Wall Street Week Ahead: Investors eye tariff deadline as US stocks rally
ADVERTISEMENT On Wednesday, Trump announced a deal with Vietnam that he says will impose a lower-than-promised 20% tariff on many Vietnamese exports. While the administration has teased a forthcoming deal with India, talks with Japan, the sixth-largest U.S. trading partner and closest ally in Asia, appeared to hit roadblocks. Investors have shifted from panicking about tariffs to relief buying, recently lifting the U.S. stock market back to record highs, with corporate earnings and the U.S. economy holding up better than many had expected through a period of dramatic policy change.
The S&P 500 has risen about 26% from April 8, when stocks bottomed following Trump's draconian April 2 tariff announcement.
But much of the rally has been driven by retail market participants and corporate share buybacks, even as institutional investors have been more reticent. Despite the S&P 500 making new highs, equity positioning is far below February levels as investors remain underweight stocks, according to Deutsche Bank estimates. "This has definitely been a junkier rally, a more speculative rally," Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.
ADVERTISEMENT "In the last week or so, it's been driven a lot more, I think, by retail than it has been by institutions. Institutional positioning is really just average," she said. While many factors are keeping investors cautious, including worries about U.S. economic growth and lofty stock market valuations, getting past the tariff deadline without a major escalation in tensions would be one less thing to worry about in the near term, analysts said. "I think that there may be some threats and saber-rattling, but I don't really think that any of that now poses a major danger to the market," said Irene Tunkel, chief U.S. equities strategist, BCA Research.
ADVERTISEMENT Still, investors don't expect the tariff deadline to put an end to trade tensions for good. "I don't view it necessarily as a hard deadline," said Julian McManus, portfolio manager at Janus Henderson Investors.
ADVERTISEMENT "The 90-day pause itself was instituted because the markets were falling apart, and I think policymakers needed breathing room and time to try and negotiate these deals or find some kind of off ramp," he said. Investors' cautious approach to boosting equity exposure now is reminiscent of their behavior immediately after the pandemic market drop of March 2020, when allocations to stocks recovered more slowly than major market indexes, Deutsche Bank strategist Parag Thatte, said.
ADVERTISEMENT "It does mean that there is room for exposures to keep rising, which is a positive for equities all else equal," Thatte said.
After a roller-coaster first half, the S&P 500 is entering a historically strong period. Over the past 20 years, July has been the strongest month for the benchmark index with an average return of 2.5%, according to a Reuters analysis of LSEG data. Investors will also be keeping an eye on economic data - especially inflation numbers - and second quarter results in coming weeks for clues to the health of the U.S. economy, and the Federal Reserve interest rate outlook. "We're right at the point where institutions are going to have to decide one way or the other, do they believe the rally or not," Morgan Stanley's Shalett said.
Wall St Week Ahead runs every Friday. For the daily stock market report.
(You can now subscribe to our ETMarkets WhatsApp channel)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
News18
23 minutes ago
- News18
Trump Signs ‘One Big Beautiful Bill Act': What It Means For Indians And High-Income Americans
Last Updated: The bill, passed by both chambers of Congress, includes several measures that will impact Indian families and workers abroad US President Donald Trump signed into law the 'One Big Beautiful Bill Act" on Friday during a Fourth of July picnic at the White House, bringing sweeping changes to taxes, remittances, and federal spending. The bill, passed by both chambers of Congress, includes several measures that will impact Indian families and workers abroad, as well as raise fresh questions about tax breaks for high-income Americans. 'This is the most patriotic bill ever passed," Trump said during the signing. 'We are putting American families, American jobs, and American values first." Impact On Indians: Remittance Tax One of the bill's key provisions is a 1 per cent levy on international money transfers made by non-US citizens, including green card holders and workers on temporary visas. The tax applies to remittances sent using cash, money orders, or cashier's cheques. India, the world's largest remittance recipient, could be significantly affected. According to the Reserve Bank of India, Indian nationals received $32.9 billion in remittances from the US in 2023-24, accounting for nearly 28 per cent of total inflows. The new levy, even at a reduced rate of 1 per cent — down from an earlier proposed 5 per cent— may strain households in states like Kerala, Uttar Pradesh, and Bihar, where remittances support education, healthcare, and housing. Tax Cuts For The Wealthy The law allows up to $10,000 in interest deductions on loans for buying new American-made vehicles. However, federal tax credits for electric vehicles — which offered up to $7,500 in incentives — will now end in September, four years ahead of schedule. Meanwhile, clean energy tax credits from the Biden era will be phased out entirely by 2028. Defence And Immigration Spending The bill also boosts military and immigration enforcement budgets, with $150 billion allocated for shipbuilding and missile defence, including Trump's 'Golden Dome" project. Another $100 billion has been directed to US Immigration and Customs Enforcement (ICE) to ramp up immigration crackdowns. One campaign promise that did make it through — a tax exemption on service industry tips — was included in the final law. The Congressional Budget Office estimates that the new law will add $3.3 trillion to the federal deficit over the next decade. Notably, for many Indian families reliant on US remittances, even a modest 1 per cent tax could add up. At the same time, the law renews Trump-era tax cuts for the rich, intensifying debates over fiscal priorities and economic equity. Get breaking news, in-depth analysis, and expert perspectives on everything from geopolitics to diplomacy and global trends. Stay informed with the latest world news only on News18. Download the News18 App to stay updated! First Published: July 06, 2025, 13:29 IST
