Pre-Market Pulse 21st July – Stocks falter as Trump escalates tensions with the EU

Overnight – Stocks falter as Trump escalates tensions with the EU

Stocks managed a weekly gain despite closing flat Friday after the Financial Times reported that President Donald Trump is considering imposing a levy of at least 15% to 20% on goods imported from the European Union.  

Trade tensions between the United States and the European Union intensified as President Trump threatened to impose tariffs of 15-20% on EU imports—higher than the 10% rate the EU prefers—suggesting that ongoing negotiations have reached an impasse. With the August 1 tariff deadline approaching, Trump’s heightened rhetoric appears aimed at pressuring the EU into bigger concessions, stoking fears of a broader trade conflict. The threat of new tariffs briefly sent U.S. markets lower, but major indices largely recovered as investors grew more resistant to tariff-related headlines.

In the corporate arena, Netflix reported strong quarterly earnings and raised its annual revenue guidance, but its stock slipped as results failed to surpass elevated analyst expectations. Despite this pullback, Netflix remains a top-performing technology stock this year, reflecting broader optimism around its leadership in streaming. The start of earnings season saw mixed market reactions: financials like Charles Schwab and Regions Financial posted strong results and gained ground, while companies such as 3M and American Express saw shares decline even after beating estimates. Investors are now focused on upcoming earnings reports from major firms like Coca-Cola, Texas Instruments, Alphabet, and Tesla.

Economic indicators offered a mostly positive outlook. Consumer sentiment, as measured by the University of Michigan, rose above expectations, bolstered by cooling inflation forecasts and solid retail sales data. Jobless claims stayed low, while inflation numbers were manageable, though tariffs continue to push certain prices higher. The Federal Reserve adopted a wait-and-see stance on interest rates, with some policymakers signaling that a rate cut could be justified soon if economic risks intensify. Elsewhere, cryptocurrency stocks rallied following progress on U.S. regulatory legislation, while energy shares fell after lackluster earnings and legal setbacks in the sector.

Corporate Earnings

• American Express -2.35% – stock opened higher on results as the credit card behemoth exceeded estimates for second-quarter profit, fuelled by resilient spending by its affluent cardholders.
• 3M Company -3.65% – stock initially gained after the industrial giant raised its full-year profit forecast, as cost-cutting measures and efforts to focus on high-margin products are paying off.
• Charles Schwab +2.9% – stock rose after the financial services giant reported strong second-quarter earnings, driven by strong client asset growth and improved interest margins.