Strong Earnings and Trade Deal Optimism Bolster Stocks

The S&P 500 Index ($SPX) (SPY) today is up +0.21%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.02%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.56%.  September E-mini S&P futures (ESU25) are up +0.15%, and September E-mini Nasdaq futures (NQU25) are up +0.50%.

Stock indexes today are mostly moving higher, with the S&P 500 and Nasdaq 100 posting new record highs.  Strong quarterly corporate earnings results and positive trade news are supporting gains in stocks.  Commerce Secretary Lutnick said a 90-day extension of a trade truce with China was a likely outcome with negotiations between the two countries underway in Stockholm.  Stocks also found some support from today’s US economic news that showed the Jun advance goods trade deficit unexpectedly shrank to -$86.0 billion versus expectations of a widening to -$98.0 billion, a positive factor for Q2 GDP.

M&A activity is also supportive of stocks as Union Pacific agreed to acquire Norfolk Southern for about $85 billion, or around $320 a share.  Also, Baker Hughes acquired Chart Industries for $9.6 billion, or about $210 a share.

Weighing on the Dow Jones Industrials is a -6% fall in Merck & Co after it said it will extend its shipment pause of the Gardasil vaccine to China through at least the end of the year, citing soft demand.  Also, UnitedHealth Group is down more than -5% after reporting weaker-than-expected Q2 adjusted EPS and forecasting full-year adjusted EPS below consensus.

The US May S&P CoreLogic composite-20 home price index rose +2.79% y/y, weaker than expectations of +2.91% and the smallest pace of increase in 1.75 years.

The markets this week will focus on any news of new trade deals before Friday’s deadline. Later today, the Jun JOLTS job openings are expected to decline by -269,000 to 7.50 million.  Also, 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% when the meeting ends on Wednesday.  Also on Wednesday, the Jul ADP employment change is expected to climb by +80,000.  Finally, 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 66% 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 today are mixed.  The Euro Stoxx 50 is up +1.16%.  China’s Shanghai Composite closed up +0.33%.  Japan’s Nikkei Stock 225 closed down -0.79%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +4 ticks.  The 10-year T-note yield is down -1.4 bp to 4.396%.  T-notes are moving higher today on some short covering ahead of the start of the 2-day FOMC meeting.  Limiting gains in T-notes are supply pressures, as the Treasury will auction $30 billion of 2-year floating-rate notes and $44 billion of 7-year T-notes later today. Also, strength in stocks today has reduced safe-haven demand for T-notes.

European government bond yields today are moving higher.  The 10-year German bund yield is up +1.6 bp to 2.705%. The 10-year UK gilt yield rose to a 1-week high of 4.681% and is up +0.4 bp to 4.651%.

The ECB Jun 1-year inflation expectations eased to +2.6% from 2.8% in May.  The ECB Jun 3-year inflation expectations were unchanged from May at +2.4%.

Swaps are discounting the chances at 15% for a -25 bp rate cut by the ECB at the September 11 policy meeting.

US Stock Movers

The strength in chip stocks today is providing support to the broader market.  Advanced Micro Devices (AMD), On Semiconductor Corp (ON), and Marvell Technology (MRVL) are up more than +2%.  Also, Broadcom (AVGO), Nvidia (NVDA), Lam Research (LRCX), GlobalFoundries (GFS), KLA Corp (KLAC), and NXP Semiconductors NV (NXPI) closed up more than +1%. 

Sarepta Therapeutics (SRPT) is up more than +27% after US regulators recommended that patients who can walk be allowed to take the company’s gene therapy Elevidys again.

Amkor Technology (AMKR) is up more than +21% after reporting Q2 net sales of $1.51 billion, better than the consensus of $1.42 billion, and forecast Q3 net sales of $1.88 billion-$1.98 billion, well above the consensus of $1.76 billion. 

Chart Industries (GTLS) is up more than +16% after Baker Hughes acquired the company for $13.6 billion, or about $210 a share.

Cadence Design Systems (CDNS) is up more than +9% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q2 revenue of $1.28 billion, above the consensus of $1.25 billion, and raised its full-year revenue forecast to $5.21 billion-$5.27 billion from a previous estimate of $5.15 billion-$5.23 billion, stronger than the consensus of $5.20 billion.

Corning (GLW) is up more than +7% after reporting Q2 core EPS of 60 cents, above the consensus of 57 cents, and forecasting Q3 core EPS of 63 cents-67 cents, better than the consensus of 62 cents. 

CBRE Group (CBRE) is up more than +7% after reporting Q2 revenue of $9.75 billion, stronger than the consensus of $9.43 billion, and raising its full-year core EPS estimate to $6.10-$6.20 from a previous estimate of $5.80-$6.10. 

Brown & Brown (BRO) is down more than -9% to lead losers in the S&P 500 after reporting Q2 organic revenue rose +3.60%, weaker than the consensus of +5.63%.

Whirlpool (WHR) is down more than -8% after reporting Q2 net sales of $3.77 billion, below the consensus of $3.85 billion, and cutting its full-year EPS forecast to $6.00-$8.00 from a previous estimate of about $10, well below the consensus of $8.78. 

Stanley Black & Decker (SWK) is down more than -8% after reporting Q2 net sales of $3.95 billion, weaker than the consensus of $4.00 billion. 

Carrier Global (CARR) is down more than -8% after forecasting full-year free cash flow of $2.4 billion to $2.6 billion, the midpoint below the consensus of $2.55 billion. 

Royal Caribbean Cruises Ltd (RCL) is down more than -8% after forecasting Q3 adjusted EPS of $5.55-$5.65, weaker than the consensus of $5.84. 

United Parcel Service (UPS) is down more than -7% after it pulled guidance for the year, citing “current macro-economic uncertainty.”

Merck & Co. (MRK) is down more than -6% to lead losers in the Dow Jones Industrials after it said it will extend its shipment pause of the Gardasil vaccine to China through at least the end of the year, citing soft demand.

UnitedHealth Group (UNH) is down more than -5% after reporting Q2 adjusted EPS of $4.08, weaker than the consensus of $4.59, and forecasting full-year adjusted EPS of at least $16, well below the consensus of $20.40.

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).