Stocks Slightly Lower on Concern Over Progress to End Russian-Ukrainian War

The S&P 500 Index ($SPX) (SPY) today is down by -0.05%, the Dow Jones Industrials Index ($DOWI) (DIA) is down by -0.08%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.17%.  September E-mini S&P futures (ESU25) are down -0.06%, and September E-mini Nasdaq futures (NQU25) are down -0.12%. 

Stocks are modestly lower today on geopolitical concerns as European leaders are set to meet with President Trump in Washington today to discuss potential terms to end the Russian-Ukrainian war.  The outcome could have macroeconomic implications regarding tariffs and oil prices, and could, of course, have significant consequences for European security.  Also, concerns about how consumers are holding up in the early days of President Trump's tariffs are weighing on stocks ahead of earnings results this week from some of the biggest US retailers, including Walmart, Target, and Home Depot.

The focus of the markets this week will be on any new tariff news and signs of progress toward a Ukraine peace deal, with Ukrainian President Zelenskiy and European leaders set to meet President Trump in Washington later today.  Also, later today, the Aug NAHB housing market index is expected to climb by +1 to 34.  On Tuesday, Jul housing starts are expected to fall -1.6% m/m to 1.300 million, and Jul building permits are expected to fall -0.4% m/m to 1.388 million.  On Wednesday, the minutes of the July 29-30 FOMC meeting will be released.  On Thursday, weekly initial unemployment claims are expected to climb by +1,000 to 225,000 and the Aug Philadelphia Fed business outlook survey is expected to fall to 6.7 from 15.9 in July.  Also, the Aug S&P manufacturing PMI is expected to remain unchanged at 49.8.  In addition, Jul existing home sales are expected to fall -0.3% m/m to 3.92 million.  On Friday, Fed Chair Powell speaks on the economic outlook at the Federal Reserve's annual symposium at Jackson Hole, Wyoming. 

Regarding tariffs, President Trump said last Friday, "I'll be setting tariffs next week and the week after on steel and on, I would say chips – chips and semiconductors, we'll be setting sometime next week, week after." Mr. Trump last week said he planned a 100% tariff on semiconductors but would exempt companies that move chip manufacturing to the US.  Mr. Trump also mentioned 200% or 300% tariffs on chips.

In other recent tariff news, Mr. Trump last Tuesday extended the tariff truce with China for another 90 days until November.  On August 6, Mr. Trump announced that he will double tariffs on US imports from India to 50% from the current 25% tariff, due to India's purchases of Russian oil.  On August 5, Mr. Trump said that US tariffs on pharmaceutical imports would be announced "within the next week or so." According to Bloomberg Economics, the average US tariff will rise to 15.2% if rates are implemented as announced, up from 13.3% earlier, and significantly higher than the 2.3% in 2024 before the tariffs were announced.

Federal funds futures prices are discounting the chances for a -25 bp rate cut at 84% at the September 16-17 FOMC meeting, down from 93% last Thursday.  The markets are discounting the chances at 55% for a second -25 bp rate cut at the following meeting on October 28-29.

Earnings reports indicate that S&P 500 earnings for Q2 are on track to rise +9.1% y/y, much better than the pre-season expectations of +2.8% y/y and the most in four years, according to Bloomberg Intelligence.  With over 92% of S&P 500 firms having reported Q2 earnings, about 82% of companies exceeded profit estimates. 

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.49%.  China's Shanghai Composite rallied to a 10-year high and closed up +0.85%.  Japan's Nikkei Stock 225 rallied to a new record high and closed up +0.77%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +2 ticks, and the 10-year T-note yield is down -0.4 bp to 4.312%.  T-note prices are moving slightly higher today as weakness in stocks has boosted safe-haven demand for government debt securities.  Strength in European government bonds today is also providing carryover support to T-notes.  Gains in T-notes are limited due to concern that last week's bearish US July CPI and PPI reports could keep the Fed from cutting interest rates at next month's FOMC meeting.

European government bond yields today are moving lower.  The 10-year German bund yield is down -2.5 bp to 2.763%. The 10-year UK gilt yield is down by -0.3 bp to 4.693%.

Swaps are discounting the chances at 5% for a -25 bp rate cut by the ECB at the September 11 policy meeting.

US Stock Movers

Natural gas producing stocks are falling today after Roth Capital Partners downgraded the sector on concerns that oversupply will keep prices depressed.  EQT Corp (EQT) is down more than -5% to lead losers in the S&P 500.  Also, Comstock Resources (CRK) is down more than -5%, and Antero Resources (AR) is down more than -4%.  In addition, Expand Energy (EXE) and Range Resources (RRC) are down more than -3%.  

Cryptocurrency-exposed stocks are under pressure today with the price of Bitcoin (^BTCUSD) down more than -1% to a 1-week low.  As a result, Coinbase Global (COIN), MicroStrategy (MSTR), MARA Holdings (MARA), and Riot Platforms (RIOT) are down more than -1%. 

Madrigal Pharmaceuticals (MDGL) is down more than -3% after a drug from rival Novo Nordisk A/S received FDA approval to treat a form of liver disease that Madrigal is also developing.

Northern Oil & Gas (NOG) is down more than -3% after Morgan Stanley downgraded the stock to underweight from equal weight.

Dayforce (DAY) is up more than +25% to lead gainers in the S&P 500 after Bloomberg reported that Thoma Bravo is in talks to acquire the company. 

Duolingo (DUOL) is up more than +7% after Citigroup initiated coverage on the stock with a recommendation of buy and a price target of $400.

EPAM Systems (EPAM) is up more than +3% after TD Cowen upgraded the stock to buy from hold with a price target of $205. 

UnitedHealth Group (UNH) is up more than +2% to lead gainers in the Dow Jones industrials, adding to last Friday's +11% rally, after a 13F filing showed that Warren Buffett's Berkshire Hathaway and other investors bought shares in the company during Q2.

CVS Health (CVS) is up more than +2% after UBS upgraded the stock to buy from neutral with a price target of $79.

Earnings Reports (8/18/2025)

Palo Alto Networks Inc (PANW), XP Inc (XP).