Wall Street kicked off the week with gains, led by the Nasdaq and S&P 500, while the Dow edged slightly lower. A surge in optimism over potential Fed easing and strong early earnings reports outweighed geopolitical noise and fresh trade tensions. Treasury yields dipped, with the 10-year falling below 4.4%, reflecting rising bets on a September rate cut. CME data now shows a 60% probability of a Fed cut within two months.
Verizon ($VZ) led early gains, rallying after raising its full-year earnings guidance. As of Friday, 83% of S&P 500 companies had topped earnings estimates, and over 100 more—including Alphabet and Tesla—are reporting this week.
“If the market keeps climbing, money managers simply can’t afford to sit out,” said Baird’s Michael Antonelli. “Rate cuts, earnings, and tariff hopes are pulling capital back in.”
Trade Talks: Confidence, Leverage, and a Clock Ticking
US Treasury Secretary Scott Bessent struck a confident tone on Monday, saying “talks are moving along” with the EU, and that President Trump has created “maximum leverage” by holding firm on the Aug. 1 tariff threat. “We’re more focused on quality deals than deadlines,” Bessent told CNBC, though he acknowledged tariffs will kick in if no deal is reached.
Meanwhile, EU diplomats confirmed they are preparing a wider range of countermeasures but still hope to strike a negotiated solution.
Trump also announced a trade breakthrough with Indonesia last week and is now eyeing September–October for a deal with India. Brazil, meanwhile, is seeking a tariff rollback in exchange for a domestic amnesty deal, according to Bolsonaro’s son.
Bessent: Fed Should Cut If Inflation Dips
Bessent also pushed for a rate cut, arguing that lower inflation should lead to monetary easing and that a drop in rates would “unlock” the frozen mortgage market. However, Bank of America disagrees, saying they don’t expect any recession or Fed cuts in 2025, citing strong consumer demand and sticky inflation in goods.
WSJ Barred from Trump Trip as Media Feud Escalates
The White House barred Wall Street Journal reporters from joining President Trump’s upcoming trip to Scotland, following a defamation lawsuit over reporting on his past ties to Jeffrey Epstein. Press Secretary Karoline Leavitt said the decision was made due to “fake and defamatory conduct.”
Thirteen other outlets will be allowed to travel with the president. The Journal declined to comment, but Dow Jones has defended its reporting and vowed to fight the lawsuit.
Around the World
- Japan’s PM Ishiba vowed to stay on, despite his coalition losing its upper house majority. Markets are watching for signs of policy gridlock as US trade talks approach.
- Bitcoin fell slightly, breaking a three-day rally. Trump’s signing of the GENIUS Act last week laid groundwork for stablecoin regulation.
- OpenAI’s valuation may be peaking, according to JPMorgan, which warned its moat is shrinking amid rising model competition and limited enterprise adoption.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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