Market Performance Overview (Current Day)
- S&P 500: Up slightly by 0.02% to 6,389.77.
- Nasdaq: Rose 0.33% to 2178.58, showing limited upside despite record-high expectations.
- Dow Jones: Down 0.14% to 44,837.56, reflecting a mixed sentiment.
- Volatility Index (VIX): Up 0.1% to 15.03, but still at a relatively low level.
- Gold: Declined 0.54% to $3,317.70 per troy ounce.
- Oil (WTI): Surged nearly 3% to $67.09 per barrel due to concerns over potential sanctions related to Russia following President Trump’s remarks.
- US 10-Year Treasury Yield: Increased 2.8bp to 4.414%, influenced by a weak 5-year Treasury auction and planned significant Treasury issuances.
- Dollar Index: Jumped 1% on the ICE futures market to 98.66, primarily driven by the tariff agreement with the European Union.
- Euro: Declined significantly to around 1.195, marking its largest drop this year.
Overall, the market remains volatile and unable to sustain significant upward momentum, largely holding its ground rather than surging. While the S&P 500 and Nasdaq saw some late-day buying, their gains were limited. The Russell 2000 also had a sluggish day, rising only 0.12%.
Cryptocurrency Market Trends
The cryptocurrency market also saw a pullback. Bitcoin was down nearly 1% (0.98%) over 24 hours, trading around $117,000. Ethereum, which recently hit new highs, declined about 1% to the $3,700 level. Ripple was down over 2%, and Solana dropped 1.54%, indicating a cooling off after recent rallies.
Key Market Drivers
1. US-EU Tariff Agreement:
- Agreement Details: Following the Japan agreement, the US finalized a 15% tariff deal with the EU. This involves a substantial commitment from the EU to invest $1.35 trillion in the US ($750 billion in energy purchases, $600 billion in additional investments beyond existing ones) and mass purchase US weapons.
- Trump’s Stance: President Trump, despite initial uncertainty and pressure tactics, secured a comprehensive deal.
- Exemptions: Aircraft, aircraft parts, generic drugs, and semiconductor manufacturing equipment (like ASML) are exempt from the tariffs.
- Discrepancies: A minor dispute exists regarding pharmaceutical products; Trump claims they are excluded, while EU Commission President von der Leyen states they are included in the 15% tariff.
- Upcoming Tariffs: Commerce Secretary Howard Lutnick indicated that tariffs on pharmaceuticals, semiconductors, lumber, and copper (under Section 232 of the Trade Expansion Act) will be announced separately within two weeks, effective from August 1st for reciprocal tariffs.
- EU Reaction: While Germany, a major auto exporter, views the agreement favorably, France, heavily impacted in luxury goods, considers it humiliating. This led to a 2% drop in LVMH on the French exchange and over 3% drop for Novo Nordisk in the US.
2. US-Russia Relations and Oil Prices:
- Ceasefire Pressure: President Trump has pressured Russia for a ceasefire in Ukraine by August 9th, warning of 100% tariffs on Russian energy if not met. This secondary sanction would also impact countries like China and India using Russian energy. This new uncertainty has contributed to the rise in oil prices and a 2% depreciation of the Russian Ruble.
3. US-China Trade Talks:
- Current Status: US and Chinese representatives held a 5-hour meeting in Scranton, their first since August 12th. The focus is on potentially extending the 90-day tariff truce or assessing China’s compliance with prior agreements on rare earth minerals. Major breakthroughs are not expected from this initial meeting.
- Trump’s Stance: Trump continues to pressure China to open its markets, similar to Japan and the EU.
- Potential Summit: A possible meeting between Trump and Xi Jinping is eyed for late October or early November if talks progress well, though uncertainty remains.
- Tech Export Controls: The US has reportedly paused some tech export controls on China, as per the Financial Times.
- New IP Proposal: Commerce Secretary Lutnick is reportedly considering a plan for patent holders to collect 1-5% royalties on patent values, aiming for additional revenue beyond tariffs, which could negatively impact manufacturers.
4. Federal Reserve and Monetary Policy:
- Trump’s Remarks: President Trump again hinted at Powell’s departure, stating, “Powell will leave soon, and he will be missed.”
- FOMC Outlook: The FOMC meeting this week is expected to result in a rate hold in July. The market is weighing the possibility of dissents from Governors Michelle Bowman or Christopher Waller and signals for a rate cut at the September meeting.
- Rate Cut Expectations: Most institutions, including Goldman Sachs, predict a 25bp rate cut will commence. However, concerns about persistent US growth uncertainty might constrain the Fed’s actions.
- Transparency Lawsuit: A lawsuit by Azaria Capital in Washington D.C. demanding greater FOMC transparency and public release of meeting content is facing skepticism from the judge regarding its true intent.
5. Bond Market Dynamics:
- 5-Year Treasury Auction: The 5-year Treasury auction showed weakness, with a higher yield (3.983%) than expected, low bid-to-cover ratio (2.31%), and indirect bids at 58%.
- Treasury Issuance Plan: The US Treasury forecasts a significant increase in bond issuance for July-September to $1.07 trillion (up $450 billion from previous estimates), which is negative for bond yields. However, issuance is expected to stabilize at $590 billion from October onward.