Indian Express
44 minutes ago
- Indian Express
Can Elon Musk's America Party go beyond social media to be a political force? Explained, in 3 points
Elon Musk, the world's richest man, has announced a new political party to 'give Americans back their freedom'. Musk had earlier run a poll on X, the social media platform he owns, asking people if the US should get a new political party. Early on Sunday morning India time, he posted on X, 'By a factor of 2 to 1, you want a new political party and you shall have it! When it comes to bankrupting our country with waste & graft, we live in a one-party system, not a democracy. Today, the America Party is formed to give you back your freedom.' Musk's dramatic breach with Donald Trump, whom he helped get elected as the US President, came over the One Big Beautiful Bill Act. What exactly is Musk's problem with Trump's flagship legislation, and how soon can his political party take off? We explain, in 3 points. The One Big Beautiful Bill basically covers many of Trump's campaign promises in one big legislation. While you can read a detailed explainer on the Bill here, briefly, it announces tax cuts on the one hand, and promises to spend a lot more on border security, defence, and deporting illegal immigrants on the other. To compensate for loss of income from the tax cuts and the increased spending, it cuts back some welfare measures and subsidies. It also raises the debt ceiling, which is the amount the US government is allowed to borrow. Musk's problems seem to be about this increased debt ceiling, which he says is financially irresponsible, and with the cutting of subsidies to certain sectors such as green energy, which will directly impact his electric car business Tesla. 'The latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country,' Musk posted on X recently. 'It gives handouts to industries of the past while severely damaging industries of the future,' he added, in what is apparently a reference to the Bill not giving much support to environment-friendly technologies like electric vehicles. On a different occasion, asked on X why he stopped supporting Trump, Musk had said, 'Increasing the deficit from an already insane $2T under Biden to $2.5T. This will bankrupt the country.' Apart from its name, not much. Musk has been saying that the US two-party system is essentially a 'uniparty', with similar financial policies that don't represent 'the 80% in the middle', but hasn't explained how his party intends to do that, or what its ideology or vision is. On Sunday morning, he reposted an X a comment from another user, which said, 'Is this the America Party platform? -reduce debt, responsible spending only; -modernize military with ai/robotics; -pro tech, accelerate to win in ai; -less regulation across board but especially in energy; -free speech ; -pro natalist; -centrist policies everywhere else.' Musk has gone from being a Democrat supporter to Trump's biggest backer to now founder of a new party, so his own political views are difficult to pin down. But he has spoken about the need for Americans to have more children, and for the government to not interfere too much in how industries grow. How soon can the America Party be an actual contender in elections? Musk's plans are ambitious. When a user on X asked if he plans to start competing in the 2028 Presidential elections or the midterm elections next year, he said 'next year'. About his battle plans, he has said, on different occasions, 'The way we're going to crack the uniparty system is by using a variant of how Epaminondas shattered the myth of Spartan invincibility at Leuctra: Extremely concentrated force at a precise location on the battlefield'; and 'One way to execute on this would be to laser-focus on just 2 or 3 Senate seats and 8 to 10 House districts. Given the razor-thin legislative margins, that would be enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people.' Epaminondas was a Greek general who defeated the superior Spartan army through two innovative tactics. The Spartan Army's elite unit would stand on the right flank of its battle formation. Epaminondas went with an asymmetrical military formation, packing all his best warriors on the left side, and making those columns of soldiers deeper than usual. On the right side, he kept his weaker troops, but at an angle, so that they did not meet the Spartans first. Thus, his left wing's concentrated might smashed through the Spartans, defeating them before they could understand what was happening. Musk seems to be saying that his party's candidates will strategically fight from the constituencies that promise the best returns, and win just enough seats to hold up Bills they oppose. Although Musk's enormous wealth makes a lot of things possible, all of this is easier said than done. America's political structure favours the two-party system and it is difficult for newcomers to break through. Many, like the Green Party, the Libertarian Party, etc., have tried. To fight the national-level elections, a new party has to register with the Federal Election Commission, only after which it can spend money above a certain limit on election activities. Musk's party is yet to register. Also, states have their own rules, and for a party's presidential candidate to appear on the ballot in all 50 states, it must meet the requirements of each state individually. All of this requires grassroot presence and patience. Whatever Musk's personal appeal — and wealth — creating a party organisation of this magnitude is not easy. Also, Musk was born in South Africa, so he can't run for President. The billionaire will not only have to create a party, but also a Presidential candidate of sufficient stature, before his wealth can bankroll that candidate's campaign.
