US stocks close mostly higher after EU trade deal: Busy earnings week and Fed meet ahead
US stocks open higher on a EU trade deal. S&P 500 and Nasdaq hit records. But earnings, a Fed meeting and new data are ahead and could swing sentiment.
U.S. stocks closed mostly higher, giving up early gains made after President Donald Trump struck a weekend trade deal with the European Union.
The broad S&P 500 and tech-heavy Nasdaq each scored record highs early in the day on July 28, but ended off those peaks as investors exercised caution ahead of major earnings reports, a Federal Reserve meeting and key economic data later this week.
"This week is one traders dream of and also fear," said Jay Woods, chief global strategist at Freedom Capital Markets "There are so many adventures from which to choose."
The blue-chip Dow fell 0.14%, or 64.36 points, to 44,837.56; the S&P 500 edged up 0.02%, or 1.13 points, to 6,389.77; and the Nasdaq gained 0.33%, or 70.27 points, to 21,178.58. The benchmark 10-year Treasury note yield rose to 4.414%.
The EU deal includes a 15% tariff on most European goods entering the United States, similar to agreements struck recently between Trump and other major trading partners, including Japan. The levy is higher than the 10% rate Europeans sought but less than the 30% Trump threatened earlier in July. Pharmaceuticals, steel and aluminum aren't included in the tariff deal.
Additionally, the EU will invest $600 billion in the United States and buy $750 billion worth of U.S. energy, Trump said.
Semiconductor stocks rose because the deal also includes no tariffs from the United States or EU on semiconductor equipment. AMD advanced 4.32%. while Nvidia closed up 1.88%.
Countries that haven't cut a tariff deal yet have until Aug 1 to do so. Otherwise, Trump said a global blanket tariff on their products would likely fall between 15% to 20%.
Separately, the United States and China are expected to extend their tariff truce by another three months, the South China Morning Post reported. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are meeting in Stockholm.
Busy week ahead
With a trade deal with the United States' largest trading partner easing tariff fears, investors will turn to earnings and the Federal Reserve's policy meeting for more direction.
"This is about as busy as a week can get in the markets," said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley. "The S&P 500 ended last week up more than 28% since April 8 − the most it’s gained in 74 trading days since July 2020. This week could make or break that momentum in the near term."
More than 175 S&P 500 companies are slated to report quarterly results this week, but the main events are the so-called Magnificent Seven influential megacap technology companies. They include Facebook parent Meta, Microsoft. Amazon and Apple. Investors will not only scrutinize the results but also any hints of tariff fears or waning artificial intelligence spending that has propelled these stocks, and the market, higher this year.
With about 30% of S&P 500 companies having reported results, overall quarterly earnings are on track for a 7.7% increase from a year ago, according to data provider LSEG IBES. That's higher than the July 1 forecast for a 5.8% increase.
Meanwhile, virtually no one expects the Fed to lower rates this week but investors will look for clues on when it might. The Fed has said with the economy showing resiliency, it would wait to see how Trump's tariffs play out before moving rates. However, Trump suggested last week that Fed Chair Jerome Powell might be ready to lower interest rates.
The CME Fed Watch tool that tracks the odds markets place on a Fed rate change show a slightly more than 61% chance the Fed will cut rates at its September meeting.
"If some board members dissent, it could increase expectations for a rate cut before the end of the year," Larkin said.
At the end of the week, after the Fed's meeting, investors will see more inflation and spending data and the key monthly jobs report to see if the labor market continues to hold up despite the Trump's back-and-forth tariff threats over the past few months.
The economy is expected to have added 102,000 jobs in July, down from 147,000 in June. The unemployment rate is forecast to edge up to 4.2% from 4.1%.
"This week is not technically the midpoint of summer in the Northern Hemisphere, but it may as well be, because it will be the hottest of the year, in terms of market-moving information," said Mark Malek, chief investment officer at Siebert Financial, a brokerage and financial services firm. "Buckle up, folks, this week is the market inflection point of the year."
Corporate news
- Shares of Cheniere Energy, which provides liquefied natural gas, rose 1.38% after the European Union agreed to buy $750 billion of U.S. energy products as part of the new trade deal with the U.S.
- PagerDuty shares jumped 7.06% after Reuters said the cloud computing provider is exploring a potential sale after receiving buyer interest.
Cryptocurrency
Japanese investment company Metaplanet said it bought 780 Bitcoin for a total cost of about $92 million. That brings its total holding to 17,132 Bitcoin.
Bitcoin was last down 1.40% at $117,790.20.
Ethereum was last down 2.37% at $3,781.89 after reaching a more than seven-month high.
(This story was updated with new information.)
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.