A market on edge: Tech triumphs, tariffs trouble, and what comes next

2 minutes read

31 July 2025

A market on edge: Tech triumphs, tariffs trouble, and what comes next

Another day, another twist in the tale of the US stock market. But this week, it’s less a gentle ride and more a rollercoaster with a view across Main Street, Silicon Valley, and the corridors of global trade.

As the opening bell rang on Wall Street, whispers of new tariffs, surging tech profits, and a Federal Reserve refusing to flinch kept everyone guessing: what comes next?

When profits soar as politicians spar

It’s Wednesday evening, and the world is watching two giants, Microsoft and Meta. Both have just dropped quarterly results that most businesses would dream of. Microsoft’s Azure cloud division blew past analyst predictions, pushing annual revenue north of $75 billion. Not to be outdone, Meta, owner of Facebook and Instagram, posted a staggering $47.5 billion revenue for the quarter, up 22% on last year. Shares leapt by as much as 9% in after-hours trading.

“You can’t ignore this momentum in tech,” said Robin Feng, portfolio manager at Meridian Investments. “Meta’s execution amazes, and Microsoft keeps compounding. If you’re underweight tech in 2025, you’ve probably been left in the dust.”

Mark Zuckerberg, Meta’s CEO, went beyond just numbers. In his letter to investors, he stressed, “Over the last few months we have begun to see glimpses of our AI systems improving themselves. The improvement is slow for now, but undeniable. Developing superintelligence is now in sight”. Investors responded with the sort of euphoria reserved for milestone moments, sending Nasdaq futures higher and inspiring optimism across the S&P 500. Bar chart comparing post-earnings price jumps for Microsoft and Meta, with Meta showing a larger increase.

Central bank caution and a tariff timebomb

If you expected a quiet week, think again. Even as tech leads, policymakers are tightening their grip. On Wednesday, the Federal Reserve, under pressure from President Trump to slash interest rates, kept borrowing costs steady at 4.25–4.5% for the fifth straight meeting. Chairman Jerome Powell struck a typically measured note: “Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate”. In simpler terms, the Fed won’t move until it absolutely must.

“Powell made clear that he thinks the Fed has room to hold the fed funds rate steady for a period of time and wait and see how much tariffs feed through to inflation,” said Nathaniel Adams, senior economist at Aterica. Many on Wall Street took this as a sign: don’t expect cheaper money until at least year-end.

Meanwhile, President Trump made headlines by announcing a 25% tariff on Indian goods starting August 1, plus an additional, unspecified penalty for India’s trade with Russia. On his social media platform, Trump argued these measures are needed to defend US interests and “protect against attacks on the dollar.” The tariffs target everything from gems to electronics and pharmaceuticals, rattling both markets and US-India relations. Indian officials pledged to “study its implications” and “take all steps necessary to secure our national interest”.

Aditi Nayar, chief economist at Icra, warned, “The tariff plus penalty proposed by Trump is higher than what we anticipated and is likely to pose a headwind to India’s growth. The extent of the downside will depend on the size of the penalties imposed”. Her views are echoed across trading desks in Mumbai, New York, and beyond.

So what does it all mean for investors? For some, these swings are a warning sign. For others, they’re a source of opportunity.

Take the case of a diversified portfolio, a tilt towards tech provides ballast amid uncertainty, but the clouds of politics and central bank caution loom. As the story of 2025’s markets unfolds, all eyes remain on the next chapter. Will it be rally or retreat? One thing’s certain: everyone’s paying attention.

Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.