Morning in New York: trade threats provoke correction

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The US foreign trade policy remains in the center of attention of the investment community. President Donald Trump threatened to impose duties of 35% on Canadian imports from August 1. According to the American leader, this rate will be additional for all industry tariffs and can be further increased. Now the supply of steel and aluminum from Canada is subject to a duty of 50%, the same it will be from August 1 for copper, and for cars there is a tariff of 25%.  

In an interview with NBC News, Trump said he is considering imposing universal duties of 15-20% on most US trading partners. Previously, a 10% tariff was discussed as a base level, but recent statements by the White House head indicate a possible tightening of trade policy. This Friday, investors are also waiting for the publication of new "Trump's letters" with conditions for the European Union.  

No significant macro releases are scheduled. The nearest important release (CPI data) will take place on July 15;

Russell Vaught, Director of the Office of Management and Budget (OMB), stated that Fed Chairman Jerome Powell made managerial mistakes in the massive renovation of the Fed building, which cost $700 million more than the original budget at $2.5 billion.In parallel, the US President continues to criticize Powell for refusing to move to ease monetary conditions. There are reports that Trump is considering replacing him early, despite the legal protection confirmed by the recent Supreme Court decision.  

Futures on US indices are trading in moderate negative territory due to tougher foreign trade rhetoric. Before the opening of the main session, a negative balance of risks is formed with increased volatility. Investors are likely to shy away from risks before the weekend amid high uncertainty caused by the White House statements. We focus on S&P 500 movements in the range of 6200-6300 points (from -1.3% to +0.3% to the closing level of July 10);

- Shares of Levi Strauss & Co (LEVI) rose during the extended session on the back of a strong second quarter report. The company's EPS came in at $0.22 versus the forecast of $0.13 (+69%), while revenue reached $1.45 billion versus the expected $1.37 billion. Organic net income rose 9% on the back of a revamped product line.  

- Quotes of Frequency Electronics (FEIM) are up 6% in the post-market, reacting to the release of quarterly results and optimistic investor expectations. The company's revenue and EPS exceeded forecasts, coming in at $0.34 million and $20 million, respectively. 

- EPS of WD-40 (WDFC) for the reported quarter was $1.54 with a consensus of $1.44, while revenue came in at $156.9 million with an average guidance of $160.6 million. Year-over-year sales growth of 1% was driven by the company's key markets of Latin America, India and China. 

Trading on July 11 on U.S. stock exchanges ended predominantly in the plus. The S&P 500 added 0.27%, renewing an all-time high, the Nasdaq 100 declined 0.16%, the Dow Jones rose 0.43%, and the Russell 2000 gained 0.48%. Shares of the Magnificent Seven showed multidirectional dynamics. The Tesla securities looked better than the others amid the news about the planned expansion of the robotaxi service. Nine of the 11 sectors included in the broad market index rose. Durable goods manufacturers (XLY: +1.11%) led the way. Communications (XLC: -0.34%) 

Trump still intends to impose a 50% tariff on copper imports into the US, including those from Brazil, starting August 1. Despite this, investors remain hopeful that these conditions will be relaxed, especially after the extension of the deadline for imposing reciprocal duties. While stockpiling will help to partially cover the likely shortfall, the U.S. cannot be fully self-sufficient in copper from domestic reserves. This could lead to a prolonged sustained price premium for the commodity in the domestic market. The tariffs may affect the dynamics of shares of certain U.S. companies, in particular, power grids, for which copper is a critical element. In other industries, its share in production costs is not so high;

Fed Board of Governors member Christopher Waller said the balance sheet reduction may be smaller than previously thought and again allowed for a rate cut in late July. San Francisco FRB head Mary Daly said she still expects two rate revisions this year, starting in the fall.  

The number of initial applications for unemployment benefits for the week amounted to 227 thousand, with the forecast growth to 238 thousand. The data for the previous period were revised from 233 thousand to 232 thousand, which confirms the stability of the labor market;

The $22 billion auction of 30-year government bonds went in line with expectations. Yields of Treasury securities remained almost unchanged;

- MP Materials (MP: +50.6%) announced a joint venture with the Pentagon to produce rare earth magnets with a capacity of up to 10,000 tons per year to reduce dependence on imports. The launch is scheduled for 2028;

- Delta Air Lines (DAL: +12.0%) reported second-quarter EPS and revenue of $2.1 billion and $15.5 billion, with consensus of $2.06 billion and $15.46 billion, respectively. On the positive side, the company returned full-year guidance of EPS in the $5.25-6.25 range and free cash flow in the $3-4 billion range. 

- Conagra Brands (CAG: -4.4%) for the fourth quarter of fiscal 2025 generated EPS of $0.56 on guidance of $0.58 (-5%) and revenue of $2.78 billion versus expectations of $2.83 billion. Management noted pressure from tariff policy and general economic uncertainty on results. 

- Tesla (TSLA: +4.7%) plans to expand its robotaxi service in San Francisco within two months, subject to regulatory approvals. 

- Shares of Ultragenyx Pharmaceutical (RARE: -25.1%) collapsed amid a report that a phase 3 trial of setrusumab against osteogenesis imperfecta failed to reach the threshold for interim analysis. The study will continue, with final results expected by the end of 2025. 

- Shares of Vertiv Holdings (VRT: -6%) were pressured by news that Amazon Web Services is introducing its own design solutions for Nvidia Blackwell-based services. According to a statement from Amazon (AMZN), this infrastructure can be built in both new and existing data centers dedicated to data-intensive AI computing. 

This article was AI-translated and verified by a human editor