Stocks Set to Open Lower as Trade Worries Return

September S&P 500 E-Mini futures (ESU25) are down -0.34%, and September Nasdaq 100 E-Mini futures (NQU25) are down -0.53% this morning, starting the week on a downbeat note as uncertainty surrounding U.S. tariffs remains elevated ahead of the July 9th deadline to complete trade negotiations.

U.S. President Donald Trump announced on his Truth Social platform that “tariff letters and/or deals” would be delivered to global trading partners starting at 12 p.m. Eastern Time on Monday. President Trump has stated that new tariff rates could span from 10% to 70%. U.S. officials have signaled August 1st as the effective date for higher tariffs. Trump also threatened an additional 10% levy on nations aligned with BRICS, which includes Brazil, Russia, India, and China. “Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy,” he said.

In Thursday’s trading session, Wall Street’s major equity averages ended higher. Most members of the Magnificent Seven stocks advanced, with Microsoft (MSFT) and Nvidia (NVDA) rising over +1%. Also, Datadog (DDOG) surged more than +14% and was the top percentage gainer on the Nasdaq 100 after S&P Dow Jones Indices announced that the stock would be added to the S&P 500 index on July 9th. In addition, Cadence Design Systems (CDNS) climbed over +5%, and Synopsys (SNPS) gained more than +4% after the U.S. lifted export restrictions on chip design software to China. On the bearish side, homebuilder stocks slumped after the benchmark 10-year T-note yield jumped, with Lennar (LEN) sliding over -4% to lead losers in the S&P 500 and DR Horton (DHI) falling more than -2%.

The U.S. Labor Department’s report on Thursday showed that nonfarm payrolls rose 147K in June, stronger than expectations of 111K. Also, U.S. June average hourly earnings rose +0.2% m/m and +3.7% y/y, weaker than expectations of +0.3% m/m and +3.9% y/y. In addition, the U.S. unemployment rate unexpectedly fell to 4.1% in June, stronger than expectations of 4.3%. Finally, the U.S. ISM services index rose to 50.8 in June, in line with expectations.

“The solid June jobs report confirms that the labor market remains resolute and slams the door shut on a July rate cut,” said Jeff Schulze at ClearBridge Investments.

Atlanta Fed President Raphael Bostic on Thursday urged patience amid economic policy uncertainty and said that a wait-and-see stance could help avoid the need to reverse course on interest rates. “I believe a period characterized by such widespread uncertainty is no time for significant shifts in monetary policy,” Bostic said.

U.S. rate futures have priced in a 93.6% chance of no rate change and a 6.4% chance of a 25 basis point rate cut at the July FOMC meeting.

Meanwhile, the U.S. House of Representatives passed President Trump’s “One Big, Beautiful Bill” on Thursday with a 218-214 vote, and Trump signed it into law on the White House South Lawn on Friday afternoon.

The highlight of this week is the July 9th deadline, when the 90-day reprieve from President Trump’s so-called “reciprocal” tariffs ends. Trump is anticipated to announce a slew of trade agreements ahead of the tariff deadline. “We’re going to be very busy over the next 72 hours,” Treasury Secretary Scott Bessent said Sunday on CNN’s State of the Union, referencing the time remaining before the deadline. Bessent also indicated that certain nations without finalized deals could be granted a three-week extension to negotiate, with the tariffs set to take effect on August 1st.

The U.S. economic calendar lightens up considerably following last week’s wave of economic data releases. Investors will monitor U.S. Consumer Credit, Crude Oil Inventories, and Initial Jobless Claims data this week.

Also, market watchers will parse the Fed’s minutes from the June 17-18 meeting, scheduled for release on Wednesday, for any additional clues on potential interest rate cuts. While there have been recent signs of divisions leaning toward a more dovish stance, PMI and jobs data have indicated economic resilience, supporting the delay of interest rate cuts until later in the year.

In addition, market participants will hear perspectives from Fed Governor Christopher Waller, San Francisco Fed President Mary Daly, and St. Louis Fed President Alberto Musalem throughout the week.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.353%, up +0.86%.

