U.S. Markets Update: Trade Optimism Lifts Sentiment Amid Earnings and Economic Signals

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Index Update:  U.S. stock futures advanced, supported by renewed trade optimism following a U.S.-Japan deal that reduced tariffs and included a $550 billion investment commitment from Japan. Additional trade agreements with the Philippines and potential progress with the EU further lifted sentiment. The S&P 500 reached fresh record highs, while investors also focused on upcoming earnings reports from major firms like Alphabet, Tesla, T-Mobile, and IBM. However, some caution remained as Texas Instruments and AT&T saw sharp declines after their respective earnings updates.

Market Movers:  On Tuesday, the top gainers were Fusion Fuel Green PLC (+56.78%), followed by Beeline Holdings, Inc. (+56.02%). On the contrary Replimune Group, Inc. (-77.24%) and Baird Medical Investment Holdings Ltd (-29.08%) declined the most the same day.

Commodities Update:  Crude oil prices extended losses for a fourth straight session, with WTI falling below $65 and Brent nearing $68 per barrel, as investors awaited U.S. inventory data and monitored global trade developments. Despite a slight drop in U.S. crude stocks, rising distillate inventories and concerns over weakened demand from potential tariff escalations weighed on prices. OPEC+ supply increases and uncertainty around U.S. trade negotiations, particularly with the EU and China, added to the bearish sentiment. Gold prices dipped to around $3,420 per ounce, ending a three-day rally, as a series of trade agreements reduced demand for safe-haven assets. While new deals with Japan, the Philippines, and Indonesia offered hope for easing tensions, ongoing uncertainty with the EU and China, along with upcoming Federal Reserve policy signals, kept markets cautious.

Macro Update:  U.S. mortgage applications edged up 0.8% in mid-July 2025, slightly recovering from the previous week's sharp 10% decline. Home purchase applications rose 3% after a prior 7% drop, while refinance applications fell 3.3%, continuing their recent slump amid elevated borrowing costs. The average 30-year fixed mortgage rate rose to 6.84%, the highest in four weeks, as Treasury yields climbed following strong economic data, keeping refinancing unattractive for many borrowers.

Bonds Commentary:  The U.S. 10-year Treasury yield rose to 4.36%, ending a six-session decline, as easing demand for safe-haven assets followed renewed trade optimism. Recent deals with Japan and the Philippines, along with growing hopes for an EU agreement, boosted investor confidence. Meanwhile, Treasury Secretary Scott Bessent indicated no urgency in replacing Fed Chair Jerome Powell, as markets await next week's Fed meeting, with expectations for rates to remain unchanged amid ongoing trade-related inflation concerns

Futures Update:  U.S. stock index futures moved higher, supported by optimism around a trade agreement between the U.S. and Japan. Investors also looked ahead to earnings reports from major tech firms, including Alphabet and Tesla. Despite a mixed finish in the previous trading session, the S&P 500 managed to notch a new record high as markets continued to digest recent corporate earnings.

Following early pressure in the session, stocks managed to recover ground throughout Tuesday’s trading day. The S&P 500 edged higher by 4.04 points, or 0.06%, closing at 6,309.63. From a technical perspective, since prices are trading at relatively elevated levels, a period of consolidation may occur before any substantial movement in either direction in the near term. This observation aligns with our earlier outlook for the week. The 14-period Relative Strength Index (RSI) remains near overbought territory, suggesting that caution should be exercised at current levels. However, key moving averages are still significantly below current prices, providing support should volatility pick up. Important support levels are around 6,210, with resistance expected near 6,355.