Stocks posted muted gains on Monday as market participants traded cautiously ahead of a busy week of inflation readings and second-quarter earnings reports. Investors also monitored new tariff developments from the Trump administration over the weekend.
The Dow Jones Industrial Average
President Donald Trump announced Saturday that the United States will impose a 30% tariffs on imports from the European Union and Mexico, effective Aug. 1. The new rates, revealed in letters to European Commission President Ursula von der Leyen and Mexican President Claudia Sheinbaum posted on his social media platform Truth Social, came with the threat that the White House will retaliate with higher levies if the E.U. or Mexico responds with their own: "whatever the number you choose to raise them by, will be added on to the 30% that we charge."
The new tariff rates follow similar letters to several other countries including Japan, Brazil, South Korea and Canada establishing their own new rates ahead of the Aug. 1 deadline. The European Union and Mexico make up about one-third of U.S. imports, CNBC reports.
"The most recent wave of announced tariffs would raise the effective rate by around 4 [percentage points]. with further upside risks if 15-20% blanket tariffs are implemented. That would carry around 30 [basis points] of stagflationary risks," Bank of America economist Claudio Irigoyen wrote in a Monday note.
"With more uncertainty around the tariff shock and inflation, the Fed is less likely to cut rates at the margin," he continued. "Extending the 'escalate to de-escalate' strategy just increases the option value of waiting for the Fed, in line with our out of consensus call of no Fed cut this year."
The week ahead also hosts a series of fresh economic data, with readings including June's consumer price index and producer price index, as market participants continue to access the potential effects of Trump's tariffs on the broader U.S. economy.
Wall Street will also react to the first major week of the second-quarter earnings season, as major corporate reports major banks JPMorgan Chase
- Minutes from the central bank's Juen meeting released last Wednesday showed that most Fed officials anticipate rate cuts in 2025
- thouhg they divered on how many exactly. Traders are pricing in about 96% chance of hte two quarter-percentage-point cuts by the end of hte year
- the CME FedWatch tool.
- On Sunday
- National Economic Council Director Kevin Hassett told ABC News that Trump can fire Fed Chair Jerome POwell
- Trump officials are probing hte costs of renovation of the Federal Reseve's meanin building in Washington DC
- whild the president has repeatedly critized Powell for not lowering inters trates. The centrlal bank has pushed back against soem the of criticisms of the renovation project.
