The S&P 500 Index closed up +0.02% and the Nasdaq 100 up +0.36% on Monday, marking new record highs, while the Dow Jones fell -0.14%. This movement followed a trade deal between the European Union and the United States, where the EU will face 15% tariffs on most exports, significantly lower than previously threatened tariffs of up to 50%. Additionally, reports indicated that the US and China are expected to extend their tariff truce by 90 days.
Market response was mixed as weak demand for a $70 billion Treasury auction of 5-year T-notes raised bond yields, causing a pullback in equities. The Treasury’s Q3 borrowing estimate was raised to $1.01 trillion from an April estimate of $554 billion. U.S. economic indicators were positive with the Dallas Fed manufacturing outlook rising to a 6-month high of 0.9, surpassing expectations.
This week, market focus will be on upcoming economic data, including Jun JOLTS job openings and the Fed’s 2-day FOMC meeting, where interest rates are expected to remain unchanged at 4.25% to 4.50%. Notably, earnings season is underway with 38% of S&P 500 stocks reporting, showing expected earnings growth of +4.5% for Q2, exceeding previous forecasts.
