Good Morning Investors,
The bull market doesn't care about your feelings or tariffs. Despite President Trump's latest global tariff barrage, markets are pressing forward with relentless momentum. The S&P 500 ($SPY ( ▲ 1.54% )) gained 0.6% Wednesday, the Nasdaq ($QQQ ( ▲ 1.54% )) jumped 0.9% to a record high, and the Dow ($DIA ( ▲ 1.94% )) added 0.5%, all powered by Nvidia's ($NVDA ( ▲ 1.72% )) historic move past a $4 trillion valuation.
This is what happens when earnings momentum meets skeptical sentiment. While politicians trade threats and pundits predict doom, companies continue delivering results that matter. The market's message is clear: it is betting on American innovation over Washington theater.
Opening Bell: Tariffs, Copper, and Political Theatre
President Trump announced a 50% tariff on imported copper and an identical 50% duty on goods from Brazil starting August 1. Brazil's response? A promise of "economic reciprocity" (polite diplomat-speak for retaliation). The copper market surged 10% as importers raced to beat the new levies, highlighting America's chronic reliance on foreign supply. With only three operational smelters and a 15-year build timeline, there's no quick fix.
The tariff letters keep flying out of the White House like confetti at a campaign rally. Seven new countries were added Wednesday, with more promised. Yet the market barely blinked. Investors have become desensitized to tariff saber-rattling, treating it more as negotiation theater than economic apocalypse.
Nvidia Hits $4 Trillion and It’s Just Getting Started
Congratulations to Nvidia and its loyal holders for cracking the $4 trillion market cap milestone. As I’ve said since April, Nvidia is not just a chip company; it is the backbone of the AI revolution. The stock is up 21% this year alone, second only to Meta among the Magnificent Seven.
Nvidia’s edge isn’t just its superior chips; it is its customer list. Amazon, Google, Microsoft, Tesla - all rely on Nvidia’s products to build their AI dreams. While the big tech platforms hustle to monetize AI services and justify sky-high valuations, Nvidia simply keeps cashing checks.
Wedbush’s Dan Ives put it perfectly: “There is one company in the world that is the foundation for the AI revolution and that is Nvidia.”
Delta Kicks Off Q2 Earnings
Delta ($DAL ( ▲ 6.66% )) shares soared 11% after reporting a strong beat and reinstating its 2025 profit outlook. Adjusted EPS for Q2 came in at $2.10 versus $2.05 expected, with revenue at $15.51 billion, topping estimates.
CEO Ed Bastian noted that booking patterns have shifted, with travelers waiting longer to confirm plans, but demand remains resilient. Premium cabin revenue rose 5%, offsetting a 5% dip in main cabin sales. Delta now expects full-year EPS of $5.25 to $6.25, down from January’s lofty $7.35 forecast but still strong enough to lift the sector.
Delta’s solid results set a constructive tone ahead of big bank earnings next week.
TSMC’s AI Momentum
TSMC ($TSM ( ▲ 2.49% )) posted Q2 revenue of $32 billion, topping expectations, driven by surging demand from Nvidia and Apple. CEO C.C. Wei reaffirmed a 25% US dollar sales growth target for 2025, despite tariff noise.
TSMC is plowing $100 billion into global expansions, including Arizona and Japan, to meet unrelenting AI chip demand. While margins may land on the lower end of guidance due to a weaker dollar, the topline trajectory remains robust.
Market View: The Rally That Everyone Loves to Hate
Despite the drama, data suggests the consumer isn’t flinching. Jobs remain strong, margins are holding up, and earnings continue to surprise to the upside. The market’s resilience is a direct rebuttal to claims that “it’s all priced in.”
Consider this: even after weathering numerous major shocks since COVID, the S&P 500’s median valuation is still below pre-pandemic levels. Meanwhile, margin risk from tariffs is largely offset by falling gasoline and commodity prices.
The Fed minutes showed a divided board, with no clear consensus on cuts in July, though a later move this year remains likely. Inflation remains the wildcard, but if core inflation stays tame, the Fed will have room to act not out of desperation but out of choice.
With about half of this year’s potential gains realized, the setup for a push toward my 6,500 year-end target (and potentially 7,000 by mid-2026) remains intact.
Final Thoughts
This remains a hated rally with a lot of investors still waiting for the same pullback they've been waiting on since May, and that is precisely what keeps it alive. Skepticism fuels it, and when sidelined cash finally gives in to FOMO, it propels the next leg higher.
I continue to favor large-cap tech (particularly AI and semiconductors), financials, and quality cyclicals. Tariff headlines are noise; earnings momentum is the real music.
Stay opportunistic, stay patient, and keep your eye on the data.
Please feel free to reach out to me on LinkedIn or by email if you'd like help navigating this environment or have any planning questions.
Dan Sheehan
This newsletter is for informational purposes only and should not be considered investment advice. Please consult your financial advisor about your specific situation.