Key Takeaways
- Markets calm as investors await clarity on trade proposals and potential tariff decisions from Washington
- CrowdStrike tumbles on weak outlook; Wells Fargo rises after Fed lifts asset cap restrictions
- Weak ADP jobs report spooks markets slightly; eyes now on Friday’s official employment numbers
It was a relatively quiet day on Wall Street. The Dow Jones Industrial Average gained 0.5%. The S&P 500 added 0.6%, while the Nasdaq Composite and Russell 2000 added 0.8% and 1.6%, respectively. While we did have a few earnings, the main story continues to be trade policy.
President Trump set a deadline of today for countries to submit their best trade proposals. After receiving those, the administration will review and counter with hopes of settling any and all trade disputes before next month’s deadline. Back in April, Trump paused many of the tariffs he put on for “Liberation Day” by 90 days. With that deadline just over a month away, I think markets are waiting to see not just what is said, but what is actually done.
To date, although we have heard there are deals being worked on, we haven’t seen any final details. Even the deal with the UK was more a framework than a specific agreement. It’s also worth noting, we actually maintain a trade surplus with the UK. In 2024, that surplus was around $11.9 billion. Therefore, my personal belief is that the market wants to see a deal with a major trading partner. Once we see that, it will empower companies to start forecasting growth moving forward.
Speaking of growth forecasts, shares of CrowdStrike Holdings are down nearly 7%. The company reported a beat on earnings, met revenue expectations but offered a weak outlook. Dollar Tree shares are down nearly 1.5% after warning tariffs could impact future earnings. One company that said its outlook has stabilized is Hewlett Packard Enterprise. Although the company lowered its top end sales outlook, shares are higher in the premarket by 7.5%. Finally, although they didn’t report earnings, shares of Wells Fargo are indicated higher by 2.5%. After seven years, the Federal Reserve lifted restrictions on the bank’s assets cap following a scandal where the company was opening fake customer accounts.
On the economic front, it’s a quiet day. I think markets are waiting on Friday, when we get the next report on employment. We did get the latest ADP Employment reading which came in well below expectations. While I don’t typically mention this report and I don’t think it’s particularly consequential, markets did pull back some on its release. It’s possible the much weaker than expected report of 37 thousand new jobs vs 111 thousand forecast could be a sign that estimates for Friday’s report are in jeopardy. I’ll have more on this on Friday, after the report is released.
For today, there isn’t much on either the earnings or economic calendar. As mentioned above, I think this market is really waiting on tariff news. While summer months can get a bit quiet, it’s worth remembering that there are a number of potential catalysts out there. Aside from tariffs, I believe the two biggest unknowns are a budget bill that still needs to pass the Senate, then go back to the House before heading to President Trump. The other one worth monitoring is the war in Ukraine. Ukrainian military forces have recently launched attacks deeper into Russian territory. In the past, Putin has threatened the use of nuclear weapons against Ukraine and I’m a bit concerned we may begin hearing more heated rhetoric on that front. As always, I would stick with your investing plan and long-term objectives.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.
Read the full article here
