Stocks Climb on Strength in the Magnificent Seven Stocks

The S&P 500 Index ($SPX) (SPY) today is up +0.25%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.19%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.28%.  September E-mini S&P futures (ESU25) are up +0.22%, and September E-mini Nasdaq futures (NQU25) are up +0.23%. 

Stocks are climbing today, with the Nasdaq 100 posting a new all-time high.  Strength in the Magnificent Seven technology stocks is supporting gains in the overall market.  Stock investors are awaiting fresh news on trade deals and tariffs.  President Trump said he would update the trade status of seven countries this morning, with additional announcements later in the day. Slightly lower bond yields are positive for stocks, with the 10-year T-note yield down -2 bp to 4.38%. 

Gains in stocks are limited as President Trump vowed to push forward with his aggressive tariff regime, stressing he would not offer additional extensions on country-specific tariffs set to take effect on August 1.  Mr. Trump also stated that he would impose a 50% tariff on imported copper products and that drug companies could face tariffs as high as 200% on imports if they don't relocate production to the US within the next year.  In addition, despite stating that the US was close to a trade deal with India, Mr. Trump said he would still impose a 10% tariff on India's goods for their participation in BRICS, a group of developing nations he claimed were "set up to hurt" the US.   

US MBA mortgage applications rose +9.4% in the week ended July 4, with the purchase mortgage sub-index up +9.4% and the refinancing sub-index up +9.2%.  The average 30-year fixed rate mortgage fell -2 bp to 6.77% from 6.79% in the prior week.

US May wholesale trade sales unexpectedly fell -0.3% m/m, weaker than expectations of a +0.2% m/m increase and the biggest decline in 4 months.

Consumer and producer price reports from China showed that demand remains sluggish and deflationary pressures persist.  China's June PPI fell -3.6% y/y, weaker than expectations of -3.2% y/y, the biggest decline in nearly two years, and the 33rd consecutive month producer prices have contracted.  Meanwhile, China's June CPI unexpectedly rose +0.1% y/y, stronger than expectations of a -0.1% y/y decline but still a weak report.

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 eleven S&P 500 sectors are projected to post an increase in earnings, the fewest since Q1 of 2023, according to Yardeni Research.

This week's market focus will mainly be on new tariff and trade deal news ahead of today's deadline.  Later today, 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 7% for a -25 bp rate cut at the July 29-30 FOMC meeting.

Overseas stock markets today are mixed.   The Euro Stoxx 50 rallied to a 1-month high and is up +1.22%.  China's Shanghai Composite fell from a 9-month high and closed down -0.13%.  Japan's Nikkei Stock 225 closed up +0.33%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +8 ticks.  The 10-year T-note yield is down -2.4 bp at 4.376%.  Sep T-notes are climbing today on some short covering ahead of today's 10-year T-note auction and the minutes of the June 17-18 FOMC meeting. Gains in T-notes are limited by concern that US tariff increases could boost inflation and prevent the Fed from cutting interest rates.  Additionally, supply pressures are negative for T-notes, as the Treasury will auction $39 billion of 10-year T-notes later today and $22 billion of 30-year T-bonds on Thursday.  Tuesday's 3-year T-note auction saw soft demand from investors.

European government bond yields today are moving lower.  The 10-year German bund yield is down -1.7 bp at 2.669%.  The 10-year UK gilt yield is down -3.0 to 4.603%.

ECB Governing Council member Holzmann said, "There's no reason at the moment why the ECB should cut interest rates, definitely not at the next meeting, and also for the rest of the year."

Swaps are discounting the chances at 3% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

US Stock Movers

The Magnificent Seven stocks are all trading higher today, led by a gain of more than +1% in (NVDA), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), and Meta Platforms (META).

Freeport McMoRan (FCX) today is down more than -1% after Tuesday's rally of +2.6%.  Goldman Sachs said it expects US copper imports to accelerate in the coming weeks as an incentive to "front-run" the expected 50% US copper import tariff. Sep Nymex copper prices are down about -3% today, giving back part of Tuesday's +13.1% surge on President Trump's intent to impose a 50% tariff on copper imports.  Southern Copper (SCCO) is down more than -3% and Rio Tinto Plc (RIO) is down -0.5%. However, Newmont Corp (NEM) is up more than +1%.

AES Corp (AES) is up more than +16% to lead gainers in the S&P 500 on a newswire report that the company is exploring a potential sale amid takeover interest. 

Bloom Energy (BE) is up more than +15% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $33.

Boeing (BA) is up more than +3% to lead gainers in the Dow Jones Industrials after it delivered 60 aircraft in June, the most in 18 months. 

Doximity (DOCS) is up more than +2% after Evercore ISI upgraded the stock to outperform from in line with a price target of $70. 

Aehr Test Systems (AEHR) is down more than -14% after reporting Q4 revenue of $14.1 million, down -15% y/y. 

Hershey (HSY) is down more than -4% to lead losers in the S&P 500 as a shortage of cocoa powder has lifted cocoa powder prices to near a record, curbing chocolate demand and eating into company profits.

Tandem Diabetes (TNDM) is down more than -3% after Citigroup downgraded the stock to sell from neutral with a price target of $14. 

Illumina (ILMN) is down more than -3% after Citigroup downgraded the stock to sell from neutral with a price target of $80.

UnitedHealth Group (UNH) is down more than -2% to lead losers in the Dow Jones Industrials after the Wall Street Journal reported the Department of Justice is probing the company's Medicare billing practices. 

T-Mobile US (TMUS) is down more than -1% after KeyBanc Capital Markets downgraded the stock to underweight from sector weight with a price target of $200. 

Wynn Resorts Ltd (WYNN) is down about -1% after Citigroup downgraded the stock to neutral from buy.

Merck (MRK) will buy UK-based biotech Verona Pharma Plc (VRNA) in a $10 billion deal.  Verona's US-listed ADRs are up more than +20% on the news, while Merck is up +2%.

Earnings Reports (7/9/2025)

AZZ Inc (AZZ), Barnes & Noble Education Inc (BNED), Bassett Furniture Industries Inc (BSET), Gencor Industries Inc (GENC), Methode Electronics Inc (MEI), Pure Cycle Corp (PCYO).