The U.S. stock market is sprinting ahead with its 2025 summer rally continuing, buoyed by fresh records and a flurry of trade developments. After the S&P 500 notched its 11th closing record this year, futures edged higher following President Donald Trump's announcement of a "massive Deal" with Japan, featuring reciprocal 15% tariffs on Japanese exports to the U.S. This deal not only reassures markets but also signals a strategic pivot in global trade dynamics. Investors eagerly await key earnings reports from tech heavyweights Alphabet and Tesla, whose performances could either fuel or temper the current risk-on sentiment.
Health Care Surges as Tech Faces Headwinds
While health care — a sector lagging behind in 2025 — put up a surprisingly strong performance, rising nearly 2% with standout gains from companies like IQVIA and Charles River Laboratories, technology stocks softened. Led down by declines in chipmakers like Nvidia and Broadcom, the tech sector took a breather after sustained leadership earlier this year. This rotation reflects investors' nuanced repositioning amid a bustling earnings calendar where about 85% of reported companies have beaten expectations so far.
Trump Turns Attention to Europe Amid Tense Trade Talks
Riding the momentum of the Japan deal, Trump has now turned his eyes toward Europe, with trade negotiations looming and tariff deadlines fast approaching. The U.S. aims to enforce 30% tariffs on EU imports by next month, while the EU readies retaliatory measures targeting U.S. goods valued at billions of euros. Experts see the Japan deal as a hopeful precedent that could pave the way for an EU agreement—especially given the unexpected tariff cuts on autos without export caps granted to Japan. This move is casting new light on potential concessions that might break the EU-U.S. trade deadlock.
Europe, meanwhile, remains delicately balanced, as its leaders plan engagements with Japan and prepare for an EU-China summit, where trade stands prominently on the agenda. The crosscurrents of U.S. protectionist policies and EU-China relations hint at a complex diplomatic chessboard where economic interests, geopolitical tension, and tariff retaliation intersect.
