Stock Market Reacts to Tariff Storm: Bitcoin Surges, Banks Set to Report
Dow, Nasdaq, and S&P 500 Decline as Wall Street Braces for CPI, Earnings, and Crypto Legislation | That's TradingNEWS
Tariff Chaos Reshapes Wall Street Strategy Ahead of Earnings Storm
Markets Struggle as Dow (^DJI), S&P 500 (^GSPC), and Nasdaq (^IXIC) React to Trump Tariffs
Equities opened the week with losses across major indices. The S&P 500 (^GSPC) closed at 6,249.97, shedding 0.16%, while the Dow Jones (^DJI) dropped 0.2%, and the Nasdaq Composite (^IXIC) slipped 0.11%. Selling accelerated after President Trump announced a sweeping 30% tariff on all imports from the EU and Mexico, effective August 1, alongside a punitive 35% tariff on Canadian goods. The market, which had rallied on expectations of a diplomatic resolution, is now being forced to reprice a risk environment shaped by unrelenting protectionism.
Inflation Data in Spotlight as Fed Decision Nears
Traders are laser-focused on Tuesday's Consumer Price Index (CPI) report, expected to reveal the full inflationary bite of earlier tariff rounds. Core CPI is forecast to rise 0.3% month-over-month, pushing the annualized rate above 3.5%, complicating the Federal Reserve’s upcoming decision. Treasury yields spiked as bets on a summer rate cut faded, with the 2-year yield touching 4.98%. Tech stocks bore the brunt, as rising rates threatened premium multiples.
Bank Giants Set to Deliver: JPM, GS, MS, C, WFC
The tone for Q2 earnings will be set by America’s largest banks. JPMorgan Chase (JPM), Goldman Sachs (GS), and Morgan Stanley (MS) are expected to post investment banking revenue growth over 10% QoQ, fueled by revived M&A flows. Wells Fargo (WFC), having just exited a decade of strict regulatory oversight, is forecast to post EPS of $1.56, while Citigroup (C) eyes a rebound from its dismal Q1 performance. Buyback announcements are expected after all five passed the Fed’s stress test in June. On July 3, JPM, GS, and MS each hit all-time highs, reflecting bullish positioning into earnings.
Bitcoin (BTC-USD) Breaks $121K Amid ETF Boom and Pro-Crypto Legislation
Bitcoin (BTC-USD) blasted through resistance to trade above $121,500, up more than 30% YTD, driven by record inflows into spot ETFs and the launch of “Crypto Week” in Congress. The House is reviewing the GENIUS Act, which mandates 1:1 dollar reserves for stablecoins, and the CLARITY Act, which seeks to split regulatory authority between the SEC and CFTC. Coinbase (COIN) surged 2.27% to $395.84, while Robinhood (HOOD) gained 2.68%, and MicroStrategy (MSTR) rallied 2.8%, supported by growing institutional appetite for digital assets. Stablecoin leader Circle (CRCL) is now up over 500% since its IPO.
Tech Earnings on Deck: Netflix (NFLX), Taiwan Semi (TSM), ASML (ASML)
Eyes are on Netflix (NFLX) this Thursday, trading near $1,261.66, but down 5.5% in July amid sector rotation. While revenue has consistently beat estimates, concerns about ad-tier adoption linger. Chipmakers Taiwan Semiconductor (TSM) and ASML (ASML) are also due to report. TSM will reveal how AI chip production is coping with global demand, while ASML’s guidance on EUV demand will offer a read on the second-half chip cycle. Meanwhile, Nvidia (NVDA) closed at $163.73, with its market cap now over $4 trillion, exceeding that of Germany’s GDP.
Silver (SI=F) Breaks Out, Gold (GC=F) Holds Above $3,360
Precious metals extended their rally. Silver futures (SI=F) surged to $39.07, up 33% YTD, breaking the 2011 high. Gold (GC=F) hovered near $3,363.80, under its $3,500 April peak, but held strong as global macro instability fueled haven demand. Trump’s tariff barrage, along with central bank gold buying and geopolitical risks, is reinforcing long exposure. Yet inflation-adjusted real yields continue to cap the upside.
S&P 500 Outlook: From 6,250 to 10,000?
Despite current volatility, RBC Capital Markets raised its year-end S&P 500 target to 6,250, while Trivariate Research mapped a bold trajectory to 10,000 by 2030, citing 10–11% EPS CAGR. The bull thesis rests on AI productivity, with Microsoft (MSFT) reporting $500 million in annual cost reductions from AI-powered call centers. Analysts argue that tech-led efficiency will fuel margin expansion even if top-line growth slows.
S&P 500 Dividend Yield Near Record Low as Buybacks Surge
With S&P 500 dividend yields nearing all-time lows, around 1.35%, firms are opting for buybacks over cash distributions. This quarter, $237 billion in buybacks are expected—up 18% YoY. However, strategists warn that buybacks are cyclical levers and can vanish in downturns, making them a weaker form of shareholder support compared to dividends. Current policy is increasingly tied to EPS-linked executive comp and AI investments.
Final Verdict: Buy JPM and COIN, Hold S&P 500 and Nasdaq, Avoid NFLX
Momentum continues in JPMorgan (JPM) and Coinbase (COIN), both backed by institutional strength, strong technicals, and macro tailwinds. Silver (SI=F) and Bitcoin (BTC-USD) present strong accumulation opportunities on dips given supply constraints and inflows. The broader S&P 500 (^GSPC) and Nasdaq (^IXIC) should be held cautiously, while Netflix (NFLX) remains a short-term avoid until it proves stability in engagement and monetization.
Verdict: Buy JPMorgan (JPM), Buy Coinbase (COIN), Hold Nasdaq (^IXIC) and S&P 500 (^GSPC), Accumulate Silver (SI=F) and Bitcoin (BTC-USD), Avoid Netflix (NFLX).
