July 29th Market Overview

Happy Tuesday

Markets opened at fresh records but couldn't hold it as China talks wrapped up in Stockholm with no deal. Classic pause day as traders position ahead of tomorrow's Fed decision and digest this monster earnings week.

Let's dig in...

Summary

Trade Talks End Without Deal
Stockholm negotiations concluded with no tariff extension agreement. Treasury Secretary Bessent and Trade Representative Greer brief Trump tomorrow for the final call. Without a deal, tariff rates jump to 80-85% on Chinese goods after the August 12 deadline.

Mega M&A Deals Reshape Industries
Union Pacific is acquiring Norfolk Southern for $85 billion, creating America’s first transcontinental railroad. The $320 per share deal targets $2.75 billion in synergies.

Earnings Divide Widens
Strong results from fintech leaders like SoFi contrast sharply with disappointing guidance cuts from UnitedHealth. The split reveals which sectors can navigate current economic headwinds and which cannot.

Fed Decision Wednesday
Rates stay put, but Powell’s press conference matters more. Investors want clarity on September rate cuts and the Fed’s read on economic momentum heading into fall.

Market Overview

Fun Chart of the Week

Stock Spotlight

SoFi $SOFI ( ▼ 5.98% ) delivered strong results that justify fintech optimism. EPS of $0.08 beat the $0.06 estimate while revenue hit $858.2 million versus $804 million expected. The company raised full-year guidance across all metrics and grew members 34% year-over-year.

Novo Nordisk $NVO ( ▲ 2.38% ) fell sharply after cutting full-year sales growth outlook to 8-14% from 13-21%. The Danish pharma company blamed weaker U.S. Wegovy sales on competition from compounded weight-loss drugs. The GLP-1 market faces new competitive pressure.

Union Pacific $UNP announced the acquisition of Norfolk Southern $NSC, creating America’s first transcontinental railroad network. The $320 per share offer represents a 25% premium and 2025’s largest M&A deal.

Big Name Updates

NVIDIA $NVDA ( ▼ 2.33% ) placed fresh orders for 300,000 H20 chips with Taiwan Semiconductor $TSM ( ▼ 2.65% ) , reversing plans to rely on existing inventory. This shows continued strong AI infrastructure demand despite export restrictions.

Microsoft $MSFT ( ▼ 1.76% ) is renegotiating its OpenAI partnership to secure long-term technology access. The revised deal would maintain Microsoft’s rights even if OpenAI achieves artificial general intelligence.

Apple $AAPL ( ▼ 2.5% ) will close its Dalian City store on August 9, marking the company’s first retail closure in China. The move reflects ongoing trade tensions and competitive pressures in the key market.

Other Notable Company News

Whirlpool $WHR ( ▼ 0.45% ) cut full-year EPS guidance to $6-8 from $10 and halved its quarterly dividend. The appliance maker faces pressure from Asian manufacturers flooding U.S. markets with stockpiled inventory.

PayPal $PYPL ( ▼ 2.4% ) beat estimates on all key metrics including Venmo payment volume. However, third-quarter EPS guidance came in light of expectations. The company raised full-year transaction margin forecasts.

UnitedHealth $UNH ( ▼ 4.72% ) missed EPS estimates and slashed full-year guidance to “at least $16” from $20.40 consensus. Medical cost pressures continue weighing on the healthcare giant’s margins.

Sector Watch

Bond Market

Treasury yields fell as investors sought safety ahead of the Fed decision. The 10-year yield dropped to 4.328% while demand increased across the curve.

Japan's 2-year bond auction drew the strongest demand since October 2008, with bid-to-cover hitting 4.47 versus 3.90 previously. Global bond markets reflect central bank policy uncertainty and flight-to-quality flows.

Policy Watch

Trade negotiations remain fluid with significant implications. During Stockholm talks, U.S. officials warned China against continued purchases of sanctioned Iranian and Russian oil, threatening higher tariffs as leverage.

• Treasury Secretary Bessent said the U.S. will monitor the EU's commitment to invest $600 billion as part of last weekend's trade deal

• The agreed 15% tariff rate "could change" if the EU doesn't meet investment commitments
  

What to Watch

Fed Decision Wednesday
Powell’s press conference will be dissected for dovish or hawkish signals about September rate cuts. Focus on language around labor market conditions and inflation progress. Any shift in the dot plot could drive significant moves.

Trump’s Tariff Decision
The August 1 deadline approaches for extending Chinese tariff relief. Trump’s response to tomorrow’s briefing determines whether Chinese goods face 80%+ total rates. Watch for three-month extension announcements.

Magnificent Seven Earnings
Meta $META, Microsoft $MSFT, Apple $AAPL, and Amazon $AMZN report Wednesday and Thursday. Results will reveal AI spending returns, cloud growth rates, and consumer demand strength across premium segments.

July Jobs Report Friday
Economists expect 100,000 jobs added versus 147,000 in June, with unemployment rising to 4.2% from 4.1%. Labor market softening could influence Fed policy discussions for September.


Thanks for reading 🙂

- John

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