S&P 500 and Nasdaq 100 Post Record Highs on Trade Deals

The S&P 500 Index ($SPX) (SPY) Monday closed up +0.02%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.36%.  September E-mini S&P futures (ESU25) fell -0.02%, and September E-mini Nasdaq futures (NQU25) rose +0.35%.

Stock indexes on Monday settled mostly higher, with the S&P 500 and Nasdaq 100 posting new record highs.  Positive trade news pushed stocks higher on Monday after the European Union (EU) and the US reached a trade deal on Sunday, which will see the EU face tariffs of 15% on most of its exports, lower than the previous threats from President Trump of tariffs as high as 50%.  Stocks also rose after the South China Morning Post reported that the US and China are expected to extend their tariff truce by another 90 days from August 12, when US Treasury Secretary Bessent and Chinese Vice Premier He Lifeng meet in Stockholm.

Stocks fell back from their best levels on Monday after poor demand for the Treasury’s $70 billion auction of 5-year T-notes pushed bond yields higher and sparked long liquidation in equities.  Bond yields also rose after the Treasury raised its Q3 borrowing estimate to $1.01 trillion from an April estimate of $554 billion, which could prompt the Treasury to boost its sales of government debt securities. 

Monday’s US economic news was supportive for stocks after the Jul Dallas Fed manufacturing outlook survey rose +13.6 to a 6-month high of 0.9, stronger than expectations of -9.0.

The markets this week will focus on any news of new trade deals before Friday’s deadline. On Tuesday, the Jun JOLTS job openings are expected to decline by -219,000 to 7.55 million.  Also on Tuesday, the Conference Board’s US Jul consumer confidence index is expected to climb by +3.0 to 96.0.  In addition, the 2-day FOMC meeting begins on Tuesday, and the Fed is expected to keep the fed funds target range unchanged at 4.25% to 4.50%. On Wednesday, the Jul ADP employment change is expected to climb by +80,000.  Also on Wednesday, Q2 GDP is expected to expand by +2.4% (q/q annualized) and the Q2 core PCE price index is expected to ease to +2.3% from +3.5% in Q1. On Thursday, initial weekly unemployment claims are expected to rise by 6,000 to 223,000, and the Q2 employment cost index is expected to increase by 0.8%.  Also, Jun personal spending is expected to climb +0.4% m/m and Jun personal income is expected to rise +0.3% m/m.  In addition, the Jun core PCE price index, the Fed’s preferred inflation gauge, is expected to climb +0.3% m/m and +2.7% y/y.  Finally, on Thursday, the Jul MNI Chicago PMI is expected to increase by +1.6 to 42.0.  On Friday, Jul nonfarm payrolls are expected to increase by +109,000 and the Jul unemployment rate is expected to rise by +0.1 to 4.2%.  Also, Jul average hourly earnings are expected +0.3% m/m and +3.8% y/y. In addition, the Jul ISM manufacturing index is expected to increase by +0.2 to 49.5.  Finally, the University of Michigan Jul consumer sentiment index is expected to be unrevised at 61.8. 

The markets are awaiting President Trump’s August 1 deadline for trade deals to avoid high tariffs.  On July 16, Mr. Trump announced that he intends to send a tariff letter to more than 150 countries, notifying them that their tariff rates could be 10% or 15%, effective August 1.  As an update, Mr. Trump last Wednesday said, “We’ll have a straight, simple tariff of anywhere between 15% and 50%,” an indication that the floor for tariffs is rising and suggesting that he would not go below 15%. 

Federal funds futures prices are discounting the chances for a -25 bp rate cut at 3% at the Tue/Wed FOMC meeting and 63% at the following meeting on September 16-17.

This week kicks off the earnings season’s busiest week, with 38% of the stocks in the S&P 500 reporting quarterly earnings, double the amount reported last week. The earnings results of Magnificent Seven members will be front and center, with Microsoft and Meta Platforms reporting on Wednesday and Apple and Amazon.com reporting on Thursday.  Early results show that S&P 500 earnings are on track to rise +4.5% for the second quarter, better than the pre-season expectations of +2.8% y/y, according to Bloomberg Intelligence.  With about a third of S&P 500 firms having reported, around 82% exceeded profit estimates. 

Overseas stock markets on Monday settled mixed.  The Euro Stoxx 50 fell from a 2-week high and closed down -0.27%.  China’s Shanghai Composite closed up +0.12%.  Japan’s Nikkei Stock 225 closed down -1.10%.

Interest Rates

September 10-year T-notes (ZNU25) Monday closed down -7 ticks.  The 10-year T-note yield is up +1.6 bp to 4.404%.  T-notes are under pressure from today’s rally in the S&P 500 to a new record high, which reduces safe-haven demand for T-notes. Also, supply pressures are weighing on T-notes as the Treasury auctioned $69 billion of 2-year T-notes and $70 billion of 5-year T-notes on Tuesday.  T-notes fell to their lows on Monday afternoon due to weak demand for the Treasury’s $70 billion auction of 5-year T-notes that had a bid-to-cover ratio of 2.31, below the 10-auction average of 2.39.  Losses in T-notes were limited after the US and EU agreed on a trade deal, which eases concerns about inflation.

