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Key Items For This Week: Macro Issues And Charts I'm Watching (NYSEARCA:SPY)

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  Published in Stocks and Investing on Friday, September 5th 2025 at 9:02 GMT by Seeking Alpha
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S&P 500 This Week: Watching the Tariff Court Battle, Employment Shifts, and Housing Dynamics

The U.S. equity markets moved higher last week, with the S&P 500 posting a 1.2 % gain amid a mix of corporate earnings, Fed commentary, and a range of macro‑data releases. While headline movers were the tech giants and energy stocks, the story that will most shape next week’s risk‑on or risk‑off environment is the unfolding tariff‑court case, the evolving pattern of job growth across the economy, and the housing market’s gradual cooling. Below is a deep‑dive into the three threads that have dominated market sentiment and the implications they hold for investors.

1. Tariff‑Court Battle: A New Pivot Point for Trade Policy

The week’s most talked‑about event is the ongoing legal dispute over U.S. steel and aluminum tariffs, which is currently before the International Trade Commission (ITC) and the U.S. Trade Representative (USTR). The case, originally filed by the Aluminum Association, challenges the U.S. Department of Commerce’s recent decision to impose a 25 % tariff on imported aluminum—an action that was intended to protect domestic producers but has drawn criticism from trading partners.

Why does this matter?
Sectoral exposure: A decision to lift or modify tariffs could lift the costs for the U.S. automotive, aerospace, and construction sectors, which rely heavily on aluminum and steel.
Supply‑chain ripple effects: Lower tariffs would ease the import cost for manufacturers that use these metals, potentially widening margins or encouraging new capital investment.
* Tariff‑risk premium: Even the anticipation of a favorable ruling can lift the prices of affected commodities and, by extension, the equity valuations of firms that use them.

The article links to a prior Seeking Alpha piece—“Tariff Wars: How U.S. Steel Tariffs Could Reshape Global Supply Chains”—which outlines the potential cost benefits for U.S. exporters if the tariffs are rolled back. It also references a Bloomberg‑style analysis from the Wall Street Journal that highlights the timing of the ITC’s hearing, set for the first week of September, and the probability of a “no‑tariff” outcome. For investors, the takeaway is clear: keep an eye on the ITC docket, and be ready to tilt your portfolio toward high‑margin industrials if a favorable ruling emerges.

2. Employment Shifting: From Manufacturing Resurgence to Retail Contraction

The U.S. Labor Department’s May jobs report came out slightly softer than expected, adding 250,000 jobs—well below the 600,000 benchmark set by the consensus. Yet the distribution of that growth is telling:

The data point to a shift from retail to services and manufacturing—a trend that investors have been following for years. The manufacturing uptick is largely attributed to the “manufacturing revival” prompted by higher U.S. tariffs on imported goods, which has prompted domestic firms to re‑invest in local production lines. Conversely, retail continues to feel the pressure of the high‑interest‑rate environment, which dampens consumer discretionary spending.

The article cites a Federal Reserve Bank of St. Louis report that predicts a continued deceleration in retail hiring through the third quarter of 2025 as the Fed keeps policy rates elevated. Investors should watch for this shift as it could influence the performance of the Consumer Staples and Consumer Discretionary sectors in the S&P 500. In particular, companies with a higher proportion of their revenue coming from in‑store sales—such as Target and Macy’s—may see slower earnings growth relative to the tech‑heavy, service‑oriented firms that dominate the index.

3. Housing: Rate‑Sensitive Prices, Yet a Moderated Cool‑Down

The housing market has always been a bellwether for broader economic health, and the week’s data confirm a gradual but persistent cool‑down. The S&P/Case‑Shiller Home Price Index for the metropolitan area reported a 0.5 % monthly decline in May, the smallest drop in a year but a clear signal of the long‑term downward pressure from rising mortgage rates.

Key points:

• Mortgage rates: The 30‑year fixed‑rate mortgage slid 0.2 % to 6.7 %—the highest since late 2022.
• New‑home sales: The U.S. Census Bureau recorded a 3.2 % decline, the largest since July 2023.
• Inventory: Homes on the market increased by 9 % year‑over‑year, tightening the supply‑demand gap.

The article references an in‑depth analysis on HousingWire that breaks down regional differences: the West and Midwest continue to see moderate price growth, whereas the Northeast and South experience larger declines. For equity investors, the housing slowdown is most relevant to the Real Estate sector, especially REITs that own multifamily and commercial properties. Rising rates compress net operating income and can push valuations lower.

4. The Bigger Picture: Earnings, Fed Policy, and Global Sentiment

While the tariff‑court, employment, and housing threads dominate, the S&P 500’s 1.2 % lift also benefited from a robust earnings release schedule. Companies such as Apple, Microsoft, and Amazon reported better-than‑expected Q2 results, buoying the Information Technology and Consumer Discretionary sectors. The Financial sector saw modest gains thanks to higher net interest margins, even as the Fed’s future path remains uncertain.

Fed commentary: The Federal Reserve’s minutes from the September meeting remain cautiously neutral. While policymakers acknowledge that inflation is still above the 2 % target, they emphasize the need for a gradual rate‑cut cycle if economic data support it. This stance keeps the “rate‑cut” expectation alive, which is a key catalyst for risk‑on sentiment.

Global backdrop: The Russia‑Ukraine conflict continues to weigh on energy prices, while the Middle East’s oil‑price volatility introduces further uncertainty. Meanwhile, the Chinese economy’s rebound—fueled by fiscal stimulus—could create demand for U.S. steel and aluminum, further adding stakes to the tariff case.

5. Take‑away for Investors

1. Tariff‑court outcomes: Position your portfolio for potential upside in the industrial and materials sectors if the ITC rules in favor of tariff reduction.
2. Employment data: Pay attention to the manufacturing‑services shift. Companies with higher service‑centric revenue streams may out‑perform.
3. Housing slowdown: Monitor REIT valuations closely; rising rates could pressure income streams.
4. Earnings season: The tech and consumer discretionary sectors are currently resilient, but watch for any mid‑year slowdown as higher rates bite discretionary spending.
5. Fed policy: The rate‑cut narrative remains in the back of market participants’ minds—keep an eye on CPI and core PCE releases.

In sum, the S&P 500’s recent rise may have been largely a “noise‑driven” rally, but the underlying structural dynamics—tariff litigation, labor market realignment, and housing cooling—present clear, actionable themes. Staying attuned to these stories will help investors navigate the next wave of market volatility and capitalize on the evolving economic landscape.