U.S. stocks were mixed on Monday as investors took in the news of a new trade agreement between the United States and the European Union, kicking off a crucial week full of earnings reports, economic data, and central bank meetings.
As of 9:35 a.m. ET, the Dow Jones Industrial Average was down 10 points (0.1%), while the S&P 500 rose 6 points (0.2%), and the tech-heavy NASDAQ gained 75 points (0.4%). The S&P and NASDAQ recently hit record highs, helped by strong earnings and reduced uncertainty around U.S. tariffs.
U.S. and EU Reach Trade Deal
Over the weekend, the U.S. and EU reached a preliminary trade agreement. It includes a 15% tariff on EU goods entering the U.S., increased EU purchases of U.S. energy and defense products, and significant EU investments in the U.S. economy. Specifically, the EU committed to buying $750 billion in U.S. energy and investing $600 billion in the U.S.
This deal has eased market concerns about a potential trade impasse ahead of the August 1 deadline for new U.S. tariffs. However, ING analysts cautioned that nothing has been signed yet and more details are expected soon.
Fed, Inflation Data in Focus
Beyond trade, the Federal Reserve begins its two-day policy meeting this week, ending July 30. Interest rates are expected to remain between 4.25% and 4.5%, but investors will be looking for any signals about a possible rate cut in September or later this year.
The Bank of Japan also meets this week, ahead of the release of the Fed’s preferred inflation gauge — the PCE price index — on Friday. Other key U.S. labor data this week includes the JOLTS report, ADP private payrolls, jobless claims, and July’s official jobs report.
Big Tech Earnings Ahead
This is also the busiest week of earnings season, with more than 150 S&P 500 companies reporting. Major tech players — part of the “Magnificent Seven” — including Meta (Facebook), Microsoft, Apple, and Amazon, will all report this week.
Investors will be paying close attention to what companies say about AI spending, as it could influence whether recent investments in cloud infrastructure are sustainable.
Morgan Stanley strategist Michael Wilson said he sees the S&P 500 reaching 7,200 by mid-2026, driven by a “rolling recovery” in corporate earnings. He expects mid-teens growth in earnings per share based on the firm’s models.
Oil Prices Rise on Trade News
Oil prices climbed Monday after the U.S.-EU trade deal eased fears of a damaging trade war. At 9:35 a.m. ET, Brent crude was up 2.3% at $69.23 a barrel, while U.S. West Texas Intermediate gained 2.4% to $66.76. The possibility of further trade deals before the August 1 tariff deadline is also supporting oil prices.
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