Faced with uncertainty, investors are betting on corporate America

Economic

Summary:

Despite uncertainty over tariffs and inflation, investors are betting on the strength of U.S. corporate earnings. Expectations have been lowered, but optimism remains high, driven by tech and a weaker dollar.

We are now just a few days away from the start of the corporate earnings season. This week, we have put together an overview of the issues at stake in the first reports.This is a key moment when investors will be able to try to tune out the noise surrounding tariffs and Donald Trump's announcements and focus on the fundamentals: earnings per share.

As we enter this pivotal period, the first thing to note is that expectations have been revised downwards. According to Factset, which tracks earnings forecasts on a weekly basis, EPS forecasts have been lowered by 4.3% since the start of the quarter. To provide a comparison basis, over the past five years, the average downward revision of expectations for a quarter has been 3%.

Looking up

Uncertainties, particularly related to tariffs, have therefore led analysts to be more cautious about the second quarter.

Paradoxically, however, this is a factor that makes strategists fairly confident. The reasoning is as follows, as summarized by Max Kettner of HSBC: "Overall expectations have been too low in our view," creating "a very low bar to clear." This is especially true given that US companies are particularly adept at pushing analysts to revise their forecasts downward... so they can deliver a positive surprise on the day the results are released.

The logical conclusion of this reasoning is higher target prices for the S&P 500. In the last few days alone, Bank of America has updated its year-end target from 5,600 to 6,300. Meanwhile, Goldman Sachs has raised it from 6,100 to 6,600.

The general mood is therefore fairly optimistic, even though US indices are already at record highs after a strong rebound in recent weeks, led, as always by tech stocks. Yesterday, the Nasdaq set a new record, not far from 23,000 points, while Nvidia reached the $4 trillion market capitalization mark.

All this comes as Donald Trump has reignited the tariff saga, extending the July 9 deadline until August 1 and broadening the threat with new sectoral tariffs (copper, semiconductors, pharmaceuticals).

The coming weeks will tell us whether the US president will follow through or back down again. At this stage, the market seems to be betting on the latter, given the movements of the last few days.

It is impossible to predict what Donald Trump will do on August 1, but one thing is clear: uncertainty remains, and this will push the Fed to wait and see. A rate cut in July is now definitely out of the question: September also seems rather optimistic as things stand.

The exceptionalism of corporate America

While uncertainty about the US economy remains high, investors have far fewer doubts about the large companies listed on the S&P 500. They continue to bet on the exceptionalism of corporate America, rather than on American exceptionalism.

After all, the S&P 500 is not the US economy, and the index is mainly driven by a few large tech stocks, whose growth trends show no signs of slowing down. A quote from Bank of America sums up the investor mindset perfectly: "The US is not exceptional, but corporate America may be."

Beyond technology, S&P 500 companies have shown in recent years that they can weather shocks, reorganize, and pass price increases on to consumers to preserve their margins.

This pricing power will be put to the test again in the coming months. Now that everyone understands that there will be significant tariffs, the question is who will bear the cost. According to Goldman Sachs' estimates, less than 20% of the cost of tariffs will be absorbed into margins.

Faced with uncertainty, investors are betting on corporate America_1

Finally, another factor that should benefit US companies in the coming quarters is the exchange rate. The dollar has depreciated significantly since the beginning of the year, which is helping US companies' overseas earnings. 40% of S&P 500 companies' revenue is generated internationally.

Since Covid, we have been living in an environment of successive shocks and high uncertainty. And every time investors have doubted, every time the likelihood of recession has risen, it has been the earnings season that has reassured the market. To quote a phrase often used by investors: "Never underestimate corporate America."

Source: marketscreener

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Adam

Economic

US dollar volatility may have settled down in recent weeks, but analysts at Goldman Sachs Group Inc. see plenty of reasons to think it may start trading like a “riskier” currency again.

Analysts Karen Reichgott Fishman and Lexi Kanter list elevated policy uncertainty related to trade tariffs and Federal Reserve independence, fiscal fears and diversification away from US assets as potential triggers.