Hans India
an hour ago
- Hans India
5 key triggers for Sensex, Nifty next week; India-US trade deal, Q1 earnings, FPI flows
The Indian stock market is poised for a volatile week as multiple global and domestic cues unfold simultaneously. The top factors influencing investor sentiment include the anticipated India-US trade deal, the kick-off of Q1 FY26 earnings, foreign capital flows, monsoon progress, and the release of the US Federal Reserve's June meeting minutes. During the week ended July 4, both the Nifty 50 and Sensex slipped 0.70%, snapping their two-week winning streak. Profit-booking, foreign capital outflows, and uncertainty over trade negotiations between India and the US weighed on the indices. According to Ajit Mishra, SVP at Religare Broking, "Investors are cautious ahead of global trade deadlines and earnings. A potential interim trade agreement between India and the US may limit downside risks, but clear outcomes are crucial." While large-cap indices corrected, mid- and small-cap segments continued their upward march. The Nifty Midcap 100 gained 0.5%, and the Smallcap 100 rose 0.3%, showing resilience amid broader volatility. Here are 5 major triggers for the markets in the coming week: 1. India-US Trade Deal The unresolved trade pact between India and the US remains a top market trigger. With US President Donald Trump's July 9 deadline approaching, investor anxiety is growing. Although Indian negotiators returned from Washington last week, Commerce Minister Piyush Goyal reiterated that India will not commit to any deal unless it serves the national interest. A breakthrough could boost export-heavy sectors such as IT, pharma, and auto components. In contrast, any deadlock may dent near-term sentiment. 2. Q1 FY26 Earnings Season India Inc's Q1 results will start rolling in this week. IT bellwether TCS and Tata Elxsi will release their earnings on July 10, followed by DMart on July 11. Investors will watch closely for growth guidance, margin trends, and demand commentary, which will likely set the tone for sectoral momentum. 3. Monsoon Progress India's southwest monsoon has shown healthy progress, with cumulative June rainfall exceeding the long-period average by nearly 9%. Improved monsoon activity is aiding kharif crop sowing, which is up by 11% year-on-year. With the IMD forecasting active rainfall over the next week, monsoon trends will continue to be a crucial macroeconomic monitor for inflation and rural demand. 4. Foreign Portfolio Investment (FPI) Trends So far in July, FPIs have pulled out ₹5,773 crore from Indian equities amid uncertainty and valuation concerns. Experts suggest that clarity on the trade deal and robust Q1 earnings could reverse this trend. According to VK Vijayakumar of Geojit Financial, "A breakthrough in India-US trade talks and strong corporate earnings could revive FPI interest." 5. US Fed Minutes Global markets will keep a close watch on the minutes of the US Federal Reserve's June 17–18 meeting. These insights will offer clues on the Fed's stance regarding inflation and potential interest rate cuts. Though a September rate cut is still expected, recent jobs data hint at a resilient labor market, possibly delaying policy easing. Fed Chair Jerome Powell has stated that the inflationary impact of tariffs may start appearing in the coming months, suggesting a cautious Fed in the near term.
