Global stock market: GDP and the Fed put record-high valuations to the test

Main angle of the week

• 📉 The S&P 500 closed on Friday, July 24 at 7,408.30 points and the Nasdaq Composite at 25,137.69, with a sharper daily decline in technology than in the broad index.
• 🧾 The most impactful macro data point of the week was the June CPI in the US: -0.4% month-on-month and 3.5% year-on-year, versus an expected monthly decline of 0.2%.
• 🗓️ Next week is packed with the advance second-quarter GDP, PCE, and the Fed meeting, along with several corporate events already scheduled between July 27 and 31.

What happened this week

Friday closes and breadth

The week ended with a visible correction on Wall Street. On Friday, July 24, the S&P 500 closed at 7,408.30 points and the Nasdaq Composite at 25,137.69. Reuters also reported that the Nasdaq fell 553.21 points in Thursday’s session and that Friday’s close left a more selective market, with pressure on big tech and relatively better tone outside that core. S&P 500, Nasdaq Composite and session recap.

In Europe, the focus remains on the divergence between a US stock market with high multiples and a continental market more dependent on the cycle. The Euro Stoxx 50 and the IBEX 35 head into the weekly close with less structural pressure than the Nasdaq, but greater sensitivity to crude prices, the euro, and European manufacturing activity.

Market breadth deteriorated in the latter part of the week. Yahoo Finance noted that declines outpaced advances by 2.99 to 1 on the NYSE and by 2.52 to 1 on the Nasdaq in the session with the greatest stress. That reading is consistent with a rise in tactical risk: when breadth worsens and the decline is concentrated in growth, the market demands immediate validation from earnings and macro data. The Russell 2000 and the VIX will be useful references to determine whether the correction remains contained or broadens.

Most relevant macro data

The most important data already released this week remains June CPI in the United States. According to the official publication from the Bureau of Labor Statistics, the headline index fell 0.4% month-on-month after rising 0.5% in May. The year-on-year rate came in at 3.5%.

The move surprised to the downside versus consensus. The market benchmark pointed to a 0.2% monthly decline, so the data eased pressure on the Fed for a few days. That relief, however, was not enough on its own to support a Nasdaq that still trades with high sensitivity to real rates, AI investment, and margin expectations.

The practical takeaway is clear. Headline inflation moderated more than expected, but the market is not trading on that data point alone. It now needs to verify whether cooler prices coexist with sufficient growth and with earnings strong enough to justify high valuations. That is why the natural shift in focus moves from the already known CPI to next week’s GDP, PCE, and Federal Reserve meeting.

Cross-asset and relative valuation

Across assets, the market heads into the new week with three prices that matter greatly. EUR/USD is trading at 1.1538, Brent closed on Friday, July 24 at $96.78, and gold is trading around $4,119.20. This mix combines less pressure on the European currency with still-high oil and gold continuing to act as a thermometer of macro and geopolitical uncertainty.

The rates benchmark is not pointing to full relaxation either. In Yahoo Finance bond markets, the yield on the 10-year Treasury stood at 4.542%. At that level, the discount rate remains demanding for long-duration companies, precisely the segment that weighs most heavily in the Nasdaq and in the artificial intelligence narrative.

In valuation terms, the underlying conclusion is that US equities still require flawless execution. If we take a forward P/E reference for the S&P 500 in the upper range of 24x, the earnings yield is around 4.2%. Against a 10-year Treasury at 4.54%, the implied risk premium comes in near -0.3 points. That ERP measures the excess earnings return over the sovereign bond: when it compresses too much, the market tolerates less disappointment in growth, inflation, or earnings.

What could move the market next week

Corporate earnings

Next week does bring verified corporate events within the required window. At UDR, the release is scheduled for Monday, July 27. At MasTec, the company has announced earnings for Thursday, July 30 after the close. Both enter the week as still-scheduled events.

They are not names with the weight of the mega caps, but they are still useful for reading two themes. UDR provides information on residential real estate and financing costs. MasTec offers visibility on infrastructure, energy, and demand linked to industrial investment. In a week with the Fed and GDP, that contrast may help gauge how much the cycle matters relative to the multiple.

Base case (55%): in-line results, with no surprise capable of changing the overall tone, and a market focused on macro and rates. Bullish scenario (20%): better-than-expected figures in demand and margins, supporting small and mid caps. Adverse scenario (25%): cautious guidance or cost pressure that reinforces the defensive rotation and the sell-off in financing-sensitive companies.

Macro

The week of July 27 to 31 includes several milestones. The Trading Economics calendar places the Federal Reserve decision on Wednesday, July 29. For Thursday, July 30, it lists the advance second-quarter US GDP, with consensus at 2.3% and the prior at 2.1%, along with personal income and spending. For Friday, July 31, it shows the second-quarter Employment Cost Index, with consensus at 0.8% and the prior at 0.9%.

The most delicate block arrives on Thursday. The market wants enough growth to support earnings, but not so much that it reopens fears of higher rates for longer. The ideal combination for equities would be reasonable GDP and controlled personal spending inflation. Any mix of solid activity with sticky prices could put yields under pressure again.

Base case (50%): Fed on hold, GDP close to 2.3%, and a prudent, data-dependent message. Bullish scenario (25%): acceptable growth and a disinflationary reading in PCE or labor costs, with yields compressing and the Nasdaq rebounding. Adverse scenario (25%): robust GDP with less cooperative inflation or a more hawkish Fed than expected, which would pressure valuations and growth sectors.

Geopolitics

Geopolitics will continue to be priced in through energy, transport, and FX. With Brent near $96.78 at Friday’s close, the sensitivity threshold is high. When oil approaches triple digits, the market once again watches implied inflation, margin pressure, and consumption.

The element to watch is whether any additional signal emerges during the week of July 27 to 31 regarding the Middle East that alters the energy risk premium. In that case, Europe would be more vulnerable due to import dependence, while in the US the impact would be seen first in inflation expectations and the Fed’s bias rather than in immediate growth.

Base case (60%): contained tension, with no further break higher in crude or sustained jump in safe-haven assets. Bullish scenario (15%): diplomatic easing and a drop in Brent, supporting consumption and European equities. Adverse scenario (25%): a new rise in oil and a flight to safety into gold and high-quality debt, pressuring stock markets and especially energy-intensive sectors.

Conclusion

The market enters the last week of July with one central idea: equities remain close to demanding levels and now need simultaneous confirmation from earnings, growth, and disinflation. The relief from June CPI was real, but it was not enough to sustain tech leadership once doubts emerged about cost of capital, capex, and breadth. The decisive reference is no longer what happened on July 14 with CPI, but what happens between July 29 and July 31 with the Fed, GDP, PCE, and labor costs. If those pieces come out reasonably aligned, the late-week adjustment could remain more a digestion of positions than a deeper change in trend.

The base case would be invalidated if three factors coincide: a more restrictive Fed, a rebound in core spending inflation, and a new widening of weakness from the mega caps to the rest of the market. In that case, the VIX, the Russell 2000, and the 10-year Treasury would offer a cleaner signal than the S&P 500 itself. As hedges, gold may continue to work in the event of a geopolitical shock or inflation fears, while high-quality sovereign debt would regain usefulness if growth disappoints. By contrast, if Brent falls and macro data comes in orderly, quality segments with visible earnings and solid balance sheets would become more attractive again.

This article is general financial information and does not constitute investment advice.