Stock market today: S&P 500, Nasdaq eke out records as markets kick off huge week for US economy

US stocks, notably the S&P 500 and Nasdaq, closed at new record highs on Monday following a US-EU trade pact setting tariffs at 15% and renewed optimism for extended US-China trade talks. Investors are now focused on a packed week featuring major Big Tech earnings, the Federal Reserve's policy meeting for interest rate signals, and key inflation (PCE) and jobs data, all of which are poised to significantly influence near-term market direction.

Analysis

US equity markets are exhibiting cautious optimism at record levels, with the S&P 500 achieving a sixth consecutive record close and the Nasdaq Composite rising 0.3%, while the Dow Jones Industrial Average slipped 0.2%. This muted but positive action was primarily driven by a new US-EU trade pact, which sets a baseline tariff of 15% on European goods, averting a threatened 30% rate. While President Trump lauded the deal, the mixed assessment from EU leaders suggests potential complexities remain. Concurrently, rising hopes for a three-month extension of the US-China tariff truce are providing an additional tailwind. However, the market's focus has now pivoted to a critical week of catalysts that will test current valuations. Over 150 S&P 500 companies are set to report earnings, including technology heavyweights Meta, Microsoft, Amazon, and Apple. Furthermore, the Federal Reserve's policy decision is forthcoming, and while rates are expected to hold at 4.25%-4.50%, investors will be scrutinizing commentary for any signals of a potential rate cut in September. Key economic data, including the PCE inflation gauge and the July jobs report, will provide further direction on the health of the economy and the Fed's future policy path.

Key Decisions for Investors

• Investors should anticipate heightened market volatility as a dense calendar of Big Tech earnings, a Federal Reserve policy decision, and key inflation and labor data will dictate near-term market direction.
• Positions in technology mega-caps such as META, MSFT, AMZN, and AAPL carry significant event risk this week, warranting a review of direct and indirect exposure through indices like the Nasdaq.
• Closely monitor the Federal Reserve's post-meeting statement for any shift in tone regarding future policy, as signals of a potential September rate cut would be a significant market catalyst.
• While the US-EU trade agreement provides a near-term positive, the ongoing US-China trade negotiations remain a crucial factor, and any news on a truce extension should be watched carefully.