Daily Newsletter 7/30/25

The U.S. Federal Reserve is scheduled to announce its latest interest rate decision today, with market participants broadly expecting the central bank to maintain the federal funds target range at 4.25% to 4.50%. As of yesterday, the most recent effective daily federal funds rate was 4.38%, which falls within this target range. This reflects the Federal Reserve's continued cautious approach in response to current economic conditions.

The federal funds rate is the interest rate banks charge each other for overnight loans of reserves. It guides U.S. monetary policy by influencing borrowing costs. Lower rates encourage spending and growth; higher rates help control inflation but may slow the economy. The Federal Reserve adjusts this rate to balance growth and price stability.

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According to the advance estimate released by the U.S. Bureau of Economic Analysis, real gross domestic product (GDP) rose at an annualized rate of 3.0 percent in the second quarter of 2025, covering April through June.

Consumer spending grew at an annualized rate of 1.4%, improving from the first quarter, supported by a resilient labor market that bolstered household purchasing power. However, this increase was partially offset by a decline in business spending.

A decline in business spending could be viewed as a potential risk.

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Markets are eagerly anticipating earnings reports from major corporations with megacap stocks, particularly the influential Magnificent 7 tech giants. The "Magnificent 7" refers to seven dominant, high-growth mega-cap technology companies—Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla—that significantly impact market performance.

Alphabet (Google) and Tesla reported their earnings after the market closed on Wednesday, July 23, 2025. Microsoft and Meta Platforms are also scheduled to release their earnings following today’s market close. Meanwhile, Apple and Amazon are set to announce their results after the market closes on Thursday, July 31, 2025.