The S&P 500 closed flat on Monday as investors digested a major U.S.-EU trade deal and looked ahead to a packed week featuring earnings from key tech giants and a pivotal Federal Reserve policy meeting.
At the close, the Dow Jones Industrial Average slipped 64 points, or 0.1%, the S&P 500 was unchanged, and the Nasdaq Composite edged up 0.3%.
U.S. and EU Strike Framework Trade Deal
Over the weekend, the U.S. and European Union reached a landmark trade agreement, which includes a 15% tariff on EU goods entering the U.S. The deal outlines significant EU commitments to purchase $750 billion in U.S. energy and invest $600 billion into the American economy. The EU accounted for over $600 billion of the $3.3 trillion in U.S. imports last year.
Markets welcomed the deal, which helped ease concerns over looming tariffs set to take effect on August 1. However, analysts at ING cautioned that “nothing is on paper yet,” and further clarity is expected in the coming days.
Fed Meeting, PCE Inflation in Focus
The Federal Reserve begins its two-day meeting Tuesday, with a decision due July 30. While rates are expected to remain at 4.25%–4.5%, investors are looking for guidance on a potential rate cut later this year—possibly in September or December.
Other key events this week include the Bank of Japan’s policy decision on Thursday and June’s PCE inflation report, the Fed’s preferred price gauge. Labor market data will also be closely watched, including JOLTS, ADP payrolls, jobless claims, and Friday’s July jobs report.
‘Magnificent Seven’ Earnings in Spotlight
More than 150 S&P 500 companies report earnings this week, including several members of the so-called “Magnificent Seven.” Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT) report Wednesday, followed by Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) on Thursday. AI-related spending commentary will be key as investors evaluate ongoing investment in hyperscale infrastructure.
Morgan Stanley strategist Michael Wilson said the S&P 500 could hit 7,200 by mid-2026, citing a “rolling recovery” in earnings and strong macro conditions. He sees earnings per share (EPS) growing at mid-teens levels.
Movers & Shakers
- Tesla Inc. (NASDAQ:TSLA) rose 4% after CEO Elon Musk announced a $16.5 billion chip supply deal with Samsung Electronics (KS:005930), which will manufacture semiconductors for Tesla.
- Nike Inc. (NYSE:NKE) jumped 4% after JPMorgan upgraded the stock to overweight from neutral, citing signs of a recovery.
- Cisco Systems Inc. (NASDAQ:CSCO) fell nearly 2% following a downgrade from Evercore to in line from outperform, noting limited upside after recent gains.
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