Wall Street's Make-or-Break Week for the Stock Market: Earnings, CPI, Tariffs Collide

U.S. Stock Market Faces Crucial Week: Earnings, Tariffs, and Fed Pressure Collide

S&P 500, Nasdaq, Dow: Rally Faces High-Stakes Reality Check

After a blistering 26% surge since April, the S&P 500 now stands at all-time highs, but the rally's resilience is under threat as the market heads into a week loaded with earnings from top-tier companies like JPMorgan (JPM), Netflix (NFLX), and Taiwan Semiconductor (TSM), alongside a critical Consumer Price Index (CPI) inflation report. The Nasdaq Composite and Dow Jones Industrial Average also hover just below record territory, supported by tech and AI momentum but weighed by tariff uncertainty and shifting rate expectations.

Despite Donald Trump's August 1 tariffs looming, most equity indices remained stable last week. The S&P 500 ended slightly lower, a notable show of resilience considering the backdrop of renewed trade aggression targeting copper, pharmaceuticals, and semiconductors — key sectors that could face price shocks.

Q2 Earnings Preview: Financials, Pharma, and Big Tech Take Center Stage

The upcoming earnings barrage will test market confidence. Major U.S. banks reporting this week include:

• JPMorgan (JPM) – Tuesday

• Wells Fargo (WFC) – Tuesday

• Citigroup (C) – Tuesday

• Bank of America (BAC) – Wednesday

• Morgan Stanley (MS) – Wednesday

• Goldman Sachs (GS) – Wednesday

Expectations are modest. Analysts have slashed Q2 earnings growth forecasts for S&P 500 companies from +10.2% on April 1 to just +5.8% today. Yet 78% of companies beat estimates last quarter, and a similar performance now could ease fears around the tariff fallout and macro instability.

Also reporting are:

• Netflix (NFLX) – Thursday after market close

• Johnson & Johnson (JNJ) – Thursday

• Novartis (NVS) – Thursday

• GE Aerospace (GE) – Thursday

• PepsiCo (PEP) – Thursday

• Taiwan Semiconductor (TSM) – Thursday

Netflix is up 40% YTD, riding tailwinds from ad expansion and gaming. Analysts expect a 3–5% revenue beat, with sustained content leadership giving it pricing power. Goldman Sachs lifted its price target to $1,140. Still, valuation above 40x forward earnings has some strategists cautious.

GE Aerospace continues to benefit from aviation tailwinds, while Johnson & Johnson and Novartis will give insight into pharma’s resilience amid Trump’s 200% tariff threat on drug imports — a move estimated to add $600 billion in cost burden.

Nvidia (NVDA) Hits $4 Trillion, But Faces China Risk

Nvidia (NVDA) just became the first public company to hit $4 trillion in market cap, fueled by relentless demand for AI chips. But CEO Jensen Huang’s upcoming July 16 trip to Beijing is sparking political friction. A bipartisan U.S. Senate group urged Huang to avoid entities linked to China's military or on the U.S. restricted list.

Nvidia generated $17 billion from China last fiscal year, or 13% of revenue. With the U.S. banning sales of its powerful H20 AI chips, Chinese rivals like Huawei are closing in. Nonetheless, CUDA dependence gives Nvidia an edge, though investor sentiment hinges on Huang’s diplomacy — and Washington’s reaction.

Inflation Watch: CPI, Retail Sales Could Shift Fed Trajectory

The June Consumer Price Index drops Tuesday. Economists forecast +0.3% MoM, an acceleration from May. Headline inflation last printed at 2.4% YoY, which was cooler than expected. But tariff threats are reigniting cost-push concerns.

Retail sales data, due Thursday, will gauge consumer stamina. May’s decline reflected a pullback after tariff front-loading, and a soft June print could reinforce arguments for a rate cut at the July FOMC meeting.

Fed speakers this week include Michelle Bowman and John Williams, both of whom have hinted that rising costs from tariffs complicate the easing path. The market still prices in 50 bps of cuts by year-end, but expectations are fragile.

Trump’s Tariffs and SNAP Cuts Create Uneven Retail Outlook

Trump’s tariff regime isn’t the only policy shock. His newly signed tax and spending package slashes SNAP funding by $130 billion through 2034, shifting costs to states and tightening eligibility.

Bernstein analysts see the net effect as short-term positive for middle and high-income consumers, but a 1–7.5% income drop for the lowest quintile by 2033. Retailers like:

• Dollar General (DG)

• Dollar Tree (DLTR)

could suffer margin pressure, while Walmart (WMT) and Target (TGT) may gain share among value-conscious consumers. Bernstein rates WMT and DG Outperform, TGT Underperform.

AI Boom Reshapes Tech Valuation: GOOGL, META, MSFT, AMZN in Focus

Generative AI is shifting the fundamentals for:

• Google (GOOGL)

• Meta Platforms (META)

• Amazon (AMZN)

• Microsoft (MSFT)

Google’s Veo 3 and Meta’s MovieGen are leading image/video AI tools. Morgan Stanley sees each 1% lift in engagement adding $1B for YouTube and $5B for Meta by 2027.

Microsoft was just upgraded to Outperform by Oppenheimer with a $600 PT, citing AI-driven Azure growth and premium business metrics (Rule of 60).

Amazon received a price target bump to $300 from Morgan Stanley on stronger AWS growth, lower tariff downside, and Anthropic exposure. Their bull case: $350/share.

Micron (MU), MongoDB (MDB) and Tesla (TSLA): Analyst Highlights

Micron (MU): Deutsche Bank initiated coverage at Buy with a $150 PT, citing HBM chips driving margins above 60%. HBM could hit 23% of sales by 2026. DRAM strength persists, while NAND outlook is more cautious.

MongoDB (MDB): Wolfe Research launched coverage at Outperform with a $280 PT. Despite 2025 softness, MDB is riding a dual wave of enterprise data modernization and early AI adoption. They expect $400M incremental revenue next year.

Tesla (TSLA): Wedbush sees a critical moment for the EV giant as Elon Musk launches a political party. Analyst Dan Ives warns the distraction could derail Tesla’s AI/robotics roadmap. A merger with xAI is rumored. Board intervention is encouraged to preserve Musk’s focus.

Saudi Markets and Commodities Snapshot

The Tadawul All Share Index closed down 0.21%, with energy and real estate sectors underperforming. Top movers:

• SHL Financing (TADAWUL:1183): +9.98%

• Al Sagr Insurance (TADAWUL:8180): +6.47%

• Fawaz AlHokair (TADAWUL:4240): +5.80%

Crude oil rebounded sharply:

• WTI (CL=F): +2.82% to $68.45

• Brent (LCO=F): +2.51% to $70.36

Gold (GC=F) surged 1.15% to $3,364/oz, driven by inflation hedging and central bank demand.

That's TradingNEWS