The Euro Stoxx 50 Index is up +0.23% this morning as investors digested fresh economic data from the region and continued to monitor tariff and trade talk developments ahead of U.S. President Donald Trump’s tariff deadline. Financial stocks led the gains on Monday. Data from Eurostat released on Monday showed that the Eurozone’s monthly retail sales fell in May as consumers curtailed spending amid persistent economic uncertainty. At the same time, a survey showed that investor confidence in the Eurozone improved more than anticipated in July, reaching its highest level in over three years as the region’s economic recovery gained momentum. In addition, data showed that Germany’s monthly industrial production unexpectedly rebounded in May, supported by strength in the country’s export-driven car and pharmaceutical sectors. Meanwhile, a White House official said on Friday that U.S. trade negotiations with the European Union were ongoing and there was optimism that a deal could be finalized soon. In corporate news, Capgemini SE (CAP.P.DX) slid over -4% after the company agreed to buy technology outsourcing firm WNS for $3.3 billion.

Germany’s Industrial Production, Eurozone’s Sentix Investor Confidence Index, and Eurozone’s Retail Sales data were released today.

The German May Industrial Production stood at +1.2% m/m, stronger than expectations of -0.6% m/m.

The Eurozone July Sentix Investor Confidence Index came in at 4.5, stronger than expectations of 1.1.

Eurozone’s May Retail Sales arrived at -0.7% m/m and +1.8% y/y, stronger than expectations of -0.8% m/m and +1.2% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.02%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.56%.

China’s Shanghai Composite Index closed just above the flatline today as trade uncertainty persisted. AI-related stocks led the declines on Monday. Also, the medical services sector weakened after China imposed reciprocal curbs on medical device imports from the European Union on Sunday. At the same time, property stocks climbed after the housing regulator pledged to put a floor on falling home prices. Although China is not at risk of facing imminent reciprocal tariffs due to the trade truce with the U.S., sentiment remained largely subdued as U.S. President Donald Trump’s shifting policies kept investors on edge. Trump on Sunday threatened to impose an additional 10% tariff on countries aligned with BRICS. BRICS is an intergovernmental organization consisting of developing nations, including China. In response, China’s foreign ministry said on Monday that the country opposes the use of tariffs as a means of coercion. In corporate news, Shanghai Pret Composites surged +10% after projecting its first-half attributable profit to increase between 39% and 67% year-over-year, reaching as much as 240 million yuan. Investor focus this week is on China’s June inflation data to assess the health of the world’s second-largest economy amid persistent deflationary pressures and trade-related risks.

Japan’s Nikkei 225 Stock Index closed lower today as uncertainty over U.S. tariffs continued to weigh on sentiment. Automobile and bank stocks led the declines on Monday. Trade talks between the U.S. and Japan appeared to stall, and Washington recently threatened to impose even steeper tariffs on Japanese goods. At the same time, Japanese Prime Minister Shigeru Ishiba stated on Sunday that he won’t “easily compromise” in negotiations with Washington. Adding to the cautious mood, government data released on Monday showed that Japanese real wages fell in May at the sharpest rate in nearly two years, as persistent inflation continued to outpace wage growth and weigh on consumption-driven economic growth. Inflation-adjusted wages fell 2.9% in May from a year earlier, following a revised 2.0% drop in April, according to data from the labor ministry. Moody’s Analytics economist Stefan Angrick said that Japan’s weak wage data indicates it is becoming increasingly challenging for the Bank of Japan to pursue additional interest rate hikes. “With wage growth stumbling and inflation proving sticky, the BOJ’s job will get much harder,” Angrick said. Separately, preliminary data from the Cabinet Office showed that Japan’s leading economic indicators index, which gauges the economic outlook for a few months ahead based on data such as job offers and consumer sentiment, rebounded slightly in May. In corporate news, Yaskawa Electric plunged over -10% after the machinery maker slashed its full-year operating profit forecast. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +2.62% to 27.37.

The Japanese May Leading Index came in at 105.3, in line with expectations.

Pre-Market U.S. Stock Movers

Tesla (TSLA) slumped over -6% in pre-market trading amid concerns that Elon Musk’s push to form a new political party could spark backlash from President Trump.

Netflix (NFLX) fell about -0.5% in pre-market trading after Seaport Research downgraded the stock to Neutral from Buy.

CrowdStrike (CRWD) dropped more than -1% in pre-market trading after Piper Sandler downgraded the stock to Neutral from Overweight with an unchanged price target of $505.

Applied Materials (AMAT) slid over -1% in pre-market trading after Rothschild & Co. Redburn downgraded the stock to Neutral from Buy.

WNS (WNS) surged more than +12% in pre-market trading after Capgemini agreed to acquire the technology outsourcing company for $3.3 billion in cash.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Monday - July 7th

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