U.S. stocks inched higher Tuesday morning as markets absorbed another wave of corporate earnings reports and key economic data while the Federal Reserve kicked off its two-day policy meeting.
As of 09:40 ET, the Dow Jones Industrial Average was up 12 points, or 0.1%. The S&P 500 rose 10 points, or 0.2%, and the NASDAQ Composite climbed 90 points, or 0.4%.
Markets have been buoyed in part by the weekend announcement of a trade agreement between the U.S. and European Union, which helped ease fears of a larger transatlantic trade conflict.
Focus on U.S.-China Trade Talks
The U.S.-EU deal is one of several the White House has been working to finalize ahead of August 1, when new reciprocal tariffs on various countries are set to take effect. According to analysts at ING, investors will now be watching closely for potential agreements with Asian partners like South Korea, Taiwan, and India, as well as updates on NAFTA-related negotiations with Mexico and Canada.
Meanwhile, trade discussions between the U.S. and China are set to continue in Sweden on Tuesday. Beijing faces an August 12 deadline to reach a more permanent tariff deal with Washington. Earlier this year, both sides agreed to preliminary deals that temporarily de-escalated the ongoing trade war, which has involved rising tit-for-tat tariffs and Chinese restrictions on exports of rare earth minerals.
Fed Meeting in Spotlight
The Federal Reserve has begun its latest policy meeting, with markets widely expecting interest rates to remain steady at 4.25%–4.5% when a decision is announced Wednesday. However, investors will be listening closely for signals on the potential for a rate cut later this year.
Fed Chair Jerome Powell has maintained a cautious stance, emphasizing the need for more clarity on the economic impact of the Trump administration’s aggressive trade policy. Still, dissent within the Fed is growing, with some officials recently calling for rate cuts.
President Donald Trump renewed his pressure on the central bank Monday, urging rate reductions to support economic growth.
The Bank of Japan will also hold a policy meeting Thursday, with no change in rates expected.
On the data front, Thursday’s release of June’s Personal Consumption Expenditures (PCE) price index— the Fed’s preferred inflation measure—will be a key focus, along with a raft of labor market indicators due throughout the week, including JOLTS job openings, ADP private payrolls, jobless claims, and Friday’s July employment report.
Earnings Season in Full Swing
Earnings remain a major market driver this week, with over 150 S&P 500 companies scheduled to report. Notable names include Meta Platforms (NASDAQ: META) and Microsoft (NASDAQ: MSFT) on Wednesday, followed by Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN) on Thursday.
In other earnings news:
- Merck (NYSE: MRK) shares slipped after the company announced job and cost reductions aimed at saving $3 billion annually, following weaker-than-expected Q2 results due to sluggish demand for its Gardasil vaccine in China.
- Novo Nordisk (NYSE: NVO) fell sharply after the company issued a second downward revision to its 2025 full-year sales and profit forecasts, citing slower growth for its weight-loss drug Wegovy.
- PayPal (NASDAQ: PYPL) shares declined after the payments firm forecast flat current-quarter profits compared to last year, even as it raised full-year guidance.
- United Parcel Service (NYSE: UPS) dropped 2.5% after reporting declines in Q2 profit and revenue, reflecting weaker demand amid trade uncertainty.
- UnitedHealth (NYSE: UNH) slipped after reinstating its full-year forecast, which still came in below already-lowered analyst expectations.
- Whirlpool (NYSE: WHR) plunged after disappointing Q2 results and a lowered full-year outlook for 2025.
Visa (NYSE: V) will report earnings after markets close Tuesday.
Oil Prices Gain Ground
Crude oil prices climbed again Tuesday, extending gains from the prior session in the wake of the U.S.-EU trade agreement.
As of 09:40 ET, Brent crude futures rose 0.8% to $69.88 per barrel, while U.S. West Texas Intermediate (WTI) gained 1% to $67.36.
Both benchmarks had surged over 2% on Monday, with Brent hitting its highest level since July 18. The transatlantic trade deal eased fears of a broader trade war that could have curtailed global energy demand. It also includes a commitment from the EU to purchase $750 billion worth of U.S. energy products in the coming years.
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