US Stocks Rise as Investors Anticipate Trump’s Tariff Deadline#

Key Drivers of Market Performance#

• Trade Optimism: Canada’s decision to rescind a planned digital services tax on US tech firms, which Trump had labeled a “direct and blatant attack,” prompted the resumption of trade talks, boosting sentiment. This followed Trump’s suspension of negotiations on June 27, 2025, highlighting the market’s sensitivity to trade policy shifts. Link
• Tariff Deadline: Many of Trump’s announced tariffs, initially imposed in April 2025, were paused for 90 days and are set to resume on July 9 unless new deals are reached. The EU is negotiating to limit a proposed 50% tariff to a 10% baseline duty, with exemptions for sectors like alcohol and automobiles, further fueling optimism. Link
• Corporate Developments: Oracle’s 4% surge lifted the S&P 500 after CEO Safra Catz reported a strong fiscal year start and new cloud services contracts, including one expected to generate 30 billion annually from 2028. GMS jumped 11.7% following its acquisition by a Home Depot subsidiary for 110 per share. Hewlett Packard Enterprise and Juniper Networks rose 11.1% and 8.4%, respectively, after progress toward their merger. Link
• Banking Sector Strength: The Federal Reserve’s confirmation on June 27, 2025, that major banks like JPMorgan Chase (+1%) and Citigroup (+0.9%) are financially robust enough to withstand an economic downturn supported gains in financial stocks. Link

Market Context#

• Previous Volatility: The S&P 500 and Nasdaq posted their worst quarterly drops since 2022 in Q1 2025, driven by tariff uncertainties, with the S&P 500 losing 4.6% and Nasdaq 10.5%. A historic 9.5% S&P 500 rally on April 9 followed Trump’s 90-day tariff pause, marking its best day since 2008. Link Link
• Economic Concerns: Economists warn that unmitigated tariffs could reignite inflation and risk a US recession, with Goldman Sachs previously raising its recession probability to 35% in March 2025. However, recent trade de-escalations, including a US-China agreement to lower tariffs by 115 points, have reduced these fears. Link Link
• Global Markets: European markets showed mixed results on July 1, with Germany’s DAX flat, France’s CAC 40 down 0.16%, and the UK’s FTSE 100 up 0.22%. In Asia, Japan’s Nikkei 225 fell 1.05%, while South Korea’s Kospi rose 1.05% and China’s Shanghai Composite gained 0.32%. Link

Economic Indicators#

• Bond Market: US Treasury yields dipped ahead of key economic reports, including Thursday’s jobs report, which is critical due to the July 4 holiday. The 10-year Treasury yield fell 5 basis points, signaling cautious investor sentiment. Link Link
• Currency and Commodities: The US dollar weakened 0.29% against the Japanese yen, while Brent crude and WTI fell 0.42% to 66.46 and 0.4% to 64.85 per barrel, respectively, reflecting tempered demand expectations. Link

Risks and Outlook#

• Tariff Uncertainty: While trade deal optimism drives gains, the July 9 deadline looms, with Trump’s erratic policy moves—such as escalating China tariffs to 125% in April before de-escalating—keeping markets volatile. Link Link
• Economic Data: The upcoming jobs report and consumer spending data will shape expectations for Federal Reserve rate decisions, with markets anticipating 75 basis points of cuts in 2025, potentially starting in July. Link
• Investor Sentiment: Posts on X reflect mixed sentiment, with some users warning of market risks if trade talks falter, citing Trump’s abrupt halt of Canada negotiations on June 27 as a potential trigger for volatility.

Conclusion#

US stocks are riding a wave of optimism as investors anticipate trade resolutions before Trump’s July 9, 2025, tariff deadline, supported by corporate earnings and banking sector resilience. However, the risk of renewed trade tensions and economic slowdown persists, with the upcoming jobs report critical for market direction. Investors should monitor trade negotiation updates and economic indicators closely.