The US Stock Market Drifts Off Record Amid Trump's Tariff Threats

U.S. stocks pulled back further from their record highs on Monday, extending losses as investors grappled with fresh tariff threats from former President Donald Trump and the start of a crucial corporate earnings season.

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The uncertainty surrounding international trade policy, particularly Trump’s plan to raise tariffs on imports from Europe and Mexico, added to investor anxiety at a time when Wall Street is gearing up for a wave of earnings results.

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By 9:45 a.m. in New York, the S&P 500 had dropped by 0.3%, marking a continuation of last week’s downward trend after two weeks of gains. The benchmark index now stands less than 0.5% below its July 10 peak, having recently climbed above the closely watched 6,200 level.

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The tech-heavy Nasdaq 100 was also down, falling just under 0.4%. A basket tracking the so-called “Magnificent Seven” — which includes tech giants like Apple, Alphabet, and Meta Platforms — lost 0.3%.

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Losses were especially notable in semiconductor stocks, which overshadowed gains made in the consumer discretionary sector. Nvidia, one of the market’s top performers in recent months, slipped 1.4%, contributing to the overall weakness in chipmakers.

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However, there were bright spots. Stocks tied to cryptocurrencies rose after Bitcoin surged past the $120,000 mark for the first time. The rally reflected ongoing optimism in the digital asset space, especially with the U.S. House of Representatives kicking off “Crypto Week,” where lawmakers will examine new industry legislation. Shares of Coinbase Global, Galaxy Digital, and Strategy gained ground on this momentum.

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Looking ahead, investors are awaiting several key data releases and earnings reports. Inflation will be a major focus this week, with the consumer price index set for release on Tuesday, followed by retail sales data on Thursday, and a consumer sentiment report from the University of Michigan on Friday. These reports are likely to shape expectations ahead of the Federal Reserve’s upcoming interest rate decision on July 30.

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At the same time, market participants are trying to gauge how Trump’s proposed tariffs — a sweeping 30% duty on most goods from the EU and Mexico starting August 1 — will play out globally. With just over two weeks to go before the new measures could take effect, there’s uncertainty over whether any countries will manage to negotiate last-minute deals with the former president.

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“The market isn’t out of danger yet,” wrote Glen Smith, Chief Investment Officer at GDS Wealth Management, in a note to clients. “The coming weeks will be critical in determining how international partners respond to the August 1 deadline. The key question is whether strong earnings can outshine the persistent trade concerns.”

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Analysts are forecasting a relatively weak earnings season. Data from Bloomberg Intelligence show that S&P 500 companies are expected to report only 2.5% year-over-year growth in second-quarter earnings. That would mark the slowest pace since the middle of last year.

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Moreover, full-year profit growth projections have declined — from 9.4% in early April to just 7.1% now — suggesting lowered investor expectations amid economic and geopolitical headwinds.

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Major banks are set to kick off earnings reporting this week, with JPMorgan Chase, Citigroup, and Wells Fargo all scheduled to release results on Tuesday. Later in the week, investors will hear from other key financial institutions, including Goldman Sachs, Morgan Stanley, and Bank of America.

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Despite short-term jitters, some strategists remain bullish. RBC Capital Markets upgraded its year-end forecast for the S&P 500, raising its target to 6,250 from a previous 5,730. The new estimate puts the firm’s projection in line with where the index ended last week. RBC’s team, led by Lori Calvasina, noted the new target reflects a midpoint between five different valuation models they use to assess market levels.

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In corporate news, Kenvue Inc., the company behind Neutrogena and Listerine, rose as much as 5.9% following leadership changes. The company named board member Kirk Perry as interim CEO and said it is progressing with a strategic review of its business options, hinting at potential restructuring or divestitures.

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Autodesk Inc. also delivered notable gains, jumping 4.2% after announcing a strategic shift in its capital allocation. The software company said it plans to focus on internal growth, smaller targeted acquisitions, and stock buybacks as its free cash flow improves. Insiders familiar with the company also revealed that Autodesk has decided not to pursue an acquisition of PTC Inc., a move that would have ranked among the largest M&A deals of the year.

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As markets digest all of this — from earnings and economic reports to trade and crypto legislation — traders remain cautious. The coming days could prove decisive in shaping market direction for the second half of 2025.

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