Stocks were choppy to start the busy week as market participants considered a tentative trade deal between the U.S. and the European Union. The main indexes eventually finished mixed as attention turned to this week's Fed meeting and an upcoming onslaught of corporate earnings reports.
On Sunday, the two parties agreed to set a 15% tariff on most goods that the EU exports to the United States, including cars and pharmaceuticals. The deal also stipulates that the European Union buy $750 billion of U.S. energy and invest an additional $600 billion in the United States.
A zero-percent tariff on a number of goods, including aircraft and semiconductor equipment, was also part of the agreement, though negotiations for the current 50% tariff on steel and aluminum imports were not.
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The 27-nation bloc is the United States' biggest trade partner, so the news is a big win for President Donald Trump ahead of this Friday's tariff deadline. It also follows last week's announcement of a trade deal with Japan that also imposed a 15% baseline tariff.
"We believe the trade deals settled on thus far can benefit American companies in the long run," says Megan Horneman, chief investment officer at Verdence Capital Advisors.
But in the near term, she says that tariffs "threaten margins, potentially inflation and elevated multiples."
Horneman adds that the stock market appears to be phasing out any tariff threat, and is instead focusing on a strong start to second-quarter earnings season.
As for today's market moves, the Nasdaq Composite closed up 0.3% at 21,178, while the S&P 500 finished 0.02% higher at 6,389.
The Dow Jones Industrial Average shed 0.1% at 44,837. Weighing on the Dow were insurance giant Travelers Companies (TRV) and paint maker Sherwin-Williams (SHW), which shed 2.4% and 1.2%, respectively.
Nike stock gets upgraded
Nike (NKE), meanwhile, emerged as the best Dow Jones stock on Monday, gaining 3.9% after J.P. Morgan Securities analyst Matthew Boss upgraded it to Overweight (the equivalent of Buy) from Neutral (the equivalent of Hold).
The analyst also raised his price target on the blue chip stock to $93 from $64, representing implied upside of 17% to current levels.
Boss is optimistic about a multi-year recovery path for Nike that includes improving inventory levels and retail demand, as well as the anticipated launch of new performance products.
It's been a rough few years for Nike, which has seen its top and bottom lines hit by a laundry list of woes, including rising inflation, tensions between the U.S. and China, and a lack of innovation.
But the stock appears to have reached an inflection point and is up more than 42% since early April.
The week is about to get rolling
Monday marked a relatively quiet start to a week that has the potential for fireworks. Most notable on the economic calendar is Wednesday's policy announcement from the Fed.
While no rate cut is expected at the July Fed meeting, Wall Street will be glued to Federal Reserve Chair Jerome Powell's press conference, looking for clues on the central bank's rate-cut plans or commentary on President Donald Trump's aggressive campaign for lower interest rates.
Other data this week include the first reading on Q2 gross domestic product (GDP), the June Personal Consumption Expenditures (PCE) Price Index and the July jobs report.
And the busiest week of second-quarter earnings so far features a number of high-profile results. Included in the lineup are Amazon.com (AMZN) and Apple (AAPL), with the blue chips both set to report after Thursday's close.
CFRA Research analyst Arun Sundaram thinks Amazon will beat on both the top and bottom lines for its second quarter amid strength in retail, advertising and Amazon Web Services (AWS).
"That said, we wouldn't be surprised by a cautious Q3 outlook, given ongoing tariff uncertainties and rising Project Kuiper expenses as satellite launches ramp in the second half of 2025," Sundaram adds.
And Morgan Stanley analyst Erik Woodring believes Apple will report solid fiscal third-quarter results thanks to solid product sales, "better-than-feared Services growth" and forex tailwinds.
Still, he's keeping a close eye on what's around the corner. While the "setup into June quarter earnings is more positive than negative," Woodring says, " any outperformance into earnings is likely to be short-lived until we get clarity" on near-term uncertainties, including tariffs and Apple's AI strategy.
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