S&P experienced an uptick early Monday as market participants geared up for a particularly active week. This week is set to deliver earnings reports from several significant technology firms, a pivotal Federal Reserve meeting, the impending tariff deadline set by President Donald Trump on August 1, and crucial inflation data. Dow Jones Industrial Average experienced an increase of 171 points, representing a rise of 0.38%. The S&P 500 futures exhibited an increase of 0.41%, while the Nasdaq 100 futures experienced a rise of 0.55%.
The recent development follows Trump’s announcement on Sunday regarding an agreement between the U.S. and the European Union to reduce tariffs to 15%. The president had earlier indicated the possibility of imposing 30% tariffs on a significant portion of imported goods from the U.S.’s largest trading partner. Wall Street has recently experienced a successful week, driven by robust earnings reports and new agreements established between the U.S. and various trading partners, notably Japan and Indonesia.
On Friday, all three major averages concluded both the day and the week with positive returns. The blue-chip Dow experienced an increase of 208.01 points, representing a rise of 0.47%, concluding at 44,901.92. The S&P 500 experienced a gain of 0.40%, closing at 6,388.64. This marks the index’s fifth consecutive day of record closings and the 14th record close for the year. The tech-heavy Nasdaq Composite experienced an increase of 0.24%, closing at 21,108.32, marking its 15th record close of the year. “A healthy plethora of earnings beats, positive developments in U.S.-Japan trade relations, strong capex commentary, and a bullish “AI Action Plan” kept the enthusiasm of weeks’ past stronger than ever,” Nick Savone of Morgan Stanley’s Institutional Equity Division noted over the weekend. “As we navigate the majority of S&P 500 companies yet to report, the lowered expectations entering this season have certainly buoyed sentiment; however, stock responses appear primarily driven by forward guidance — particularly as investors repeatedly prepare for the repercussions of trade headlines to materialize.”
The market is preparing for a particularly active week in the earnings season. Over 150 firms within the S&P 500 are set to announce their quarterly earnings, with notable entities such as Meta Platforms and Microsoft reporting on Wednesday, and Amazon and Apple following on Thursday. Market participants will be attentive to corporate insights regarding expenditures on AI to gauge the validity of substantial investments in hyperscalers this year. This week, the Federal Reserve will convene for its two-day policy meeting, which will conclude on Wednesday. While the central bank is anticipated to maintain interest rates within the established target range of 4.25% to 4.5%, market participants will be attentive to indications regarding the potential for a rate reduction during the September meeting.
The implications of tariffs on inflation will be a central topic of discussion on Thursday, coinciding with the release of the June personal consumption expenditures price (PCE) index, which is the Federal Reserve’s favored gauge of inflationary trends. The report is anticipated to indicate an increase in inflation to 2.4% from 2.3% year-over-year, as per FactSet, and to 0.31% from 0.14% on a monthly basis. This week, market participants will receive a series of labor market indicators, starting with the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday, followed by ADP’s private payrolls report on Wednesday. Initial jobless claims will be released on Thursday, culminating in the pivotal July jobs report on Friday. According to a survey conducted by FactSet, projections indicate that the U.S. economy is expected to have generated 115,000 jobs in July, a decrease from the 147,000 jobs added in June. The unemployment rate is projected to increase marginally to 4.2% from the previous 4.1%.