (July 22–23, 2025)

Summary: Two Days of Surprises Fuel a Market Rally

In a whirlwind 48 hours, U.S. stocks notched fresh record highs on trade-war relief and a blitz of corporate earnings surprises. Investors navigated tariff breakthroughs, dramatic earnings beats and misses across sectors, and signals from the Fed – all culminating in broad market gains. Major indexes rallied to all-time peaks as optimism over new U.S. trade deals offset lingering inflation fears. Meanwhile, earnings season delivered both home-run results (lifting select stocks double-digits) and disappointments (sending others plunging), keeping traders on their toes. Below we break down all the key developments – from surging automakers and homebuilders to slumping chipmakers – with expert insights and executive commentary along the way.

Trade Deal Optimism Sparks Market Rally

Tariff Truce Boosts Sentiment: Market morale got a major boost on July 23 after President Donald Trump announced a trade deal with Japan that slashed planned auto import tariffs to 15% (versus the originally threatened 25%) investopedia.com. The agreement – which includes a hefty $500 billion Japanese investment package – arrived just ahead of a crucial August 1 tariff deadline and spared Japan’s automakers from bruising levies investopedia.com. It also fanned hopes of further deals: U.S. and EU officials signaled they are nearing a similar pact to impose 15% duties on European imports while waiving some others reuters.com reuters.com. Investors cheered these developments as signs that Trump’s multi-front tariff battles may de-escalate. “The storm clouds parting and the macro situation looks to be improving,” noted Sam Stovall, chief investment strategist at CFRA. “Japan has signed a trade agreement, fingers are crossed for the EU… investors are feeling optimistic that either more trade agreements will be announced before the August 1st deadline or postponements will be granted” reuters.com.

Stocks Soar to Records: Fueled by the trade optimism, U.S. equities jumped on Wednesday (7/23). The S&P 500 surged ~0.7% to an intraday record around 6,353, up almost 8% year-to-date reuters.com reuters.com. The Dow Jones Industrial Average leapt ~1.0% (adding ~455 points) to 44,958, nearing its first new high since last December reuters.com. The tech-heavy Nasdaq Composite rose 0.5%, though its gains were tempered as traders awaited big tech earnings due after the close reuters.com. Notably, Wall Street’s “fear gauge” – the VIX volatility index – slipped to a five-month low amid the bullish turn reuters.com reuters.com. “The key thing is the markets have confidence that the White House is going to continue to work through these trade deals,” said Larry Tentarelli of Blue Chip Daily, as investors bet that tariff headwinds would keep abating reuters.com.

Autos and Industrials Lead the Charge: The tariff reprieve ignited a sector-wide rally in automakers and industrials. U.S.-traded shares of Toyota and Honda – major Japanese car makers – each spiked about 13% on Wednesday’s news investopedia.com. Detroit’s giants surged in sympathy: Stellantis (parent of Chrysler/Jeep) jumped 11%, and General Motors climbed 8% investopedia.com. This marked a sharp rebound for GM, which just a day earlier had seen its stock plunge more than 8% after warning that new tariffs could pose a bigger headwind in the second half of the year investopedia.com investopedia.com. Industrial conglomerates and equipment makers also got a lift. For instance, GE Vernova (the power and energy spin-off of GE) saw its stock surge 13–14% to an all-time high on Wednesday after handily beating earnings and raising its revenue and cash flow forecasts, citing booming demand from AI and crypto data centers reuters.com. By mid-week, advancing issues outnumbered decliners by about 1.7-to-1 on the NYSE as trade anxiety eased reuters.com.

Safe Havens Retreat: As risk appetite grew, traditional safe havens pulled back. Gold prices, which had hit a five-week high on Tuesday, fell over 1% on 7/23 as investors rotated out of safety reuters.com investopedia.com. U.S. Treasury yields ticked higher after a three-day slide – the 10-year yield rose to ~4.39%, up from 4.34% the day prior investopedia.com reuters.com. The U.S. dollar weakened slightly against major currencies (with the dollar index down ~0.2% near 97.2) as the yen and euro strengthened on the trade progress investopedia.com reuters.com. Oil prices seesawed – U.S. crude briefly hit a one-month low near $65, then bounced to $65.45 per barrel (+0.2%) by Wednesday’s close as trade “uncertainties ebbed” reuters.com.

