Jim Cramer's top 10 things to watch in the stock market Tuesday

U.S. equity futures rose, with the S&P 500 indicated up over 1%, after President Trump delayed tariffs on the EU until July 9, causing the 10-year Treasury yield to slip below 4.5%. Despite recent volatility, the S&P 500 is up 4.2% and the Nasdaq 7.4% for the month, defying the "sell in May" adage. However, Republican Senator Ron Johnson indicated sufficient GOP opposition to Trump's budget bill due to concerns it will increase the deficit, creating potential headwinds for its passage.

Analysis

The market is exhibiting immediate positive sentiment, with the S&P 500 indicated to open over 1% higher and the 10-year Treasury yield declining below 4.5%, a direct response to the U.S. administration's decision to delay 50% tariffs on the EU until July 9. This trade-related optimism bolsters a generally bullish outlook, underscored by robust month-to-date market performance: the S&P 500 has advanced 4.2% and the Nasdaq has surged 7.4%, defying the "sell in May" adage. However, a countervailing factor arises from U.S. fiscal policy, where Republican Senator Ron Johnson has indicated sufficient GOP opposition to President Trump's House-passed “Big Beautiful Bill” unless concerns about reducing government spending and the deficit are seriously addressed. This potential legislative hurdle for the budget bill, which includes tax cuts and spending priorities, introduces a significant risk of an expanding deficit, a worry for Wall Street that could temper the current positive market momentum.

Key Decisions for Investors

• Maintain exposure to equity upside given the tariff delay and strong market performance (S&P 500 +4.2% MTD, Nasdaq +7.4% MTD), but prepare for potential shifts in sentiment as the July 9 EU tariff deadline approaches.
• Closely monitor legislative developments regarding the U.S. House-passed budget bill, as opposition driven by deficit concerns, highlighted by Senator Ron Johnson, presents a tangible risk to sustained market optimism and could impact fiscal stability.
• Evaluate the current sub-4.5% 10-year Treasury yield as indicative of trade optimism, but assess its sustainability against potential fiscal pressures if the contested budget bill advances without addressing spending reduction concerns.