A steep slide in the dollar this year triggered by President Donald Trump’s threats to impose harsh levies against global trading partners has fueled speculation about a permanent shift in the dollar’s status as a safe-haven asset. While the Goldman analysts don’t predict that will happen, things could still be pretty bumpy in the short term.

“Shifting correlations have left dollar strength in periods of risk-off a less reliable outcome,” the analysts wrote in a note published July 9.

By some measures, the dollar has continued to trade like a risky currency even as it has stabilized in recent weeks. Data compiled by Bloomberg show that the correlation between the greenback and a widely watched G-10 volatility gauge is near its lowest in seven years.

That signals that the dollar is behaving less like a haven and more like a source of volatility. For much of the past 15 years, the correlation was firmly positive. It also puts the long-standing market belief that hedging costs fall when the dollar weakens into in question.

What Bloomberg strategists say...

“The outlook for the dollar is negative over the long term for multiple reasons: less global trade, de-dollarization, re-setting of hedging ratios. Yet it has undeniably sold off a lot already, and markets rarely take the direct path to where they are ultimately going. A bounce is probably in order.”

One of the most “striking” developments of 2025 has been the dollar’s increased tendency to sell off alongside US equities, the Goldman Sachs analysts said. The dynamic has occurred more than twice as often so far this year as over the prior 10 years, they said.

The “more concerning sign of reduced US asset appeal” — when equities, Treasuries and the dollar all fall together — has also been more common, according to the note.

Source: Bloomberg

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Adam

Cryptocurrency

Bitcoin (BTCUSD) powered past $112,000 to another record high yesterday, its first since late May, before consolidating in early trade on Thursday.

In recent months, the cryptocurrency has received a boost from more companies adding it to their corporate treasuries and lawmakers working towards passing pro-crypto legislation.

Bitcoin trades nearly 50% above its early April low and has gained 19% on the year, roughly matching the returns of Magnificent Seven members, Nvidia (NVDA) and Microsoft (MSFT) over the same period.

Below, we take a closer look at the technicals in bitcoin’s chart and identify major price levels worth watching out for.

Descending Channel Breakout

Bitcoin’s price nudged above the top trendline of a descending channel on Wednesday, paving the way for a continuation move higher. Moreover, the relative strength index (RSI) confirms bullish momentum and remains below overbought levels, providing ample room for the digital asset to move into price discovery mode.

However, it’s worth pointing out that trading volume continues to dwindle on Coinbase (COIN), the largest U.S.-based crypto exchange, suggesting that larger market participants, such as institutional investors, may be accumulating the asset through spot bitcoin exchange-traded funds (ETFs) rather than exchanges.

Let’s use technical analysis to project a potential upside target on bitcoin’s chart and also locate several major price levels where the cryptocurrency could find support.

Chart-Based Upside Target

Investors can project an upside target in bitcoin by using the measuring principle, a technique that analyzes price swings on the chart to forecast future price levels.

When applying the analysis, we calculate the distance of the cryptocurrency’s uptrend that preceded the descending channel and add that amount to Wednesday’s breakout point. This projects a target of $146,400 ($37,600 + $108,800), implying 32% upside from bitcoin’s current trading levels.

Major Support Levels to Watch

During retracements, investors should initially watch the $107,000 level. This point, currently situated just below the descending channel’s upper trendline, could provide support near the 50-day moving average and prominent December and January peaks.

Finally, the bulls’ failure to successfully defend this major level opens the door for a retest or lower support around $100,000. Investors could look for entry points in this region near the descending channel’s lower trendline, which also closely corresponds with a range of trading activity on the chart stretching back to last November.

Source: finance.yahoo

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Devin

Commodity

Economic

Gold prices continue to tread water around $3,300 an ounce, buoyed by broader investor optimism and a one-month delay in U.S. import tariffs. Although shifting investor sentiment could continue to weigh on gold, one research firm expects prices to remain well supported through the rest of the year.