Earnings Winners: Homebuilders, Healthcare & More

Homebuilders Hammer Expectations: The housing sector was a standout winner after a string of upbeat earnings. On July 22, top U.S. homebuilders D.R. Horton and PulteGroup delivered results that trounced forecasts, sending their stocks skyrocketing. D.R. Horton reported fiscal Q3 revenue of $9.2 billion and EPS of $3.36, well above consensus, while PulteGroup’s Q2 sales ($4.4 B) and $3.03 EPS also beat estimates (albeit more modestly) investopedia.com investopedia.com. Horton’s Executive Chairman David Auld noted that “new home demand continues to be impacted by ongoing affordability constraints and cautious consumer sentiment,” but said the builder will elevate sales incentives in coming months to keep buyers engaged investopedia.com. Pulte CEO Ryan Marshall added that consumers had been “dealing with… high interest rates and challenged affordability [plus] macro concerns about the strength of the economy” during the spring selling season investopedia.com. Despite those headwinds, the results impressed Wall Street: D.R. Horton stock jumped 16–17%, and PulteGroup surged ~11–12% on Tuesday investopedia.com investopedia.com. The strong reports lifted the entire homebuilding group – rivals Lennar and KB Home each rallied over 8%, erasing their year-to-date losses investopedia.com.

Healthcare & Pharma Gains: Robust earnings also powered select healthcare stocks. Medical equipment giant Thermo Fisher Scientific shocked analysts by beating Q2 profit and revenue estimates, propelling its stock up about 11% reuters.com. And in the health-tech arena, IQVIA Holdings – a provider of clinical research and analytics – delivered strong results that sent its shares soaring 18%, the top S&P 500 performer on Tuesday investopedia.com. According to the company, IQVIA’s sales and earnings topped forecasts, reflecting resilient demand in the life sciences data market investopedia.com. Meanwhile, credit-rating agency Moody’s reported higher profit thanks to strength in its analytics unit, and health insurer Humana jumped on news of cutting red tape to reduce costs (each adding to positive momentum in the broader healthcare and financial segments) reuters.com reuters.com.

Surprise Bright Spots: A few other names saw outsized gains. Northrop Grumman, a major defense contractor, surged over 9% on Tuesday – benefitting from a bit of “good news by comparison” after a rival’s stumble (more on Lockheed Martin below) investopedia.com. And even some beaten-down retailers got a jolt: Kohl’s stock inexplicably spiked as much as 100% in early trading Tuesday, triggering a temporary halt, before settling up about 30% on the day investopedia.com. The shocking jump (which erased Kohl’s year-to-date decline) had traders buzzing that it might be the latest meme-stock squeeze investopedia.com. No major news accompanied the move – aside from lingering optimism over Kohl’s turnaround plan and a CEO change in May – suggesting viral retail-trader speculation may have driven the frenzy. Similarly, shares of real estate tech firm Opendoor — another target of Reddit-fueled chatter — skyrocketed 120% intraday on Monday (7/21) and held onto a 40% gain by Tuesday morning investopedia.com investopedia.com. Though Opendoor quickly gave back some gains, its week-long rally nearly tripled the stock’s value and rescued it from the brink of a Nasdaq delisting investopedia.com investopedia.com. These episodes underscored that speculative meme mania is still lurking under the market’s surface, even as fundamentals drive most large-cap moves.

Earnings Letdowns: Defense, Chips & Consumer Stocks

Not every earnings report was rosy. A number of high-profile companies stumbled and saw their stocks punished over these two days:

