Expect significant new tariffs on Chinese imports and moderate levies on goods from other nations , as President-elect Donald Trump rolls out his protectionist agenda. However, with his preference for chaotic policymaking and sudden shifts , there’s uncertainty on how soon these import taxes will actually hit. Dubbed “ Tariff Man ,” Trump aims to use tariffs both strategically and tactically . He’s mentioned taxing all Chinese goods up to 60% and potentially setting 10%-20% tariffs on imports globally , but details on these plans remain vague . Key players within Trump’s team are divided: Robert Lighthizer , a staunch tariff advocate, sees permanent duties as crucial to balance US trade , while others, like billionaires John Paulson and Scott Bessent , view tariffs as temporary leverage. Trump’s previous administration had mixed feelings, especially on national security-related trade limits , which he sometimes dismissed, favoring an “open for business” approach. High-profile busin
US stocks fluctuated as investors navigated fresh economic data and corporate earnings while preparing for key central bank decisions expected to shape global market trajectories.
After a US$2.3 trillion Nasdaq 100 wipeout, all eyes are on Microsoft Corp’s earnings to see if the tech giant can shift the market sentiment. Concerns persist that tech firms have yet to see returns from substantial investments in artificial intelligence. Microsoft's results will set the stage for upcoming reports from Meta Platforms Inc, Apple Inc, and Amazon.com Inc later in the week, alongside anticipation for the Federal Reserve's decision on Wednesday.
“It’s likely the Fed does signal that looming cut and given the recent pullback, that should help this rebound continue,” said Tom Essaye at The Sevens Report. “However, if the Fed does not signal a September rate cut, markets could get a bit ugly given recent tech weakness, especially if earnings underwhelm.”
Key Takeaways:
Fed's Decision: The Fed is expected to hold benchmark rates at their highest level in over two decades this week, with traders keenly watching for hints of potential policy easing.
Economic Data: US consumer confidence rose in July, and job openings exceeded forecasts, providing an improved outlook for the economy.
Market Performance:
- The S&P 500 hovered around 5,460.
- A gauge of the “Magnificent Seven” megacaps fell 0.5%.
- The Russell 2000 of small caps gained 0.4%.
- Microsoft Azure is investigating reports of connectivity issues globally.
- Advanced Micro Devices Inc climbed ahead of its results.
- PayPal Holdings Inc soared on a bullish outlook.
- Procter & Gamble Co sank on a sales miss.
Treasury and Yen: Treasury 10-year yields remained steady at 4.17%, while the yen weakened as the Bank of Japan began its two-day policy meeting. BOJ governor Kazuo Ueda is expected to outline plans for quantitative tightening and make a decision on the policy interest rate.
Goldman Sachs Forecast: Goldman Sachs CEO David Solomon now sees one or two Fed rate cuts later this year, a shift from his earlier prediction of no rate reductions in 2024. “One or two cuts in the fall seems more likely,” Solomon said, noting the impact of prolonged inflationary pressures on consumer behavior.
Historical Context:
- If the Fed starts a rate reduction cycle, stock bulls have history on their side. Historically, the S&P 500 has risen an average of 5% a year after the first cut following a rate hike cycle, according to CFRA. Additionally, the small-cap Russell 2000 Index has shown an average gain of 3.2% 12 months later.
As the market awaits the Fed's decision and major corporate earnings, investors remain cautiously optimistic about potential signs of economic stabilization and recovery.
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