Stocks tiptoed into the green Monday as Wall Street braced for what could be one of the year’s most event-packed weeks. Fresh off a weekend trade agreement between the U.S. and the European Union, investors nudged the Dow, S&P 500, and Nasdaq higher while sizing up a calendar filled with Big Tech earnings, Federal Reserve decisions, inflation updates, and a looming jobs report.
With the S&P 500 and Nasdaq closing out Friday at new record highs, expectations are high. But the early excitement from the trade deal is already showing signs of wear, and the market mood is shifting from celebratory to cautiously watchful.
Trump-EU Tariff Agreement Sparks a Tepid Rally
The White House’s trade breakthrough with Brussels came just in time to stir the markets. But the boost didn’t last long.
The agreement sets baseline tariffs on European goods at 15%, averting the 30% rate that had been threatened just days earlier. Trump labeled it “the biggest of them all,” while EU President Ursula von der Leyen remarked that the outcome “is not to be underestimated.”
Despite the strong political language, investors appear more skeptical than thrilled. While initial reactions were positive, momentum waned as traders sifted through the fine print. The broad outlines of the pact lacked detail, and uncertainty loomed over how or when the deal would be implemented.
S&P and Nasdaq Cling to Gains While Dow Stalls
The S&P 500 inched up 0.2%, notching another all-time high. Nasdaq followed closely, adding 0.3%.
The Dow Jones, however, barely moved—drifting around the flat line for most of the session. Analysts suggested the blue-chip index’s stagnation could be a sign of investor hesitancy, given its exposure to industrials that would be directly affected by trade fluctuations.
It’s the fifth straight record for the S&P 500, a streak that reflects continued faith in corporate earnings and economic resilience, even as interest rates remain elevated and global tensions simmer.
Markets Juggle Trade, Tech, and the Fed
If Monday’s trade agreement was the appetizer, Wall Street’s real feast arrives mid-week. Meta and Microsoft kick off the mega-cap earnings flood on Wednesday. Amazon and Apple follow Thursday.
And that’s just the corporate side of things. The Federal Reserve begins its two-day meeting Tuesday, with Chair Jerome Powell set to deliver the latest interest rate decision Wednesday afternoon.
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Fed funds target rate: Expected to hold at 4.25%–4.50%
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Eyes on: Any language hinting at a September cut
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Market pressure: Trump continues to press Powell to ease sooner
With inflation still above the Fed’s comfort zone, and growth indicators cooling, the path forward remains uncertain. Traders are hunting for signals Powell might be pivoting—but he’s not tipping his hand yet.
Hopes Rise for China Trade Extension
While Washington was tying things up with the EU, quiet optimism bubbled over in Stockholm. U.S. and Chinese representatives reportedly met Monday to discuss a possible extension of the existing trade truce beyond its Aug. 12 expiration.
There’s no formal word yet, but leaks suggest a three-month extension is on the table. The market’s response? Cautious optimism.
Another delay in tariff hikes could further stabilize global trade flows, especially for companies in sectors like semiconductors, autos, and logistics. But without confirmation, investors aren’t getting ahead of themselves.
Inflation and Jobs Numbers Loom Large
It wouldn’t be a proper market week without fresh data to chew on. Thursday’s release of the July personal consumption expenditures (PCE) index will give investors an updated look at inflation—specifically the metric the Fed watches most closely.
Forecasts predict a slight uptick, both monthly and annually. That might keep the Fed on hold in the short term, but anything hotter than expected could spook markets.
Also due is the July jobs report, expected Friday. While job growth has remained resilient, any signs of softening could shift market sentiment quickly, especially with 2024 election pressures beginning to color economic commentary.