• Lockheed Martin’s Plunge: Defense giant Lockheed Martin delivered one of the ugliest surprises. The company shocked investors on July 22 by revealing $1.6 billion in charges on troubled programs and slashing its full-year profit forecast by about 20% investopedia.com investopedia.com. A classified aerospace project suffered nearly $1 billion in cost overruns due to “design, integration, and test challenges,” and an international helicopter program rang up another $570 million in losses investopedia.com. As a result, Lockheed cut its 2025 EPS outlook to $21.70–$22 (down sharply from a prior $27+ target) investopedia.com. Second-quarter earnings undershot estimates, with net income collapsing to $342 million (from $1.6 billion a year earlier) investopedia.com. CEO Jim Taiclet tried to reassure that these loss write-offs “are a necessary step as we continue to take action to improve program execution” investopedia.com. But Wall Street was unforgiving – Lockheed shares tanked 8–11% by Tuesday’s close investopedia.com investopedia.com, making it the day’s worst S&P performer. The stock is now down ~13% year-to-date investopedia.com. Lockheed’s pain contrasted with Northrop Grumman’s 9% jump, as investors rotated to defense names seen as better managed investopedia.com.
• Texas Instruments & Chipmakers Slide: The semiconductor sector hit a speed bump after Texas Instruments (TXN) issued a weak outlook. The analog chip maker beat Q2 estimates but warned of softer demand and tariff-related uncertainty weighing on its upcoming quarter reuters.com. On its earnings call, TI management struck a more cautious tone than last quarter, noting the auto market remains subdued and new tariffs pose risks to chip demand investopedia.com. The company’s forecast badly disappointed the Street, sending Texas Instruments stock plunging 12–13% on Wednesday reuters.com investopedia.com. That news reverberated through the chip space: peers NXP Semiconductors, Analog Devices, and ON Semi fell between 1% and 5% reuters.com. It wasn’t all gloom in tech, however – on the same day, AI powerhouse Nvidia saw its stock climb ~1.6% to fresh highs reuters.com, continuing an uptrend fueled by booming AI-chip demand. Still, the mixed fortunes in chips highlight an emerging split: digital-focused semiconductor firms thrive on AI tailwinds, while analog chip makers tied to industrial and automotive markets struggle with cyclical softness and trade worries.
• Consumer Giants Mixed: Results in the consumer sector were a tale of two directions. On one hand, Coca-Cola and Sherwin-Williams (a paints/coatings bellwether) both reported earnings that initially spooked investors – each stock sold off early Tuesday – but they recovered to close only modestly lower (less than –1%) after executives calmed nerves investopedia.com investopedia.com. Coke’s profit beat estimates even as revenue was a tad light, and Sherwin’s sales slipped amid a soft housing market, but neither saw disastrous outlooks. On the other hand, Philip Morris International (PM) delivered a true disappointment. The Marlboro maker’s Q2 revenue grew 7% to $10.14 B but missed forecasts ($10.27 B expected) as cigarette demand kept declining investopedia.com. Smokefree products like its IQOS heated tobacco devices showed 15% sales growth, but not enough to offset falling cigarette volumes investopedia.com. While PM actually raised its full-year EPS guidance slightly, it cut its projected sales volume growth (now seeing only ~+1% total shipment volume, down from 2% prior) investopedia.com. That caution sent Philip Morris stock diving over 8% on Tuesday, one of the S&P 500’s steepest declines investopedia.com. Notably, even after that drop, PM shares remained up 37% for 2025 to date investopedia.com – a reminder of how strongly many staples had run up before this hiccup.
• Fintech Fizzle: Financial technology firm Fiserv became another casualty. The payments and fintech provider reported decent results mid-week, but traders seized on signs of slowing growth in key segments. Fiserv’s stock plunged 15% Wednesday, the worst on the S&P 500 that day investopedia.com investopedia.com. Analysts noted concerns about the company’s merchant payments unit and the impact of higher interest rates on payment volumes. The selloff shows that even minor weak spots in earnings are being swiftly punished in the current market, especially after Fiserv’s stock had rallied into the print.

Tech’s Big Test: Mega-Caps on Deck

Calm Before the Storm for Big Tech: The market’s recent run-up has been partly fueled by optimism that the so-called “Magnificent Seven” tech mega-caps will justify their rich valuations with strong earnings. As of mid-week, 23% of S&P 500 companies had reported Q2 results, with 85% beating expectations – a much higher beat rate than usual reuters.com. Analysts forecast aggregate S&P 500 earnings growth of about +7.5% year-on-year, a solid step-up from the single-digit pace predicted just a few weeks ago reuters.com. Much of that improvement is expected to come from Big Tech leaders – especially those at the forefront of the AI boom reuters.com. Wall Street’s reliance on a handful of momentum stocks will be “put to the test” as these giants report reuters.com.

