After a rocky Monday (July 7) spurred by President Trump’s aggressive tariff threats, U.S. markets are showing early signs of life.
Futures trading on Tuesday morning painted a cautiously optimistic picture, with the S&P 500 and Nasdaq pointing toward a higher open. While the Dow Jones edged slightly lower, investor sentiment appears to be shifting from panic to patience.
President Trump’s announcement of sweeping new tariffs, set to begin August 1 unless trading partners like Japan, South Korea, and others bring new proposals to the table, sent markets into a brief tailspin.
On Monday, July 7th, the Dow slid nearly 1%, while the S&P 500 and Nasdaq lost 0.8% and 0.9%, respectively. The fear: an all-out trade war that could rattle global supply chains and corporate profits.
But by early Tuesday, investors seemed less rattled as of 08:20 a.m. ET, S&P 500 E-minis were up 0.12%, Nasdaq 100 E-minis climbed 0.31%, and Dow E-minis dipped a modest 0.08%.
Ben Laidler, Head of Equity Strategy at Bradesco BBI, summed up the mood shift:
“The market’s taking comfort from the fact that the can has been kicked further down the road. The bark may be worse than the bite.”
In other words, Wall Street is betting on diplomacy, or at least delay, over disruption.
Tesla (TSLA) was a bright spot in premarket trading, rebounding 1.1% after suffering its steepest one-day drop in a month. The bounce reflects broader optimism around mega-cap tech stocks, many of which have powered the Nasdaq to record highs in recent weeks.
But not all sectors are feeling the love.
Solar stocks took a major hit, following Trump’s directive to roll back tax credits under the “One Big Beautiful Bill Act.” Among the biggest losers: SunRun (RUN) fell 6.9% and SolarEdge Technologies (SEDG) dropped 7.4%.
The move signals a policy pivot that could challenge the renewable energy sector, especially at a time when clean energy companies are already navigating inflation, regulation, and global competition.
Adding a layer of intrigue this week is the Federal Reserve. While a July rate cut is unlikely, traders now see a 60% chance of a rate cut in September, according to the CME FedWatch tool. The Fed’s June meeting minutes, due out Wednesday, could offer valuable insight into the central bank’s policy path.
Meanwhile, Goldman Sachs has boosted its S&P 500 forecasts, citing strong large-cap fundamentals and expectations for a more dovish Fed later in the year. Their new projections call for gains across 3-, 6-, and 12-month timelines.
This reinforces a key theme: Despite short-term policy shocks, the underlying economic and earnings momentum in the U.S. remains strong.
Only two countries, Britain and Vietnam, have sealed trade deals with the U.S. so far. Yet a fragile détente with China was struck in June, offering a sliver of hope that full-blown trade isolation might be avoided.
For now, the market seems to believe that worst-case scenarios will be avoided, or at least postponed. The measured reaction, especially when compared to the “Liberation Day” tariff chaos three months ago, suggests that investors are growing accustomed to Trump’s negotiation style: threaten big, act selectively.
This week is light on major economic data. The only standout is that the initial jobless claims on Thursday will offer a pulse check on the labor market. As for the Fed, aside from Wednesday’s minutes, just two regional Fed presidents are scheduled to speak.
That makes trade news and earnings the dominant drivers of market action for the next few days.
The S&P 500 and Nasdaq might be ready to bounce back today, but volatility remains close at hand. With tariff tensions simmering and Fed clues on the horizon, investors should brace for more headline-driven swings.
