This week has not much new developments to report, as the S&P 500 index recovered from the impact of non-farm data and approached historical highs again. On the other hand, the Nasdaq index benefited from strong financial report performance, setting a new record, disregarding the ongoing political turmoil of the Trump administration and new import tariff issues.
Global risk assets also performed well, with European and Japanese stock markets rising due to ongoing trade resolution solutions, with the United States making concessions on tariff stacking and automotive tax relief.
On the other hand, the US-China trade truce agreement is set to expire this week, with some market participants expecting the deadline to be extended again, but others are concerned that the United States might impose new tariffs due to China purchasing Russian oil - previously, India was sanctioned for similar actions.
The good news is that the United States and Russia plan to draft a new Ukraine peace agreement before this week's Alaska summit, providing another tailwind for risk assets and lowering oil prices as war premiums continue to fade.
US capital flows remain strong, with domestic and foreign investors returning en masse. The latest data shows a record monthly net inflow and breakthrough trading volumes, forming a positive confirmation.
In 2025, US stock market trading volume hit a historical high, far exceeding previous years, mainly due to the strong return of retail trading since the beginning of the year. According to Citigroup data, the average daily trading volume in the first half of 2025 is nearly 50% higher than the five-year average and has jumped 40% from the previous record set in 2024. This trend continued in July, with an average daily trading volume of 1.8 billion shares.
In fact, 17 out of the 20 largest single-day trading volumes in history occurred in 2025, with 13 days in the second quarter alone. Absolutely incredible.
Year-to-date, retail participation has driven extremely high stock concentration, with the top five stocks accounting for over 20% of total market trading volume on some trading days in 2025. Retail activity in call options has also rebounded significantly, reaching the highest level since the COVID-19 pandemic.
In terms of financial reports, about 80% of S&P 500 companies that have reported earnings have exceeded expectations, with a year-on-year growth of 12% and a 9% surprise, led by technology and financial sectors. Against the backdrop of lowered expectations after tariff concerns, the second-quarter earnings per share significantly exceeded expectations.
The current rebound has pushed the probability of economic recession in the stock and credit markets back to single-digit lows. The US fixed income market remains an exception, with the most aggressive pricing for further Federal Reserve easing.
On inflation, although the Federal Reserve is willing to ignore recent price pressures, ISM sub-item data shows a worrying rebound in payment prices, which typically leads CPI by about a quarter and could trouble the Fed's rate cut plans later this year. However, currently, under risk appetite sentiment, the market is happy to maintain high levels until hard data proves otherwise.
Cryptocurrencies also experienced a similar rebound this week, mainly driven by headlines about Trump ordering regulators to "study" the possibility of including cryptocurrencies (and private equity) in 401k portfolios. If this becomes true, it would obviously open up massive buying demand. However, there is still a long way to go before it could become law.
More excitingly, Ethereum led the weekly gains with a +20% increase. The latest mainstream experts/followers are hyping ETH as the newest FOMO target in the public equity domain. Retail traders actively responded, pushing BNMR up nearly 60% this week, showing "native gamblers" how to properly FOMO in a regulated world.
As expected, the Ethereum ETF saw new inflows of about $700 million in the last two days of this week, pushing cumulative inflows to a new historical high, with assets under management doubling year-to-date to nearly $10 billion (vs $3 billion at the beginning of the year).
ETH's recent rebound has also led to short-term volatility divergence, with Bitcoin's implied volatility still hovering near historical lows, while ETH's volatility has surged. ETH's term structure is currently in backwardation, with long-term volatility expectations falling to around 70%, while BTC's IV curve is the opposite, with short-term volatility severely compressed, and spot market staying around $120,000.
By comparison, a month ago, the market only implied a 5% chance of ETH reaching $4,500 in August, but the actual spot market performance far exceeded the implied path, catching many participants off guard.
Looking ahead, at this point, we believe there is no strong necessity to chase the market high, as we expect market assets to experience two-way fluctuations in the next month or so. Beware of potential downside catalysts such as a significant US dollar index reversal or unexpected inflation. Traders, please stay alert and have a successful trading session!
Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
