The Week in Stocks
This week, markets rose slightly as the S&P 500 remained near a 5-year high. Despite a new trade war with Canada and continued conflict with Iran, investors appeared optimistic in the future of U.S. securities.
NVIDIA stock was among the top market performers on the news of blowout Q2 earnings.
The Fed chair Kevin Warsh appeared cautious to maintain broader market stability in his first Jackson Hole Symposium speech, as the Trump administration launched a new sanctions operation to pressure Iran’s economy.
Major Headlines
Fed Chair Speaks at Jackson Hole Symposium
In his highly anticipated debut, Kevin Warsh cited economic stability and maintained a slight hawkish stance on price stability.
He cautioned that promising inflation figures won’t necessarily correlate to a broader economic recovery. Warsh also stressed a quieter central bank, directing markets to use data to influence decisions rather than Fed policy.
The speech pushed traders to price in a higher probability of future rate hikes, with the 2-Year note rising by 8 basis points after the speech.
US-Canada Trade War Escalates
Trade tensions between the United States and Canada reached a boiling point after final negotiations collapsed. In response to the U.S. implementing 50% tariffs on $20 billion dollars’ worth of Canadian goods, Prime Minister Mark Carney announced that Canada would mirror the duties for over 700 American products beginning on Labor Day. The tariffs target specific U.S. industries including forestry, agriculture and textiles, contributing to further friction as business owners and consumers brace for higher costs.
US Imposes New Iran Sanctions
The Trump administration recently announced new economic sanctions targeting Iran through “Operation Economic Outcast.” The sanctions targeted industries including oil, cryptocurrency and gold.
Treasury Secretary Scott Bessent described the measures as a warning to pressure the Iranian government. This initial list included 60 entities that the Treasury immediately penalized for aiding Iran’s regime, alongside major purchasers of Iranian commodities who were put on notice.
Tech: Nvidia Posts Blowout Q2 Earnings
Nvidia (NASDAQ: NVDA) reported approximately $96.22 billion in second-quarter revenue, with company executives expecting revenue to grow to 70 percent by 2028.
The strong earnings report and outlook temporarily eased investors’ fear that AI spending has outpaced infrastructure needs.
Analysis:
The Trump administration has grown more willing to use America’s economic force against trading partners. Despite negotiations, trade relations with Canada have deteriorated significantly, with America losing major exports in the food and beverage industry.
Furthermore, the conflict with Iran caused price volatility in the commodity market, as diplomatic talks cycled between ceasefires and hostilities.
For the American economy, Operation Economic Outcast was significantly larger than previous measures.
In addition to escalating tensions with China, weaponization of the dollar could further encourage the use of the Chinese yuan in transactions, which could weaken America’s strategic foothold in the Middle East.
