Stocks nudged higher Monday as Wall Street kicked off one of the year’s most pivotal weeks. A weekend trade agreement between the U.S. and the European Union provided an early boost, but investors remain watchful. A packed calendar featuring Big Tech earnings, a Federal Reserve interest rate decision, and key inflation and jobs data is keeping the market on edge.
EU Trade Deal Sparks a Short-Lived Rally
The week began with news of a trade breakthrough between the White House and Brussels, which helped avert a steeper tariff conflict. The new pact sets baseline tariffs on European goods at 15%, a significant reduction from the 30% rate that had been threatened.
President Trump called the deal “the biggest of them all,” but the market’s reaction was more reserved. Initial optimism quickly faded as traders realized the agreement lacked specific details on implementation. This uncertainty caused the early momentum to stall, shifting the market’s mood from celebratory to cautious.
S&P 500 and Nasdaq Gain, but the Dow Stays Flat
The S&P 500 continued its impressive run, climbing 0.2% to secure another all-time high. This marks the fifth consecutive record for the index, signaling strong investor confidence in the face of economic headwinds. The tech-heavy Nasdaq also posted a modest gain of 0.3%.
In contrast, the Dow Jones Industrial Average struggled to find direction, hovering around the flat line throughout the day. Analysts believe the index’s stagnation reflects investor hesitancy, as its industrial-focused components are highly sensitive to trade policy shifts.
A Crucial Week of Earnings and Fed Decisions
While the trade news was a key focus on Monday, the main events for Wall Street are still to come. The week is loaded with market-moving catalysts that could set the tone for the coming months.
The corporate earnings season hits its peak, with several tech giants scheduled to report:
- Wednesday: Meta and Microsoft
- Thursday: Amazon and Apple
At the same time, the Federal Reserve will hold its two-day policy meeting, starting Tuesday. The central bank is widely expected to hold its key interest rate steady at 4.25%–4.50%. However, investors will be closely analyzing Chairman Jerome Powell’s comments on Wednesday for any hints about a potential rate cut in September, especially as political pressure to ease rates continues.
Inflation, Jobs, and China Talks Add to the Mix
Beyond earnings and the Fed, investors are also bracing for critical economic reports. On Thursday, the July personal consumption expenditures (PCE) index, the Fed’s preferred inflation gauge, will be released. A hotter-than-expected number could dampen hopes for a near-term rate cut.
The week will conclude with the July jobs report on Friday. Any significant softening in the labor market could influence the Fed’s future decisions and shift market sentiment. Adding another layer of complexity, reports from Stockholm suggest U.S. and Chinese officials are discussing a three-month extension to their current trade truce, offering a glimmer of hope for further global trade stability.
Here is a summary of the key events this week:
| Day | Key Event | What Investors are Watching |
|---|---|---|
| Tuesday | Federal Reserve Meeting Begins | Start of the two-day policy discussion. |
| Wednesday | Fed Interest Rate Decision | Powell’s commentary on future rate cuts. |
| Wednesday | Meta & Microsoft Earnings | Performance of mega-cap tech stocks. |
| Thursday | PCE Inflation Report | The Fed’s preferred measure of inflation. |
| Thursday | Amazon & Apple Earnings | Insights into consumer spending and tech health. |
| Friday | July Jobs Report | Signs of strength or weakness in the labor market. |
Frequently Asked Questions
What was the main driver for the stock market on Monday?
The market edged up primarily due to a new trade agreement between the U.S. and the European Union, which averted a threatened 30% tariff rate and set it at a baseline of 15% instead.
Why was the market rally considered “tepid” or cautious?
The rally was cautious because the trade pact lacked specific details about its implementation, creating uncertainty. Investors are also looking ahead to major events later in the week, including the Fed’s rate decision and Big Tech earnings.
What is the Federal Reserve expected to do this week?
The Federal Reserve is widely expected to keep its target interest rate unchanged at 4.25%–4.50%. However, the market will be focused on any clues from Chair Jerome Powell about the possibility of a rate cut later this year.
Which major companies are reporting earnings this week?
Several of the largest tech companies are set to release their earnings reports. Meta and Microsoft will report on Wednesday, followed by Amazon and Apple on Thursday.
What other key economic data is coming out this week?
Two major reports are due: the personal consumption expenditures (PCE) inflation index on Thursday, which the Fed monitors closely, and the July jobs report on Friday, which will provide an update on the health of the labor market.
