Stocks Flat as Auctions, Tariffs Take Center Stage

Published as of: July 8, 2025, 9:02 a.m. ET

(Tuesday market open) Treasury auctions might rival trade news today and tomorrow, providing more feedback on demand for U.S. debt after the passage of last week's budget bill. Stocks flattened and yields climbed to two-week highs early today ahead of today's $58 billion 3-year note auction and as investors braced for new tariff developments after yesterday's sell-off.

"Over time, there hasn't been much of a relationship between the amount of U.S. debt outstanding and the level of Treasury yields, but that could change as the debt continues to grow," said Collin Martin, director, fixed income strategy at the Schwab Center for Financial Research. "We don't expect yields to necessarily rise much further, but those budget concerns may keep the 10-year Treasury yield in the 4.25% to 4.5% area." While the Treasury market sometimes gets less attention than stocks, rising yields are one element that could put a brake on Wall Street and today's auction—with results due at 1 p.m. ET—could help set the yield path.

In trading Monday, major indexes surrendered some of last week's gains as President Trump sent letters to 14 countries saying their products would be subject to 25% to 40% tariffs by August 1 if they don't reach deals by then. Products from Japan and South Korea would face 25% tariffs. No letters went to the European Union or India, raising hopes that deals could be near. The original date tariffs were supposed to be reinstated was tomorrow, so the delay may be positive for Wall Street. Beneath the surface, not much hedging has occurred recently and participants don't appear to expect big market moves in either direction. There has a "buy the dip" pattern, so consider monitoring for that today.

1. Next week's bank earnings could set tone for season: Big bank stocks have been on a roll since late June, helped by a favorable yield curve and by major banks passing the Fed's annual "stress tests." This allowed them to announce new share buybacks and raise dividends, in some cases. However, not all is well in earnings land. Analysts generally haven't raised expectations for overall S&P 500 earnings per share growth—and in some cases have lowered it—in recent weeks. The market has been making new highs even as earnings revisions in some cases fell, an interesting and perhaps nerve-wracking dichotomy. Still, the weak earnings expectations set a low bar for companies to hurdle as big U.S. banks start reporting Tuesday, meaning upside surprises might be easier to come by and lift market spirits. Beyond that, guidance for coming quarters could play an even bigger role, considering many withdrew or withheld guidance in their first quarter earnings outings due to tariff uncertainty. The uncertainty hasn't left, but the administration continues promising more trade deals and has a couple in its pocket.
    
2. Back-to-school, holiday shopping seasons could reflect tariffs: Looking relatively far ahead, strong first-quarter earnings and expected solid growth in second quarter U.S. gross domestic product (GDP) could raise concerns about shopping demand later this year. Back-to-school shopping traditionally begins soon, and holiday season follows, but data suggest many consumers got ahead of the game by making big purchases earlier in the year hoping to avoid possible tariff-related inflation. If that's the case, consumer demand could be less stellar later in 2025, hurting consumer discretionary stocks. There's an early preview ahead as Amazon (AMZN) holds its Prime Day sales event today through Friday. The event could bring in around $12.9 billion, a record, according to Barron's. And J.B. Hunt Transport (JBHT) earnings next week could provide more insight into shipping levels. The delay in tariffs to August 1 from July 9 might help companies get supplies they need for back-to-school and holiday seasons without facing higher costs.
    
3. Airline earnings on tarmac as tariffs remain headwind to foreign travel in U.S.: While goods demand may be under scrutiny, Americans aren't cutting back on travel. The 10-day moving average of Transportation Security Administration (TSA) checkpoint travel recently hovered near record levels. This could be a positive sign for airline stocks as investors prepare for Delta Air Lines (DAL) to share quarterly results this Thursday. While airline stocks bounced back nicely from their April lows, there's been little traction since then and they've generally trended lower. One headwind is falling tourist traffic from other countries to the U.S., which reflects international anger over U.S. trade and other policies. When Delta reported earnings in April, CEO Ed Bastian called President Trump's tariffs "the wrong approach" and the airline declined to reaffirm 2025 guidance, CNBC reported. In a late-May interview with U.K. newspaper The Times, Bastian said tariffs on EU products make no sense in the aviation sector but sounded hopeful that the worst of the trade impact is behind. He also predicted a solid summer travel season, but said anti-U.S. sentiment affecting travel "is a concern."