Big Tech and Sectoral Performance
Overall, outside of Tesla and Nvidia (and a few other semiconductors), most big tech stocks took a breather. Companies like Google, Meta, Apple, and Microsoft showed minimal fluctuations, possibly due to upcoming earnings reports making clear predictions difficult. Energy stocks declined due to oil price movements.
- Tesla (TSLA): Up 3% today, driven by a major contract with Samsung Electronics. Samsung’s Taylor, Texas fab will produce 2nm A16 chips for Tesla’s Robotaxi and Optimus robots. This 8-year contract is valued at ₩22.8 trillion (approximately $18.8 billion USD). Elon Musk confirmed this “global megadeal.” Musk emphasized the strategic importance of the deal and hinted at potential for larger production volumes. He also expressed intent to frequently visit the Samsung fab due to its proximity.
- Impact on Competitors: TSMC shares dropped 1%, and Intel was down 0.1%. Tesla is currently using Samsung for A14, TSMC for A15, and now Samsung for A16, employing a dual-foundry strategy.
- Cybertruck and Future Products: Lars Moravy, VP of Vehicle Engineering, revealed discussions for a smaller cargo truck, an addition to the Cybertruck lineup, to broaden demand and facilitate exports to Europe and China. He also reiterated Tesla’s continued focus on autonomous driving, Robotaxi, Optimus, and Semi, noting this as a critical, high-risk, but potentially high-reward transition period.
- AMD (AMD): Surged 4%, fueled by positive forecasts for its MI350 products, expecting significant price and revenue growth. UBS analyst Timothy Arcuri raised AMD’s price target from $150 to $210, citing strong growth in PC, server, and data center systems. AMD is projected to hit $10 billion in annual data center revenue for the first time. Its acquisition of GT systems in March strengthened its infrastructure design and vertical integration, positioning it well after Nvidia.
- Alphabet (GOOGL): JP Morgan expects a final verdict on Google’s search and advertising antitrust case by August 8th. If relief measures are not adopted, both Alphabet and Apple could face significant hits (e.g., $12.5 billion annual impact for Apple due to reduced user inflow from exclusive search engine supply). A compromise allowing payment for user choice of Google’s search engine could be market-acceptable.
- Figma (Figma): The online design company, eyed by Adobe, will go public on July 31st. The IPO price range is $30-32 per share, aiming to raise $1.19 billion, valuing the company at approximately $18.8 billion (close to Adobe’s acquisition offer). Bank of America projects significant benefits for Adobe, noting its diversified business beyond Photoshop and Premiere despite being overshadowed by AI.
- UnitedHealth Group (UNH): To release earnings tomorrow. This Dow component’s performance is crucial, especially after recent leadership changes and the former CEO’s return. The market is keenly watching if UNH will restore its 2025 annual guidance (previously lowered) and if its core Optum segment can regain profitability. The expected Q2 EPS is $4.48, lower than prior expectations, warranting close attention.
- Meta Platforms (META): Declined today (despite a green indicator in the transcript, the speaker corrected it to red, indicating a drop). However, news about increasing demand for Meta Ray-Ban smart glasses emerged from EssilorLuxottica’s earnings, whose H1 performance showed 4.1% growth globally and 5.5% in North America.
- PayPal Holdings (PYPL): Up 0.31% today. PayPal plans to launch “Pay with Crypto,” supporting over 100 cryptocurrencies including Bitcoin, Ethereum, Tether, and USDC. This feature allows users to connect their personal wallets for in-store payments, converting crypto to USD or PYUSD (PayPal’s stablecoin) for merchants. PayPal aims to expand market size by offering interest to merchants who do not immediately convert PYUSD to USD.
- DoorDash (DASH): Down 1% today. Spotify’s former global head of advertising, Lee Brown, a known advertising expert, will join DoorDash as Chief Revenue Officer in August.
- Warner Bros. Discovery (WBD): Up 1.5% as it officially moves to separate its streaming and cable TV businesses.
- Nike (NKE): Receiving strong Wall Street evaluations. JPMorgan upgraded Nike due to resolving excess inventory and launching new specialized running and basketball lineups. They assess Nike is entering the initial phase of a 5-stage business recovery.
- Cadence Design (CDNS): Surged 6% in after-hours trading after beating revenue and adjusted EPS estimates. The strong performance is attributed to significant demand for AI-centric semiconductor design, expecting robust results in the second half.
- Nucor (NUE) & Weyerhaeuser (WY): Down significantly by 4% and 12% respectively after their earnings reports.
Upcoming Events (Tomorrow)
- Economic Data: Goods Trade Balance, Retail Inventories, Conference Board Consumer Confidence Index, JOLTS Job Openings (most important).
- Key Earnings: Procter & Gamble, UnitedHealth Group (crucial), PayPal, Visa (after market close), Starbucks (after market close).
Important Notice: This content is for informational purposes only and does not constitute financial advice. Stock market investing carries significant risks. Past performance is not indicative of future results. Conduct your own research and consult a qualified advisor.