On Wednesday after the closing bell, all eyes were on two Magnificent Seven members kicking off their results:

• Alphabet (Google’s parent) – expected to show a ~11% revenue jump (to ~$94 B) and double-digit profit growth – is under pressure to demonstrate that digital ad demand remains robust and its costly AI investments are paying off investopedia.com investopedia.com. Jefferies analysts predicted strength in Google’s cloud division amid “strong enterprise demand and AI momentum,” while Wedbush warned that advertising sales could face new headwinds from a shift toward generative AI search models investopedia.com investopedia.com. Going into the report, Alphabet’s stock drifted about 0.5% lower Wednesday afternoon, and options pricing suggested traders anticipated a “sizable move” by week’s end once results were out investopedia.com. (Alphabet shares had lagged most tech peers this year, roughly flat in 2025 versus a ~19% YTD gain in the S&P 500 investopedia.com.)
• Tesla – the poster child of high expectations – also reported Wednesday night amid significant apprehension. Analysts projected Tesla’s Q2 revenue would drop over 10% year-on-year (to ~$22.7 B) and earnings per share would slide about 20%, reflecting aggressive price cuts on its EVs and a lack of new models finance.yahoo.com finance.yahoo.com. CEO Elon Musk had telegraphed a tumultuous quarter: Tesla prioritized market share over margins by slashing vehicle prices and offering incentives, which was set to dent profit margins to multi-year lows. “Perhaps more than ever in the company’s recent history, Tesla’s investors need results; those will have to come fast,” observed Thomas Monteiro of Investing.com, referencing Tesla’s ventures in AI and even humanoid robots as future drivers reuters.com reuters.com. Tesla’s stock actually inched up ~1% on Wednesday ahead of earnings investopedia.com, but many traders braced for volatility. “What you will hear is an awful lot of discussion about the future and a broad acknowledgment that this was a terrible quarter,” predicted Michael Green, chief strategist at Simplify Asset Management, before the results reuters.com. Indeed, when Tesla’s report hit, it revealed the weakest automotive profit margin in over five years and a ~45% plunge in quarterly profit as price cuts took their toll. Musk used the investor call to defend the strategy and hype Tesla’s self-driving software timeline, but shares fell in after-hours trading as the scale of the margin compression sank in (initially down around 8% post-market, according to Nasdaq data).

(Note: Alphabet’s results, released late 7/23, slightly topped Wall Street targets on both sales and earnings, thanks to a rebound in advertising demand and ongoing cloud strength. Alphabet’s CFO Ruth Porat cautioned that capital expenditures would remain elevated this year, even as CEO Sundar Pichai touted AI-driven opportunities ahead. The stock’s immediate reaction was mixed – up about 2% after the release, then giving up those gains as investors digested higher spending plans reuters.com reuters.com.)

Wall Street Analyst Corner – Upgrades & Downgrades

Even amid the earnings deluge, analysts continued to recalibrate their stock ratings and targets:

• Shopify and Unity Downgraded: Two high-flying software names got knocked down a peg by Wall Street. Arete Research downgraded e-commerce platform Shopify (SHOP) from “Buy” to “Neutral” on Wednesday, citing the stock’s big year-to-date run and a more balanced risk/reward outlook marketbeat.com. Likewise, BTIG cut its rating on video-game software maker Unity (U) to “Neutral,” with analyst Jake Fuller adopting a more cautious view on Unity’s growth trajectory amid competition in the game engine space finviz.com. These calls hit their targets – Shopify shares slipped ~3% and Unity sank ~5% over the two-day span, underperforming the broader tech sector.
• Mosaic Upgraded by UBS: In the materials sector, fertilizer producer Mosaic Co. (MOS) received a vote of confidence. UBS analysts upgraded Mosaic to a “Buy” (from Neutral) on July 23, setting a $45 price target for the stock marketbeat.com. The firm pointed to improving fundamentals in the crop nutrient industry and Mosaic’s attractive valuation. Mosaic’s stock, which had been stuck around the mid-$30s, rallied about 4% on the upgrade and positive sentiment flowing through commodity-related names mid-week.
• Other Notable Calls: Morgan Stanley reiterated its bullish stance on large-cap tech, reportedly telling clients that the post-earnings dip in some “Magnificent 7” stocks could be a buying opportunity, given long-term AI-driven upside (no major changes in ratings, but a noteworthy perspective). Meanwhile, Loop Capital downgraded ServiceNow (ahead of its earnings) and Deutsche Bank upgraded Procter & Gamble, highlighting the bifurcated views emerging as analysts sift winners from losers in a more volatile environment. While these individual calls didn’t move the overall market, they underscore how analyst sentiment is evolving in real time, often amplifying stock-specific moves in this earnings season.