European government bond yields on Monday were mixed.  The 10-year German bund yield fell -2.9 bp to 2.689%. The 10-year UK gilt yield rose +1.2 bp to 4.647%.

ECB Governing Council member Kazimir said the ECB shouldn’t cut interest rates in September unless there’s evidence of a major deterioration in the economy.

Swaps are discounting the chances at 17% for a -25 bp rate cut by the ECB at the September 11 policy meeting.

US Stock Movers

Chip stocks rose Monday after the EU and the US reached a trade deal.  Advanced Micro Devices (AMD) closed up more than +4% to lead gainers in the Nasdaq 100.  Also, On Semiconductor Corp (ON) closed up more than +3%, and KLA Corp (KLAC), ASML Holding NV (ASML), Marvell Technology (MRVL), Texas Instruments (TXN), Applied Materials (AMAT), and NXP Semiconductors NV (NXPI) closed up more than +2%.  In addition, Nvidia (NVDA), Lam Research (LRCX), GlobalFoundries (GFS), Microchip Technology (MCHP), and Qualcomm (QCOM) closed up more than +1%. 

Energy stocks and energy service providers rallied Monday after the price of WTI crude oil rose more than +2% to a 1-week high.  Diamondback Energy (FANG) closed up more than +4% and   Devon Energy (DVN) closed up more than +3%.  Also, APA Corp (APA), ConocoPhillips (COP),  and Phillips 66 (PSX) closed up more than +2%.  In addition, Haliburton (HAL), Marathon Petroleum (MPC), Baker Hughes (BKR), Occidental Petroleum (OXY), and Valero Energy (VLO) closed up more than +1%.

LNG stocks moved higher on Monday after the EU committed to big purchases of American energy products as part of the EU-US trade deal.  Venture Global (VG) closed up more than +4%, and Cheniere Energy (LNG) and EOG Resources (EOG) closed up more than +1%. 

Mining stocks were under pressure Monday after gold and copper prices tumbled to 2-1/2 week lows.  Newmont (NEM) closed down more than -3% and Freeport McMoRan (FCX) closed down more than -2%.

Super Micro Computer (SMCI) closed up more than +10% to lead gainers in the S&P 500 on optimism that demand for its AI servers will remain strong.

Nike (NKE) closed up more than +3% to lead gainers in the Dow Jones Industrials after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $93.

Weatherford International Plc (WFRD) closed up more than +3% after Piper Sandler upgraded the stock to overweight from neutral with a price target of $73. 

Revvity (RVTY) closed down more than -8% after cutting its full-year adjusted EPS estimate to $4.85-$4.95 from a previous estimate of $4.90-$5.00, the midpoint below the consensus of $4.93. 

Centene (CNC) closed down more than -5% after Cantor Fitzgerald downgraded the stock to neutral from overweight.

Coinbase Global (COIN) closed down more than -3% after Monness, Crespi, Hardt & Co. downgraded the stock to neutral from buy.

Gilead Sciences (GILD) closed down more than -2% as analysts note a potential risk to the company’s HIV preventative drugs after HHS Secretary Kennedy was reported to be planning the dismissal of an advisory panel that determines what preventive health measures insurers must cover.

Accenture Plc (ACN) closed down more than -2% after HSBC initiated coverage on the stock with a recommendation of reduce and a price target of $240. 

Cisco Systems (CSCO) closed down more than -1% after Evercore ISI downgraded the stock to inline from outperform. 

Earnings Reports (7/29/2025)

American Tower Corp (AMT), Arch Capital Group Ltd (ACGL), Boeing Co/The (BA), Booking Holdings Inc (BKNG), BXP Inc (BXP), Caesars Entertainment Inc (CZR), Carrier Global Corp (CARR), CBRE Group Inc (CBRE), Corning Inc (GLW), DTE Energy Co (DTE), Ecolab Inc (ECL), Electronic Arts Inc (EA), Essex Property Trust Inc (ESS), Expand Energy Corp (EXE), Hubbell Inc (HUBB), Incyte Corp (INCY), Johnson Controls International (JCI), Merck & Co Inc (MRK), Mondelez International Inc (MDLZ), Norfolk Southern Corp (NSC), PayPal Holdings Inc (PYPL), PPG Industries Inc (PPG), Procter & Gamble Co/The (PG), Regency Centers Corp (REG), Republic Services Inc (RSG), Royal Caribbean Cruises Ltd (RCL), Seagate Technology Holdings PL (STX), Stanley Black & Decker Inc (SWK), Starbucks Corp (SBUX), Sysco Corp (SYY), Teradyne Inc (TER), United Parcel Service Inc (UPS), UnitedHealth Group Inc (UNH), Visa Inc (V).