Morning in New York: White House rhetoric on the side of the "bears"

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

The foreign trade agenda remains top of mind for investors. US President Donald Trump announced his intention to impose an additional duty of 30% on imports from the European Union and Mexico from August 1 after negotiations on a comprehensive trade agreement failed. Negotiations continue. The EU has extended a moratorium on retaliatory measures until the end of July, but is preparing for a no-deal scenario and plans to team up with countries affected by U.S. tariffs and reach out to Canada and Japan to offer cooperation. These measures could increase volatility amid the risk of rising costs, triggering a market sell-off.  

White House counselor Kevin Hassett said Trump has the authority to fire Fed Chairman Jerome Powell "for cause," which could include the outcome of an investigation into the Fed's $700 million overbudget renovation.The pressure on the monetary authority could contribute to a weaker dollar and higher Treasury yields. 

No significant releases are scheduled for today in the macroeconomic calendar;

Reporting season kicks off this week. Analysts on average forecast earnings growth for companies in the S&P 500 by 5% year-on-year versus 13% in the first quarter, which partially takes into account the effects of foreign trade uncertainty. The market will closely monitor the impact of import tariffs on margins and earnings in individual sectors. Fastenal (FAST) will report before the opening of trading on July 14. 

Futures on American stock indices are trading in the negative. We assess the balance of risks for the upcoming session as moderately negative with an average level of volatility. We focus on the S&P 500 movements in the range of 6200-6300 points (from -1% to +0.7% to the previous session's closing level);

- Ilon Musk's AI company xAI is gearing up for a new round of capital raising in which its valuation could reach $200 billion. Tesla (TSLA) will give its shareholders the opportunity to vote at a general meeting to invest in the startup. According to the Wall Street Journal, SpaceX is investing $2 billion in xAI. 

- Boeing (BA) and the FAA have notified airlines that fuel switch locks on Boeing airplanes, including the 787 model, do not pose a safety hazard and do not require mandatory additional inspections.  

- Chinese regulators have approved Synopsys' (SNPS) purchase of Ansys (ANSS) for $35 billion. The approval comes amid improving trade relations between the US and China following a June agreement to reduce mutual duties. Earlier, the deal was postponed by Beijing amid escalating trade confrontation with Washington;

- NVIDIA (NVDA) CEO Jensen Huang will hold a press briefing in Beijing on July 16. This will be his second visit to China since the beginning of the year, a market which, according to the top executive, is of strategic importance to the company;

- Bitcoin broke through the $120k mark upwards for the first time in history 

- From July 8 to July 11, the U.S. hosted large-scale online sales, including Amazon Prime Day from Amazon (AMZN). The total amount of online purchases was estimated at $24.1 billion. According to Adobe (ADBE), sales volume increased by 30.3% YoY with a forecast of 28.4% growth. 

- Crinetics (CRNX) reported positive long-term data from a study of the drug for growth hormone-related pathologies. 

July 11 trading on the U.S. stock exchanges ended in the negative. S&P 500 corrected by 0.33%, Nasdaq 100 fell by 0.21%, Dow decreased by 0.63%, Russell 2000 lost 1.26%. Shares of the "Magnificent Seven" showed mixed dynamics. Quotes of Alphabet (GOOGL) and Amazon (AMZN) moved steadily upward, Meta (META)* and Apple (AAPL) remained under pressure. Nine of the 11 sectors included in the broad market index closed in the red zone. Energy companies (XLE +0.45%) were the leaders of growth. The healthcare industry (XLV -0.83%) was the outsider due to the correction in pharma stocks;

The trading dynamics was determined by the news on foreign trade negotiations. US President Donald Trump confirmed his intention to impose a tariff of up to 35% on imports from Canada from August 1 and to raise the prime rate to 15-20% for most trading partners, as well as to send official letters to the EU. Despite the tough rhetoric of the head of the White House, market participants do not rule out that many of his threats will not be realized;

Federal Reserve Bank of Chicago President Austin Goolsbee said that fears related to import tariffs announced in April have diminished and this provides an opportunity to move to a rate cut in the near future. At the same time, according to Goolsby, new initiatives of the authorities regarding import duties may force the Fed to maintain a wait-and-see attitude until the situation becomes clearer;

- Shares of PayPal (PYPL: -5.7%), Visa (V: -2.2%) and Mastercard (MA: -2.3%) reacted negatively to a Bloomberg report about plans to impose fees on fintech companies for access to their customers' data, which could change the industry's business models. 

- PriceSmart (PSMT: +5.3%) reported better-than-forecast growth in net merchandise sales for the quarter, despite unfavorable currency fluctuations, and said it sees Chile as a potential new market. 

- Performance Food Group (PFGC: +4.8%) shares rose amid Bloomberg's publication of US Foods' interest in a merger, although it is possible that regulatory restrictions will prevent a deal from being finalized;

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