• Tesla (TSLA) rebounded 1% early Tuesday after investors helped send the stock down 7% yesterday on CEO Elon Musk's plans for a new political party and new tension between Musk and Trump. The budget bill approved by Congress last week arguably hurts Tesla and other EV companies on the tax credit front. Investors responded well recently when Musk left Washington to focus more on the company. Shares are down about 15% from early June.
   
• Core Scientific (CORZ) rose 0.5% in pre-market trading after tumbling 17% yesterday on news it would be purchased by CoreWeave (CRWV), shares of which slid almost 4% Monday. The $9 billion deal wasn't unexpected, with news appearing in media reports over the last two weeks. However, investors didn't appear enthused by the deal being done in an all-stock fashion.
   
• Nvidia (NVDA) climbed 0.8% in early trading after slumping yesterday. A Citi research analyst raised his price target to $190 on Monday from $180, saying the total market for data-center AI chips could be $563 billion by 2028, MarketWatch reported. Magnificent Seven stocks were generally higher in early trading, which could support major indexes.
   
• Circle Internet Group (CRCL) fell 3% in early trading as Mizuho initiated coverage with an Underperform rating and an $85 price target. The firm says it sees 25% to 30% potential downside to the consensus estimate for fiscal 2027 revenue.
   
• Bank of America (BAC) fell 2.8% in pre-market trading, hurt by HSBC downgrading shares to Hold from Buy.
   
• Solar power firms including Sunrun (RUN), Enphase Energy (ENPH), and First Solar (FSLR) fell 3% to 8% in pre-market trading following more anti-green energy subsidy remarks out of the White House. High interest rates are another pressure point for these companies.
   
• The 10-year Treasury note yield climbed two basis points to 4.41% in early action Tuesday, the highest level since June 20. Trade-related inflation concerns and last week's solid jobs report both could be playing into higher rates, with chances of a Fed rate cut receding.
   
• Odds of a July rate cut were less than 5% early Tuesday, according to the CME FedWatch Tool. The likelihood of at least one rate cut by September was 66%.
   
• Despite yesterday's weakness that may have reflected some "sell the news" sentiment after the U.S. budget passed late last week, market breadth starts Tuesday at high levels that can point to widespread positive sentiment. About 73% of S&P 500 stocks traded above their 50-day moving averages as of late Monday, and leading sectors on that metric included a variety beyond those dominated by the Magnificent Seven. Info tech is indeed among the leaders in breadth, but so are materials, industrials, and even consumer discretionary despite the Tesla impact.

The S&P 500 index (SPX—candlesticks) didn't test support at its 20-day moving average (red line) yesterday and remains well above its 200-day (blue line). Though stocks did sell off, it could have reflected technical factors, including the relative strength index (RSI—bottom chart) rising above 75 last week. The RSI fell to 68 on Monday, still high but below what are traditionally seen as overbought conditions of 70 or higher. It's rarely reached 80 in recent years. "The SPX does not tend spend a lot of time above 75 before encountering some type of consolidation move lower," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. "An overbought RSI reading doesn't mean that a pullback is imminent, but it does suggest that some mean reversion could be approaching."

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

July 9: FOMC minutes.
July 10: Expected earnings from Conagra (CAG), Delta (DAL), and Levi Strauss (LEVI).
July 11: No major earnings or data expected.
July 14: Expected earnings from Fastenal (FAST) and FB Financial (FBK). 
July 15: July Consumer Price Index and expected earnings from JPMorgan Chase (JPM), Citigroup (C), BlackRock (BLK), Wells Fargo (WFC), Albertsons (ACI), and J.B. Hunt Transport Services (JBHT).