Macro Data and Fed Signals

Mixed Economic Signals: Fresh economic data arrived during this period, painting a nuanced picture. The housing market showed strain, as existing home sales fell more than expected in June, dropping to a 9-month low reuters.com. High mortgage rates and limited supply continue to constrain home-buying activity, a point echoed by homebuilder CEOs discussing “ongoing affordability constraints” for consumers investopedia.com. On the labor front, weekly jobless claims data (due Thursday) became a focal point – investors are watching if layoffs tick up after some softer data last week. Additionally, S&P Global’s flash PMI indexes for July are set to be released, providing a read on manufacturing and service sector health amid the tariff turmoil reuters.com. Thus far, the economy has sent mixed signals – solid corporate earnings and low unemployment on one hand, but cooling housing and cautious consumers on the other.

Fed Stay on Hold – For Now: All this feeds into the Federal Reserve’s outlook. The Fed’s next policy meeting is just a week away (late July), but traders have now largely ruled out any interest rate cut at that meeting, given the generally encouraging economic momentum reuters.com. Inflation has been easing only gradually and, with stocks at records, the Fed is expected to stand pat. However, markets are already pricing in future easing – Fed funds futures indicate about 58% odds of a rate cut by September reuters.com. That suggests investors see the Fed potentially pivoting to support growth if the economy shows more definitive weakness or if the tariff negotiations had faltered. For now, Fed officials have signaled they are content with policy on hold, allowing them to assess the impact of past hikes. Any commentary from Fed Chair Jerome Powell next week will be parsed carefully. In the interim, bond yields’ bounce on the trade news (10-year back to ~4.38%) shows that “risk-on” sentiment can push yields up even as Fed policy stays steady reuters.com. Should trade talks have unraveled, the opposite might have occurred – a flight to safety and increased bets on Fed cuts. Thankfully, the progress on multiple trade fronts (Japan, and talks with the EU and even China in coming days) has reduced one major risk factor on the Fed’s radar reuters.com reuters.com.

Conclusion: A Historic Week Sets the Stage

The July 22–23 span will be remembered as a pivotal mini-chapter of 2025’s market story – two days when trade diplomacy, earnings fireworks, and investor optimism converged to send stocks roaring higher. Major indices are now sitting at or near record levels, buoyed by easing geopolitical risks and a corporate earnings season that – so far – is delivering more upside surprises than disappointments. Sector rotation has been evident: industries most exposed to tariffs (autos, industrials) went from laggards to leaders virtually overnight on tariff relief, while pockets of tech and consumer stocks have faced comeuppance for any shortfalls. As we move forward, traders will be digesting the late-breaking mega-cap tech results (and any ensuing stock swings) and then turning to the Federal Reserve’s meeting and economic reports to gauge whether this rally has durable support.

Analysts caution that volatility could tick back up – especially if Big Tech guidance or the Fed’s tone diverge from expectations – but the overarching narrative is one of resilience. “The storm clouds are parting,” as CFRA’s Stovall put it, and after these eventful 48 hours, investors have reason to feel the sun on their faces. With trade tensions tentatively easing and growth pockets emerging, the U.S. market’s bullish momentum seems intact, albeit with the usual second-half caveats. In short, Wall Street’s wild two-day ride underscored an encouraging truth: even amid political noise and pockets of weakness, American companies are largely outperforming, and the market is responding in kind reuters.com reuters.com. For investors, it’s been an exhilarating and instructive week – one that sets an upbeat, if cautious, tone for the crucial earnings reports and policy decisions still to come.

Sources: Major news outlets and financial data feeds were used in compiling this report. Key information and quotes were drawn from Reuters market updates and earnings coverage reuters.com reuters.com reuters.com reuters.com reuters.com, Investopedia’s live markets news blog investopedia.com investopedia.com investopedia.com, and official statements from company executives on earnings calls. These have been hyperlinked throughout the text for reference. Each development discussed is backed by reporting from reputable sources (Reuters, Investopedia, Yahoo Finance, etc.) to ensure accuracy and authority in this roundup.