July 10th Market Overview

Happy Thursday.

Markets hit fresh records today despite Trump dropping his harshest tariff yet on Brazil. Seems like investors have built up serious immunity to trade drama at this point.

What actually moved money? Big deals, solid earnings beats, and the AI trade refusing to quit as Nvidia holds the $4 trillion market cap for the first time ever.

P.S. Zillow’s co-founder has started a new company calling it a “big new idea” in the real estate space. Check it out!


Let's dig in...

Market Summary

New Highs Despite Trade Noise:
The S&P 500 and Nasdaq carved out fresh all-time highs as investors shrugged off Trump’s 50% tariff on Brazil - his most aggressive trade move yet. Markets have started to become numb to tariff threats.

Blockbuster Deals Drive Action:
MP Materials exploded after the Pentagon became its largest shareholder through a $400 million investment, while Ferrero bought WK Kellogg for $3.1 billion. Real money chasing real assets.

AI Infrastructure Momentum:
Nvidia $NVDA ( ▲ 0.75% ) crossed the $4 trillion market cap milestone as the first public company ever to reach this level. The VanEck Semiconductor ETF is tracking for its seventh straight weekly gain.

Mixed Jobs Picture:
Initial claims fell to 227,000, beating estimates, but continuing claims hit the highest level since November 2021. People aren’t getting laid off, but those unemployed are having trouble finding work.

Market Overview

U.S. Stock Indexes, This Week so Far

Stock Spotlight

MP Materials $MP ( ▲ 51.22% ) secured a landmark Pentagon partnership that makes the Defense Department its largest shareholder through $400 million in convertible preferred shares. The deal includes a 10-year price floor at $110/kg for neodymium-praseodymium and a 10-year magnet supply agreement. This directly addresses U.S. dependence on Chinese rare earth supplies.

WK Kellogg $K ( ▲ 0.52% ) agreed to be acquired by Italian chocolate maker Ferrero for $3.1 billion cash at $23 per share.

Tesla $TSLA ( ▲ 4.66% ) advanced after Elon Musk announced xAI’s Grok chatbot will be integrated into vehicles by next week. Musk also said the company is expanding robotaxi service in Austin this weekend and could reach the Bay Area within two months pending regulatory approval.

Big Name Updates

Nvidia $NVDA ( ▲ 0.75% ) received a Goldman Sachs upgrade to buy with a $185 price target. The chip designer became the first company to cross $4 trillion in market value, reaching the milestone just two years after hitting $1 trillion.

Amazon $AMZN ( ▼ 0.13% ) saw Bank of America reiterate its buy rating with a $248 target, citing Kuiper satellite internet’s potential $7.1 billion revenue opportunity by 2032. Amazon Web Services also developed custom cooling hardware to handle Nvidia’s power-hungry AI chips.

Oracle $ORCL ( ▲ 0.23% ) received a Piper Sandler upgrade to overweight with a $270 price target, up from $190. The company is partnering with DayOne Data Centers to establish its first cloud services center in Indonesia.

McDonald’s $MCD ( ▲ 2.07% ) got a Goldman Sachs upgrade to buy with a $345 price target based on improved operational fundamentals.

Other Notable Company News

Palantir $PLTR ( ▼ 0.52% ) saw Wedbush raise its price target to $160 from $140. Analysts said the company has a "golden path to become the next Oracle" through its AI strategy over the next 12-18 months.

TSMC $TSM ( ▼ 0.85% ) reported June quarter revenue up 39% year-over-year to $32 billion, beating estimates. The results reflect continued AI infrastructure demand.

Coinbase $COIN ( ▲ 3.98% ) fell after HC Wainwright double-downgraded to sell from buy, warning that valuation has outstripped fundamentals following the stock’s 150% rally since April.

Dollar Tree $DLTR ( ▲ 3.64% ) announced a $2.5 billion share buyback program while hitting new 52-week highs. The discount retailer benefits from consumer trade-down trends.

Roku $ROKU ( ▲ 1.85% ) rose after KeyBanc upgraded to overweight with a $115 target, citing multiyear advertising tailwinds from budget shifts and innovation.

Sector Watch

Bond Market

Treasury yields climbed for the second straight session with the 10-year note around 4.35%. The 30-year bond auction drew solid demand despite rising rates.

Fed Governor Christopher Waller said the central bank can likely continue shrinking its balance sheet “for some time,” projecting it could fall from $6.7 trillion to around $5.8 trillion. This suggests quantitative tightening isn’t over yet.

• Bond ETF inflows surged over the past week as demand for fixed income returned
• Bank of America expects inflation acceleration from tariff-related price increases

Policy Watch

Trump escalated his trade war beyond economics, slapping Brazil with a 50% tariff partly because he's upset about Brazil prosecuting his ally, former President Bolsonaro.

Brazil's president said his country will hit back with equal tariffs on American goods. The trade fight is heating up fast, with Trump sending tariff letters to 22 countries this week.

All the new duties - ranging from 20% to 50% - kick in August 1st.

• Copper prices jumped nearly 2% after Trump confirmed a 50% tariff on the metal - this could make construction and electronics more expensive

• OPEC+ oil producers are considering pumping less oil starting in October, which could push gas prices higher

• China and the U.S. are still talking behind the scenes about trade, but tensions remain high
  

What to Watch Next

The High Bar for Chip Earnings: Following TSMC's strong report, the pressure is on for other semiconductor firms to deliver. The VanEck Semiconductor ETF ($SMH) is on its longest winning streak since 2019, meaning expectations are sky-high.

• Keep an eye on ASML and Applied Materials as they report next week; their 2025 spending forecasts will be the key metric.

• These stocks are priced for perfection. Any disappointing guidance could cool off the entire AI trade.

The August 1st Tariff Deadline: In just three weeks, new duties are set to hit 22 countries. The uncertainty surrounding retaliation and price impacts could inject significant volatility into the market.

• Watch for potential retaliatory tariffs from Brazil, which would likely target American agricultural and manufactured exports.

• Higher import costs on copper and rare earths could flow directly to consumer prices, impacting everything from cars to electronics.

The Growing Split in the Jobs Market: The latest labor data tells two different stories. While initial claims (new layoffs) remain low, continuing claims (ongoing unemployment) just hit their highest level since November 2021.

• This signals that while people aren't getting fired, it's taking them longer to find new work—a classic sign of a slowing economy.

• The July jobs report on August 1st will be crucial. The Fed is watching this divergence closely, and it will influence future rate decisions.

Thanks for reading 🙂

- John

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