Trade Deal Optimism May Lead To Initial Strength On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to move to the upside following the lackluster performance seen during last Friday's session.

The upward momentum on Wall Street may reflect optimism about potential trade deals, with Commerce Secretary Howard Lutnick saying he is confident the U.S. will reach an agreement with the European Union.

"These are the two biggest trading partners in the world, talking to each other. We'll get a deal done," Lutnick said in an interview with CBS News over the weekend. "I am confident we'll get a deal done."

However, Lutnick also described August 1st as a "hard deadline" for new "reciprocal tariffs" on U.S. trade partners to take effect.

"Nothing stops countries from talking to us after August 1st, but they're going to start paying the tariffs on August 1st," he said.

Traders are also looking ahead of the release of earnings news from several big-name companies this week, including Google parent Alphabet (GOOGL), Tesla (TSLA) and Intel (INTC).

Stocks showed a lack of direction over the course of the trading session on Friday, with the major averages bouncing back and forth across the unchanged line after failing to sustain an initial move to the upside.

The major averages eventually ended the day narrowly mixed. While the Nasdaq inched up 10.01 points or 0.1 percent to a new record closing high of 20,895.66, the S&P 500 edged down 0.57 points or less than a tenth of a percent to 6,296.79 and the Dow fell 142.30 points or 0.3 percent to 44,342.19.

For the week, the Nasdaq jumped by 1.5 percent and the S&P 500 climbed by 0.6 percent, but the Dow slipped by 0.1 percent.

The initial strength on Wall Street came as stocks continued to benefit from Thursday's upbeat U.S. economic data, which helped ease concerns about the impact of President Donald Trump's trade wars.

Buying interest waned shortly after the start of trading, however, leading to some profit taking after the Nasdaq and the S&P 500 reached new record intraday highs.

The subsequent pullback also came amid a slump by shares of Netflix (NFLX), with the streaming giant tumbling by 5.1 percent to its lowest closing level in over a month.

The drop by Netflix came after the company reported better than expected second quarter results but warned its operating margin in the second half will be lower than the first half.

Shares of American Express (AXP) and 3M (MMM) also showed notable moves to the downside even though the companies reported second quarter results that exceeded estimates.

Meanwhile, traders largely shrugged off a report from the University of Michigan showing a modest improvement by U.S. consumer sentiment in the month of July.

The University of Michigan said its consumer sentiment index climbed to 61.8 in July after surging to 60.7 in June. Economists had expected the index to rise to 61.5.

With the slightly bigger than expected increase, the consumer sentiment index reached its highest level since hitting 64.7 in February.

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Utilities stocks showed a strong move to the upside, however, with the Dow Jones Utilities Average climbing by 1.6 percent to its best closing level in over seven months.

Considerable strength was also visible among brokerage stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Securities Broker/Dealer Index.

Interactive Brokers (IBKR) helped lead the sector higher, surging by 7.8 percent after reporting better than expected second quarter results.

On the other hand, biotechnology stocks came under pressure over the course of the session, dragging the NYSE Arca Biotechnology Index down by 2.2 percent.

Airline and oil service stocks also showed notable moves to the downside on the day, offsetting the strength in the aforementioned sectors.

Commodity, Currency Markets

Crude oil futures are edging down $0.06 to $67.28 a barrel after slipping $0.20 to $67.34 a barrel last Friday. Meanwhile, after rising $13 to $3,358.30 an ounce in the previous session, gold futures are jumping $32.70 to $3,391 an ounce.

On the currency front, the U.S. dollar is trading at 147.35 yen versus the 148.81 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1665 compared to last Friday's $1.1626.

Asia

Asian shares rose broadly in thin trading on Monday, with Japanese markets closed for a holiday. Investors watched the latest trade developments, with U.S. Commerce Secretary Howard Lutnick saying he was confident the U.S. and the EU could reach a trade deal before August 1.

"That's a hard deadline, so on August 1, the new tariff rates will come in… Nothing stops countries from talking to us after August 1, but they're going to start paying the tariffs on August 1," Lutnick said in an interview with CBS News on Sunday.

