Stocks Pressured Ahead of Wednesday's Tariff Deadline

The S&P 500 Index ($SPX) (SPY) today is down -0.56%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.54%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.70%.  September E-mini S&P futures (ESU25) are down -0.54%, and September E-mini Nasdaq futures (NQU25) are down -0.71%. 

Stocks are under pressure today as trade tensions are back in the forefront, with US trading partners rushing to finalize trade deals with the Trump administration ahead of Wednesday's deadline.  On Sunday, President Trump pledged to announce unilateral tariff rates on dozens of countries in the coming days.  Mr. Trump also stated that countries aligning with the anti-American policies of the BRICS group of nations (Brazil, Russia, India, China, and South Africa) will face an additional 10% tariff. 

Stock losses are limited after Treasury Secretary Bessent announced that August 1 will be the new effective date for higher tariffs, and some countries may be offered a three-week extension to negotiate.  Also, the European Union (EU) and the US are moving closer to a trade agreement following a Sunday call between European Commission President Ursula Von der Leyen and President Trump, according to an EU commission spokesman.

Stocks also have support after President Trump last Friday signed the reconciliation bill into law.  The fiscal stimulus from the bill will be a net positive for the US economy, but the higher deficit is negative as it increases the risk of an eventual debt crisis in the United States.

Tesla is down more than -6% to lead mega-cap technology stocks lower after President Trump criticized Elon Musk's bid to start a new political party, intensifying concerns about implications for Tesla and other companies led by Musk. 

Another hurdle for stocks is the upcoming earnings season, which begins this week.  Bloomberg Intelligence data show that the consensus for Q2 earnings of S&P 500 companies is for a rise of +2.8% year-over-year, the smallest increase in two years.  Also, only six of the 11 S&P 500 sectors are projected to post an increase in earnings, the fewest since Q1 of 2023, according to Yardeni Research.

The focus of the markets this week will be on any new tariff news and if US trading partners sign trade deals ahead of Wednesday's deadline. On Wednesday, the minutes of the June 17-18 FOMC meeting will be released.  On Thursday, weekly initial unemployment claims will be released.  Also, on Thursday, St. Louis Fed President Musalem and San Francisco Fed President Daly speak on the US economy and monetary policy.

Federal funds futures prices are discounting the chances at 5% for a -25 bp rate cut at the July 29-30 FOMC meeting.

Overseas stock markets today are mixed.   The Euro Stoxx 50 is up +0.91%.  China's Shanghai Composite closed up +0.02%.  Japan's Nikkei Stock 225 closed down -0.56%.

Interest Rates

September 10-year T-notes (ZNU25) today are down -6 ticks.  The 10-year T-note yield is up +2.8 bp to 4.373%.  T-notes are being undercut after President Trump last Friday signed his tax and spending plan into law, which will boost the US budget deficit by a total of $3.4 trillion over the next 10 years, according to the CBO, thus requiring the Treasury to sell more debt to fund the deficit.  Supply pressures are also weighing on T-notes as the Treasury will auction $119 billion of T-notes and T-bonds this week, beginning with Tuesday's $58 billion auction of 3-year T-notes.  T-note prices are also seeing negative carryover today from a decline in European government bond prices. 

European government bond yields today are moving higher.  The 10-year German bund yield is up +3.5 bp to 2.642%.  The 10-year UK gilt yield is up +1.6 bp to 4.570%.

The Eurozone July Sentix investor confidence index rose +4.3 to a nearly 3.50-year high of 4.5, stronger than expectations of 1.0.

Eurozone May retail sales fell -0.7% m/m, weaker than expectations of -0.6% m/m and the biggest decrease in 1.75 years.

German May industrial production unexpectedly rose +1.2% m/m, stronger than expectations of a -0.2% m/m decline.

Swaps are discounting the chances at 6% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

US Stock Movers

Tesla (TSLA) is down more than -7% to lead losers in the S&P 500 and Nasdaq 100 after CEO Musk said he is forming a new political party, which sparked backlash from President Trump and raised concerns about the implications for Mr. Musk's companies.

Chip stocks are under pressure today, weighing on the broader market.  Marvell Technology (MRVL) and ARM Holdings Plc (ARM) are down more than -3%.  Also, Advanced Micro Devices (AMD), Micron Technology (MU), and Qualcomm (QCOM) are down more than -2%.  In addition, Intel (INTC), GlobalFoundries (GFS), KLA Corp (KLAC), and ON Semiconductor Corp (ON) are down more than -1%. 

Webull (BULL) is down more than -11% after securing a standby equity purchase agreement with a fund managed by Yorkville Partners that allows Webull to issue $1 billion of Class A shares at a 2.5% discount to market price over the next three years.

Stellantis NV (STLA) is down more than -3% after Bank of America Global Research downgraded the stock to neutral from buy, saying it expects to see a "very weak" first-half report on July 29.

Travelers Cos (TRV) is down more than -1% to lead losers in the Dow Jones Industrials after Barclays downgraded the stock to equal weight from overweight. 

CrowdStrike Holdings (CRWD) is down more than -1% after Piper Sandler downgraded the stock to neutral from overweight.

MGM Resorts International (MGM) is down more than -1% after Goldman Sachs initiated coverage on the stock with a recommendation of sell and a price target of $34.

WNS Holdings Ltd (WNS) is up more than +14% after Capgemini SE agreed to purchase the company for $3.3 billion or $76.50 per share.

Phibro Animal Health Corp (PAHC) is up more than +8% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $35.

Tractor Supply Co (TSCO) is up more than +3% after Bloomberg Second Measure reported sales for the company rose +4.3% in the fiscal quarter ended June 28.

Geo Group (GEO) and CoreCivic (CXW) are up more than +2% as the approval of President Trump's tax and spending bill will add billions of dollars for immigrant detention centers.

Public Service Enterprise Group (PEG) is up more than +1% after UBS upgraded the stock to buy from neutral with a price target of $97. 

GE Vernova (GEV) is up more than +1% after UBS initiated coverage of the stock with a recommendation of buy with a price target of $614.

Earnings Reports (7/7/2025)

None.