Stock Rally Stalls In Run-Up To Fed, Tech Results: Markets Wrap

A rally in stocks toward all-time highs lost steam as Wall Street traders waded through economic data and corporate earnings ahead of the Federal Reserve decision. The dollar hit the strongest level in five weeks. Bonds rose.

While the S&P 500 barely budged, if it closes even marginally higher for a seventh straight day, it will be the longest record-setting streak since 2021. Treasury yields dropped ahead of a $44 billion sale of seven-year notes. The greenback advanced against all of its developed-world peers.

US consumer confidence increased in July as concerns eased about the outlook for the broader economy and the labor market. While job openings fell, they hovered at a level that indicates generally stable demand for workers.

“Overall, it was a mixed round of data that has done little to materially challenge the price action or macro narrative,” said Ian Lyngen at BMO Capital Markets.

On Wednesday, the Fed is forecast to keep interest rates unchanged, while growth and inflation numbers are seen reinforcing the picture of a buoyant economy. The market also faces a key test this week, with four tech giants reporting earnings over a two-day stretch.

“If those events tell a similar story of economic and labor market stability, equity markets have the catalysts in place to continue higher, with pullbacks likely being viewed as buying opportunities,” said Bret Kenwell at eToro.

On the tariff front, Commerce Secretary Howard Lutnick said a 90-day extension of a trade truce with China was a likely outcome. A top Chinese official reiterated the commitment to “healthy” development with American businesses during a meeting with executives from US companies.

Wall Street strategists have a message for investors worrying about signs of excessive optimism emerging as US stocks extend their record run: Any near-term pullback will likely create a buying opportunity.

Strategists from HSBC Holdings Plc, Morgan Stanley and UBS Group AG are maintaining their long-term bullish views even as concerns build that valuations have become stretched at the moment. They see strong corporate earnings and economic data, growing clarity around tariffs and the tailwind of artificial intelligence propelling stocks higher into next year.

“While we expect equities to advance over the next 12 months, investors should be mindful of potential market swings in the coming weeks,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “We think capital preservation or phasing-in strategies can be effective in navigating near-term volatility.”

Long positioning on US equity futures keeps increasing, led by rising exposure to the S&P 500 in the past week, according to Citigroup Inc. strategists led by Chris Montagu.

Investors are pricing the US stock market as if there’s no longer any risk of a tariff-driven recession. Peter Oppenheimer isn’t so sure. 

The chief global equity strategist at Goldman Sachs Group Inc. says it’s possible that tariffs bite hard enough to hurt equity prices even as Washington agrees on deals with key trading partners. And while the US might dodge a recession, valuations are high enough that it’s prudent to keep diversifying into other markets.

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 10:56 a.m. New York time

• The Nasdaq 100 rose 0.1%

• The Dow Jones Industrial Average fell 0.3%

• The Stoxx Europe 600 rose 0.3%

• The MSCI World Index fell 0.2%

• Bloomberg Magnificent 7 Total Return Index fell 0.3%

• The Russell 2000 Index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%

• The euro fell 0.5% to $1.1526

• The British pound fell 0.2% to $1.3329

• The Japanese yen was little changed at 148.57 per dollar

Cryptocurrencies

• Bitcoin fell 0.2% to $117,761.8

• Ether fell 0.3% to $3,775.47

Bonds

• The yield on 10-year Treasuries declined five basis points to 4.36%

• Germany’s 10-year yield was little changed at 2.69%

• Britain’s 10-year yield declined three basis points to 4.62%

• The yield on 2-year Treasuries declined three basis points to 3.90%

• The yield on 30-year Treasuries declined seven basis points to 4.89%

Commodities

• West Texas Intermediate crude rose 1.2% to $67.53 a barrel

• Spot gold rose 0.4% to $3,327.59 an ounce