Market Update

The S&P 500 Index has seen a decline of -0.57%, while the Dow Jones Industrial Average has dropped by -0.65%. The Nasdaq 100 Index is down -0.51% as well. In addition, September’s E-Mini S&P Futures fell by -0.67%, and September’s E-Mini Nasdaq futures dropped by -0.57%.

The stock market is experiencing a downturn today following President Trump’s announcement of increased tariffs, which heightens concerns about a potential risk-off atmosphere in asset markets. Late on Thursday, Trump stated that tariffs on certain Canadian products would rise from 25% to 35%, effective August 1st. However, these tariffs will not affect goods traded under the US Mexico-Canada Trade Agreement, and energy-related imports will remain at 10%. Furthermore, he indicated plans for a blanket tariff of 15% or 20% on many US trading partners.

Bond yields have also increased, with the 10-year Treasury note yields rising by +5 basis points to 4.40%. Investors are worried that Trump’s tariff threats might spur US inflation, which could limit the Federal Reserve’s ability to cut interest rates.

In the cryptocurrency space, Bitcoin prices have increased by over +3% today, achieving new records. This week, Bitcoin surged more than +9% after the U.S. House of Representatives Committee on Financial Services proclaimed next week as “crypto week.” There’s also a planned hearing by the House Committee on Ways and Means titled “Make America the Crypto Capital of the World.”

As Trump continues to enforce his aggressive tariff strategy, the stock market faces ongoing downward pressure. He also signaled a possible 10% tariff on Indian goods linked to his participation in BRICS, despite indicating progress toward a trade deal with India.

Looking ahead, earnings season is set to kick off next week. Data from Bloomberg Intelligence suggests that the consensus for S&P 500 companies shows only a 2.8% increase in second-quarter revenues compared to last year, which is the lowest growth in two years. Moreover, a survey from Yadeni indicates that only six of the 11 S&P sectors expect to see growth, marking a decline since early 2023.

Federal fund futures markets are currently reflecting a 7% chance of a potential -25 basis point rate cut at the upcoming FOMC meeting on July 29-30.

In international markets, the Euro Stoxx 50 has decreased by -0.91%, while China’s Shanghai Composite reached a nine-month high, closing flat at +0.01%. Japan’s Nikkei 225 has dropped by -0.19%.

As for bond yields, September 10th T-Notes have decreased by -10 ticks. The 10-year T-note yield now stands at 4.397%, up +4.8 basis points. Worries regarding inflation stemming from Tariffs could hinder the Fed’s rate-cutting potential. Additionally, there were negative influences from today’s 10-year German yields reaching a three-and-a-quarter month low in T-Notes.

European government bond yields are also climbing. Germany’s 10-year yield has increased to a three-and-a-quarter month high of 2.734%, rising +1.8 basis points. The 10-year UK gilt yield now stands at 4.620%, up +2.5 basis points.

In the UK, manufacturing production fell by -1.0% month-over-month, worse than the anticipated -0.1%, marking the most significant drop in ten months.

Isabel Schnabel, a member of the ECB Executive Committee, commented on the likelihood of an ECB rate reduction, emphasizing that there would need to be substantial deviations from the medium-term target to prompt such a move. The market is discounting only a 2% chance of a -25 basis point cut at the ECB’s policy meeting set for July 24th.

Stock Movers

Chip companies are experiencing broader market impacts today, with Intel (INTC) down over -2%. Other chipmakers like Microchip Technology, Advanced Micro Devices, Marvell Technology, ARM Holdings, and NXP Semiconductor have all seen declines above -1%.

Capricor Therapeutics (CAPR) has plummeted by over -40% after the FDA declined to approve a treatment aimed at Duchenne muscular dystrophy.

Civista Bancshares (CIVB) is down more than -10%, with shares priced below Thursday’s close after announcing a secondary offering.

Albemarle (ALB) has fallen more than -4% following a downgrade from UBS. Oscar Health (OSCR) has similarly dropped by over -4% after Wells Fargo Securities revised its outlook lower.

Illumina (ILMN) has decreased by more than -2% due to a downgrade from Scotiabank.

Northern Trust Corp (NTRS) is down over -1% following a downgrade from Keefe, Bruyette & Woods.

In a more positive light, drone-related companies have seen gains after U.S. Defense Secretary Pete Hegses ordered enhancements in drone production and deployment. Red Cat Holdings (RCAT) surged over +21%, while Aerovironment and Kratos Defense & Security Solutions both climbed more than +7%.

Bitcoin-related stocks are also doing well, with MicroStrategy (MSTR) up over +3%. Other companies like Mara Holdings and Riot Platforms have increased over +1% as Bitcoin prices rise by +2% or more to reach record highs.

Levi Strauss & Co (LEVI) has seen a growth of more than 7% after updating its annual revenue guidance to indicate stronger expectations than previous forecasts.

Performance Food Group (PFGC) has jumped over +4% amid rumors of its interest in acquiring US Foods Holding Corp.

Medtronic PLC (MDT) is up more than +1% following government proposals for national compensation regarding a specific hypertension treatment.

Gisteon Corp (VC) has increased over +1% after Goldman Sachs upgraded its rating.