In their latest note, commodity analysts at Metals Focus said they see limited downside for gold in the second half of the year as ongoing economic uncertainty is expected to support investment demand.

“Although the global economy appears to have avoided a full-scale trade war, U.S. tariffs are expected to remain historically high for some time. Perhaps more significantly, while the U.S. economy has remained resilient thus far, the inflationary impact of tariffs may take several months to fully resonate with consumers. The risk of stagnation is therefore likely to persist,” the analysts said in the report.

Spot gold last traded at $3,315.76 an ounce, roughly unchanged on the day.

The British precious metals research firm added that concerns about unsustainable global debt are another factor likely to support gold’s long-term uptrend. Specifically, investors are keeping a close eye on U.S. government debt, which has now surpassed $37 trillion.

At the same time, new budget legislation is expected to increase the deficit by nearly $4 trillion over the next 10 years. Fears over the size of the U.S. government’s debt have kept long-term bond yields elevated and pushed the U.S. dollar to multi-year lows.

“President Trump’s tax-and-spending bill is projected to widen the deficit, keeping bond supply concerns in focus. Investor confidence in the independence of the U.S. central bank will also remain a key issue. While the dollar’s role as the primary reserve currency is not under immediate threat, longer-term concerns about its stability continue to support gold,” they said.

Some analysts have noted that gold could struggle in the second half of the year as bullish positioning has become overcrowded. However, Metals Focus noted that positioning in July has eased.

“At the start of July, net managed money long positions in CME futures returned to levels last seen in April, though they remain well below the highs recorded earlier in the year,” the analysts said. “Similarly, after modest outflows in May, gold exchange-traded products (ETPs) saw renewed inflows in June, with global holdings by the end of June rising to their highest level since August 2022. Measured in U.S. dollar terms, gold ETPs reached a new all-time high end-month value of $383 billion.”

Source: Kitco

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Stocks

Stocks Hold Ground as AI Strength Counters Trump Tariff Tensions

Daily E-mini Nasdaq 100 Index Futures

Stocks were little changed early Thursday. Traders gauged the market’s resilience after Trump’s 50% tariffs. Strong AI momentum continued to buoy sentiment.

S&P 500 futures dipped 0.1%. Nasdaq-100 futures hovered near flat. Dow futures fell 75 points.

On Wednesday, the Nasdaq closed at a record high. Nvidia’s gains and bullish AI sentiment helped traders look past tariff concerns.

Can Ongoing AI Optimism Offset Tariff Pressures?

Daily NVIDIA Corporation

NVIDIA briefly hit a $4 trillion valuation after rising nearly 2%. This fed optimism that AI-driven productivity and capex could cushion the impact of higher prices from tariffs.

Jeremy Siegel told CNBC that AI could counter tariff-induced price pressures. This reinforced the bullish tone.

Advanced Micro Devices rose 2% in premarket trading after an HSBC upgrade. The upgrade cited strong pricing for AMD’s new AI chips as a revenue upside catalyst.

The Nasdaq gained 0.9% Wednesday. Traders see AI as a core pillar for bulls holding the market’s recent highs.

Will Federal Reserve Rate Cuts Face Delays from Tariff-Driven Inflation?

The Federal Reserve’s June minutes showed policymakers split on the timing of rate cuts. Tariff-related price pressures loom, adding complexity to the Fed’s path.

Bank of America expects firmer inflation in the coming months. Tariffs and higher equity prices driving up portfolio management fees may push inflation higher.

Initial jobless claims fell unexpectedly to 227,000. This signals a resilient labor market.

However, continuing claims climbed to 1.96 million, the highest since late 2021. Traders remain alert for signs of labor market cracks that could guide Fed policy.

How Are Sectors and Key Stocks Reacting to Trade Headlines?

Brazilian stocks retreated after Trump’s 50% tariffs on Brazilian imports. The iShares MSCI Brazil ETF fell 2%. Petrobras also traded lower.

