Riding the wave: Hope, nerves, and high stakes in summer 2025

3 minutes read

30 July 2025

Riding the wave: Hope, nerves, and high stakes in summer 2025

The air on Wall Street crackled with anticipation this Monday. Just after sunrise in New York, traders hunched over glowing screens, eyes darting between shifting numbers and global headlines. Markets had been on a six-day winning streak, the S&P 500 marking yet another record close, the Dow brushing against historic highs, and the Nasdaq, buoyed by tech titans, dancing beyond all expectations. Still, beneath the cheerful ticker tape, a question lingered: could this rally keep going?

Across the globe, diplomats were shaking hands and making promises, sometimes more in hope than certainty. The US and China, after months locked in a tense dance, kicked off new trade talks in Stockholm. The global economy awaited their every syllable. “This meeting can serve as a keystone moment to build a durable framework rooted in predictability, transparency and mutual economic interest,” observed Chris Pereira, CEO of iMpact Consulting in New York.

Trade talks and tariffs: A fragile truce

The mood in the financial district was, as one trader put it, “cautious optimism, heavy on the caution.” Recent progress in the US-China relationship had offered a lifeline. Beijing and Washington had agreed to extend a truce, slashing some punishing tariffs and opening the door, if only a crack, to stability. That small gesture was enough to send stocks leaping last week.

But nobody was certain the peace would last. “Three high-level trade talks in three months indicate a mutual desire to de-escalate tensions and stabilise economic ties,” noted Dr Lyu Xiang of the Chinese Academy of Social Sciences. In plain terms, both sides wanted a cooling-off period—even if only to catch their breath. And as Li Daokui, dean at Tsinghua University, told reporters, “I believe that in the near future, China and the US should be able to reach a new trade agreement that is beneficial to both sides. On the whole, I am relatively optimistic”.

Still, others offered a dose of reality. Torsten Sløk, chief economist at Apollo, warned, “By removing this tail risk and the risk of a recession, we now have the markets saying, ‘Well, maybe the growth outlook is not that bad.’ And maybe therefore, yes, inflation will still go up, but…we will eventually get a tailwind as a result of removing this tail risk”. In other words, optimism was justified, but threats remained, especially as tariff-driven inflation started to creep into consumer prices. Pie chart showing investor sentiment breakdown: 45% cautious, 40% optimistic, 15% uncertain.

The Fed and Wall Street: A test of nerves

Investors, clearly not content to watch from the sidelines, turned their gaze to the Federal Reserve. This week’s meeting was all anyone in finance could talk about. With inflation stubbornly sticky and business sentiment holding strong, the Fed was almost certain to keep interest rates steady at 4.25%-4.50%, but the market wanted more than a status quo.

"The July 29-30, 2025, Fed meeting will likely continue existing monetary policy while keeping inflation restraint in balance with support of growth, making it a complicated scenario that will steer near-term NASDAQ and Dow Jones index performance," wrote analysts at The Daily Guardian. Drew Matus, from MetLife Investment Management, offered a simple truth: “If [the Fed] move rates lower too early…they raise the risk of actually boosting inflation expectations further”. The central bank’s caution might frustrate some, but for now, it was probably the right move.

Meanwhile, not all was rosy beyond the ticker tape. Even with new jobs numbers impressing, and earnings from giants such as Alphabet and Apple breaking expectations, hiring had slowed and price pressures lurked just beneath the surface. Small business confidence simmered at pre-pandemic levels, a sign that while the mood was upbeat, it was hardly euphoric.

As the sun set over Manhattan, traders packed up, some smiling, others biting their nails. The next few days would bring clarity: a possible breakthrough in Stockholm, more words from Chairman Powell, fresh data that could tip optimism into caution, or vice versa. This is the defining mood on Wall Street right now, a relentless search for certainty in a world that rarely sits still. One thing’s for sure: the story isn’t over yet.

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.