To The Moon

Markets showed resilience Monday after a new U.S.–EU trade deal was unveiled over the weekend, but enthusiasm proved short-lived. Despite a burst of early optimism, major indexes struggled to hold gains, as investors looked past tariff clarity and turned cautious ahead of a busy earnings and macro week.

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Trade Deal: More Clarity, But Higher Costs

The U.S. and European Union announced a fresh trade agreement Sunday, adjusting tariffs on EU imports to a 15% rate, higher than the 10% baseline but well below the 30% level previously threatened by President Trump.

• Key Exemptions: Some critical sectors, including raw materials, chemicals, and aircraft, will avoid the levy entirely.

• Market Reaction: Initial enthusiasm gave way to fatigue, with only marginal gains by close. The S&P 500 rose just 0.02%, notching a record by a sliver.

Indexes Coast, Then Cool

Index Move (Mon) Notable $S&P 500(.SPX)$ +0.02% New record, barely $NASDAQ(.IXIC)$ +0.33% New closing high Dow -0.14% Pulled lower by cyclicals

Stocks

• Best Performing Stock: $SUPER MICRO COMPUTER INC(SMCI)$ +10.4%

• Worst Performer: Albemarle Corporation -10.7%

• Top Sector: Energy +1.1%

• Lagging Sector: Real Estate -1.7%

While Big Tech once again lifted the Nasdaq, broader participation was weak, and sentiment wavered as attention shifted to China. Another 90-day extension on U.S.–China negotiations kept tensions subdued, but prolonged uncertainty is weighing on investor conviction.

“Tariff Math” and the Consumer Question

Not everyone is sounding alarm bells.

• Scharf Investments’ Brian Krawez believes fears of recession from tariffs are overstated. “Tariffs are on cost, not retail price,” he notes, e.g., an iPhone faces a levy on the $600 import cost, not its $1,200 shelf price.

• Still, he cautions that the U.S. consumer may be weakening, and the looming $9 trillion in Treasury maturities is a slow-moving but significant risk being ignored.

What’s Coming: Fed, Earnings & Economic Clarity

This week could shift market momentum decisively:

Federal Reserve

• The FOMC meets this week, though no policy change is expected.

• Charles Schwab’s Kevin Gordon: “The Fed listens to data. Right now, the data aren’t justifying cuts, yet.”

Corporate Earnings

An enormous slate of earnings is on deck Tuesday alone, including:

Mega Caps: $Boeing(BA)$ , Merck, Procter & Gamble, $Visa(V)$ , $PayPal(PYPL)$ Industrials/Services: UPS, Royal Caribbean, Norfolk Southern Tech & Media: Spotify, Electronic Arts, Seagate, Teradyne REITs & Utilities: Essex Property, American Tower, Republic Services

Key Macro Data

• Tuesday: Case-Shiller Home Prices (May), JOLTS job openings

• Wednesday: Consumer Confidence (July)

• Later in the week: CPI, PPI, Retail Sales, and Housing Starts

Can the Rally Continue? One Strategist Thinks So

Despite a muted Monday, Oppenheimer’s John Stoltzfus sees upside:

• Raised 2025 S&P 500 target to 7,100 (from 5,950 in April).

• Based on improved earnings and reduced tariff overhang.

• His new forecast implies another 20%+ gain for 2025, which would be the third year in a row of such strength, a feat not seen since the 1990s.

Bottom Line: A Market in Search of a Catalyst

Markets have proven resilient to political noise, but they’re clearly searching for a new driver.

• Tariff clarity is helping remove a dark cloud.

• Earnings season will now serve as the most important test of equity strength.

• Watch for signs of consumer softening and Fed hesitance, both of which could cap further upside, unless Q2 earnings and macro data deliver a surprise to the upside.

It may be summer, but between the Fed, earnings, and geopolitics, this market is anything but sleepy.

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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.