Nasdaq 100 and S&P500: AI Surge Keeps US Stocks Steady as Traders Eye Fed and Tariffs_3

Daily MP Materials Corp.

MP Materials surged 41% after the Pentagon said it would become its largest shareholder. The move will expand U.S. rare earth processing capacity.

Delta Air Lines jumped 11% after reinstating its profit outlook and posting Q2 beats. WK Kellogg soared 30% on a $3.1 billion buyout from Ferrero.

Helen of Troy tumbled 16% after issuing weak guidance, showing the divergence in stock reactions during earnings season.

What Should Traders Watch Next?

The market’s next test comes as second-quarter earnings season ramps up next week. Traders will see if AI momentum and consumer resilience can offset tariff concerns.

Investors will also track inflation data and Fed commentary to gauge rate cut timing.

If tariff impacts remain limited, the bull market could extend. But deeper supply chain pressures could add volatility to Q3 positioning.

Source: fxempire

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Adam

Forex

Forex markets have been taking what resembles a summer break, with two consecutive days of muted movements – Most major pairs are contained within a 300 pip range, but with the USD attempting a rally, let's see if this may add fuel to create some volatility.

The Weekly Jobless Claims report just came with a beat – 227K vs 235K expected and shows another sign of strength for US Employment. Claims had started to elevate in the middle of June but seems like it only was temporary as we just received another positive report.The latest tariffs news were the announcement of 50% tariffs on Copper imports (questionable idea by the way, trying to relaunch US Industrial production and giving them higher import costs isn't the most viable thing, but markets are getting used to bad ideas from the Trump Administration), and also 50% tariffs on anything that comes from Brazil.Let's take a look at the US Dollar as markets start to prepare for next week's US CPI Report.

Dollar Index 4H and 1H Analysis

DXY 4H Chart

The US Dollar is currently breaking out from its 2025 Main descending channel after forming a bullish divergence with the last lows.There had been a theme of imbalanced short positioning against the Greenback, which had started to be less interesting after the continuous drop down in the index throughout the first half – Particularly as US Data keeps surprising higher, postponing FED Cuts (and creating debate as to when they will actually be able to cut).The breakout can be quite important for markets as flows markets may see some new trends in the second half that is just beginning.There had been an upside breakout in June therefore markets may need a convincing breakout to estimate that the downtrend is completely unvalidated.

DXY 1H Chart

Looking closer at the Dollar Index breakout, Greenback buyers are using a bullish trendline from the lows to retest weekly highs (97.84).Short-term momentum is strong, just having breached the 1H MA 50, however, any movement will have to break out either on the upside or the downside as the past few days of up and down movement may lead to a simple consolidation in a 45 pip range (97.25 to 97.70).

Source:marketpulse

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Olivia Brooks

Economic

The number of individuals filing for unemployment insurance for the first time, also known as initial jobless claims, has shown a decrease, according to the latest data. The actual figure stands at 227K, a significant drop compared to the forecasted number of 236K.

The lower than expected reading is seen as a positive indicator for the U.S. dollar. Economists and market watchers often view the initial jobless claims data as one of the earliest indicators of the country’s economic health. A lower number suggests fewer layoffs and potentially a more robust job market.

The actual number of 227K is not only lower than the forecasted figure but also represents a decrease from the previous figure of 232K. This decline further emphasizes the improving conditions of the U.S. labor market.

The jobless claims data can fluctuate from week to week, but the latest figures show a promising trend. The decrease in initial jobless claims suggests that fewer people are being laid off, which may indicate a strengthening job market and overall economy.

The drop in initial jobless claims is likely to be seen as a bullish sign for the USD. Economists often interpret a lower than expected jobless claims figure as a positive sign for the U.S. dollar, as it suggests a stronger economy and potentially higher interest rates.

In conclusion, the latest initial jobless claims data is a positive sign for the U.S. economy, with the actual number of claims falling below both the forecasted and previous figures. This data suggests a strengthening labor market, which could bode well for the overall health of the U.S. economy and the strength of the U.S. dollar.