The yen held firm as Japan's ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba's grip on power.

However, Ishiba announced he has no intention to step down, pledging to redouble efforts on economic diplomacy.

U.S. stock futures edged higher ahead of key earnings reports from major tech companies, with Tesla and Google parent Alphabet set to unveil their earnings results on Wednesday, followed by Intel on Thursday.

Investors also looked ahead to a busy week of U.S. housing market data and comments from central bankers, including Federal Reserve Chairman Jerome Powell at a banking conference, as President Donald Trump piles pressure on him over rates and renovations at the U.S. central bank's headquarters.

Gold prices rose on a weakening dollar as investors debated the Federal Reserve's next move and Trump reiterated that a 10 percent tariff would be imposed on any BRICS nation actively working to bypass the dollar in international trade.

Oil prices were marginally lower in Asian trading, as investors weighed the prospect of increased supply from OPEC+ against new sanctions on Russia.

China's Shanghai Composite Index climbed 0.7 percent to 3,559.79 as the People's Bank of China held the 1-year loan prime rate at 3.0 percent and 5-year LPR at 3.5 percent, as expected.

Hong Kong's Hang Seng Index rose 0.7 percent to 24,994.14 after reports emerged that Trump and Chinese leader Xi Jinping might meet ahead of the October APEC summit.

Seoul stocks rose notably, with big-cap tech shares pacing the gainers as foreigners continued their buying streak for the eighth consecutive session. The Kospi advanced 0.7 percent to 3,210.81.

Tech giant Samsung Electronics gained over 1 percent, its chipmaking rival SK Hynix added 1.3 percent and leading battery maker LG Energy Solution rallied 2.6 percent.

Australian markets fell sharply after reaching a record high in the previous session. The benchmark S&P/ASX 200 Index slumped 1.0 percent to 8,668.20, suffering its biggest fall since April amid broad-based selling.

The broader All Ordinaries Index settled 0.9 percent lower at 8,926.90. South32 shares surged 4.5 percent after the diversified miner exceeded its full-year production guidance.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index closed up 0.6 percent at 12,961.51 after annual consumer inflation for the second quarter came in below economists' forecasts.

Europe

European shares have struggled for direction on Monday as EU leaders prepare for a high-stakes showdown over U.S. tariff threats.

The Wall Street Journal reported that EU member states are pressing the European Commission to prepare countermeasures, including tariffs on U.S. goods, restrictions on digital services, and limits on public procurement access.

Overall losses, if any, remained limited as the ECB's quarterly Survey on the Access to Finance of Enterprises showed Eurozone firms remain optimistic about their growth prospects in the next quarter despite trade tensions.

The euro held its ground in the absence of high-tier data releases. The German yield curve flattened ahead of June euro zone PMI data and the European Central Bank's policy decision later this week, with economists expecting the central bank to leave interest rate unchanged.

While the French CAC 40 Index is down by 0.4 percent, the German DAX Index and the U.K.'s FTSE 100 Index are both down by 0.1 percent.

In corporate news, Ryanair Holding shares surged over 6 percent. The airline's net profit more than doubled in its April-June quarter, thanks in part to higher fares and cost control.

Stellantis NV fell 1.3 percent. The automaker said it expects a net loss of 2.3 billion euros ($2.68 billion) for the first half of 2025 amid the early effects of U.S. tariffs.

Infrastructure firm Hochtief AG gained 1 percent after it won a €172 million contract from German state company Deutsche Bahn.

Bayer AG rose about 1 percent as it secured EU approval for Nubeqa as third indication for metastatic hormone-sensitive prostate cancer.

Oil & gas giant BP Plc gained half a percent after naming Albert Manifold as its new chairman, succeeding Helge Lund.

Hunting, a precision engineering group, rose 2 percent on securing a $31 million order for Black Sea gas project.

U.S. Economic News

The Conference Board is scheduled to release its report on leading economic indicators in the month of June at 10 am ET. The leading economic index is expected to dip by 0.2 percent in June after edging down by 0.1 percent in May.