[New York Stocks] Markets Rise as Trump Hints at Trade Talks... June CPI and Earnings in Focus

Trump: "The Letter Is the Agreement... But Dialogue Remains Open"
UBS Forecasts Effective Tariff Rate at 15%... "S&P to Rise"
June CPI Data and Q2 Earnings Also Shape Market Trends

All three major indices on the New York Stock Exchange closed higher on July 14 (local time). The market assessed that the likelihood of high tariffs being imposed was low after U.S. President Donald Trump left the door open for future negotiations regarding the tariff letters he sent to 25 countries last week. Investors are closely watching both the tariff developments and this week's upcoming inflation data and corporate earnings reports.

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On this day at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average rose by 88.14 points (0.2%) to close at 44,459.65. The large-cap S&P 500 index gained 8.81 points (0.14%) to finish at 6,268.56, while the tech-heavy Nasdaq index climbed 54.8 points (0.27%) to end at 20,640.33.

Investors' attention turned to President Trump's remarks on tariffs. At the White House, during a meeting with NATO Secretary General Mark Rutte, Trump told reporters regarding trade negotiations with the European Union (EU), "The letter is the agreement. The agreement has been made, and there is nothing more to negotiate," but also added, "We are always open to dialogue." Previously, President Trump sent letters specifying country-by-country tariff rates to 25 countries, starting with South Korea and Japan on July 7. For the EU and Mexico, he notified them of base tariff rates of 30% and 35%, respectively, in letters sent on July 12. However, the effective date for the tariffs was postponed from July 9 to August 1, effectively extending the negotiation deadline for each country. As optimism grows that the U.S. will reach trade agreements with major trading partners, the market is shaking off tariff threats.

On Wall Street, there are forecasts that the effective tariff rate will be set in the mid-10% range and that the stock market will continue to rise.

Mark Haefele, Chief Investment Officer (CIO) at UBS Global Wealth Management, stated, "We view the recent moves from the White House as a negotiation strategy, and our base scenario remains that the effective U.S. tariff rate will be set at around 15%. We expect the S&P 500 index to rise further over the next 12 months."

The market is also focusing on the series of inflation and consumption indicators to be released this week. The June Consumer Price Index (CPI), which will be announced by the U.S. Department of Labor on July 15, is regarded as a key indicator for gauging the impact of tariff policies. According to market forecasts compiled by Bloomberg, last month's core CPI is expected to have risen by 2.9% year-on-year. This marks an acceleration compared to May's 2.8%. On a monthly basis, the increase is expected to jump from 0.1% in May to 0.3% in June, representing the largest rise in five months since January (0.4%). Given that Federal Reserve Chair Jerome Powell and other monetary policymakers have consistently warned of the possibility of higher inflation during the summer, this CPI release is drawing particular attention.

One day later, on July 16, the Producer Price Index (PPI), which tracks wholesale prices, will be released. The June PPI is expected to have risen by 0.3% from the previous month, showing a clearer upward trend compared to May's 0.1%. On July 17, June retail sales data will be published. Retail sales, which account for about two-thirds of the U.S. economy, are projected to have increased by 0.2% from the previous month, suggesting a rebound after a 0.9% decline in May.

The earnings season, kicking off this week with financial companies, is also expected to provide key clues regarding the impact of tariffs. According to market research firm FactSet, second-quarter net profits for S&P 500 companies are projected to increase by 4.6% year-on-year. This growth rate is lower than the five-year average of 9.1% and the ten-year average of 6.9%.

Glenn Smith, Chief Investment Officer (CIO) at GDS Asset Management, commented, "The biggest question for the market over the next few weeks is whether the solid corporate earnings expected can outweigh the ongoing tariff issues in the background. So far, the market has weathered the tariff news and is now focusing more on corporate earnings and economic resilience."

Additionally, the Federal Reserve's Beige Book, a report on economic conditions, will be released on July 16. Speeches by Fed officials, including Susan Collins, President of the Federal Reserve Bank of Boston, Lisa Cook, Fed Governor, and Christopher Waller, Fed Governor, are also scheduled throughout the week.

U.S. Treasury yields remained steady. The yield on the benchmark 10-year U.S. Treasury note stood at 4.43%, while the yield on the two-year note, which is sensitive to monetary policy, was at 3.9%, both unchanged from the previous session.

By stock, Kenvue, which produces Tylenol and Neutrogena, rose 2.25% on news of its CEO's resignation. Electric vehicle maker Rivian fell 2.15% after Guggenheim downgraded its investment rating from "buy" to "neutral" due to concerns over prolonged weak vehicle sales. Electric vehicle maker Tesla gained 1.1%. Nvidia declined 0.52% ahead of CEO Jensen Huang's visit to China on July 16.