[New York Stock Market] Closes Mixed Near Flatline... Limited Market Response Despite US-EU Trade Deal

Dow Down 0.14%... S&P and Nasdaq Rise
US-EU Reach Trade Agreement; Tariff Suspension Extension Discussed with China
Focus on July 30 FOMC Meeting... Key Economic Indicators to Be Released

The three major indices of the New York Stock Exchange closed mixed and mostly flat on July 28 (local time). Despite news of a trade agreement between the United States and the European Union (EU) the previous day, the market showed only a limited reaction. As concerns over a trade war eased, the value of the dollar continued to rise.

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On this day, the Dow Jones Industrial Average, which focuses on blue-chip stocks, closed at 44,837.56, down 64.36 points (0.14%) from the previous trading day. The S&P 500, which is centered on large-cap stocks, rose 1.13 points (0.02%) to close at 6,389.77, while the tech-heavy Nasdaq gained 70.27 points (0.33%) to close at 21,178.58, setting a new all-time high.

US President Donald Trump met with European Commission President Ursula von der Leyen in Turnberry, Scotland, the previous day and agreed to lower tariffs on EU imports from the existing 30% to 15%. With an agreement reached with the EU following the one with Japan, concerns over a tariff war have somewhat subsided. During a press briefing held in conjunction with his summit with UK Prime Minister Keir Starmer, President Trump stated that tariffs imposed on countries without a trade agreement would likely be "in the range of 15% to 20%," and said, "It will probably be either 15% or 20%."

On the same day, the United States and China began their third high-level trade talks in Stockholm, Sweden. The first day of the two-day talks lasted about five hours. The US delegation included Treasury Secretary Scott Besant and US Trade Representative (USTR) Jamison Greer, while the Chinese side was represented by Vice Premier He Lifeng. The key agenda was the extension of the tariff suspension set to expire on August 11. According to Reuters, both sides aimed to extend the suspension by three months. Previously, in the first Geneva meeting, the two countries agreed to mutually reduce ultra-high tariffs by 115 percentage points, resulting in the US applying a 30% tariff rate and China applying a 10% rate.

Daniel Skelly, Managing Director at Morgan Stanley Wealth Management, analyzed, "With the market reaching all-time highs and volatility dropping to its lowest level since February, investors are facing two challenges: complacency and the urge to chase the market," and added, "Despite recent positive developments in trade, the overall impact of tariffs remains uncertain."

This week, investors are focused on whether the US will reach additional trade agreements, as well as the Federal Reserve's interest rate decision and the release of various economic indicators.

The Fed will hold a regular Federal Open Market Committee (FOMC) meeting on July 30 to decide the benchmark interest rate, which is currently at 4.25-4.5% per year. While a rate freeze is widely expected, the key issue is whether Fed Chair Jerome Powell will take a hawkish (favoring monetary tightening) tone or signal the possibility of a rate cut in September with a dovish (favoring monetary easing) stance.

A series of major US economic indicators will also be released around the FOMC meeting. On July 30, the US Department of Commerce will announce the preliminary estimate for second-quarter gross domestic product (GDP). The market expects the US economy to have grown at an annualized rate of 2.4% quarter-on-quarter, rebounding from a -0.5% contraction in the first quarter. On July 31, the Fed's most closely watched inflation indicator, the June Personal Consumption Expenditures (PCE) price index, will be released. The core PCE price index is expected to rise by 0.3% month-on-month, a larger increase than May's 0.2%. On August 1, the US Department of Labor will release the July employment report. Nonfarm payrolls are projected to increase by 108,000, slowing from June's 147,000, while the unemployment rate is expected to edge up from 4.1% to 4.2%.

In addition, earnings announcements from big tech companies will continue. Following Alphabet, Google's parent company, and Tesla last week, Microsoft (MS) and Meta, Facebook's parent company, will report earnings on July 30, followed by Apple and Amazon on July 31. Whether investments in artificial intelligence (AI) are translating into actual profits is a key point of interest.

The value of the dollar is rising, supported by easing trade tensions. The dollar index, which measures the value of the US dollar against the currencies of six major countries, is trading at 98.4, up 1.03% from the previous session.

Government bond yields are increasing. The yield on the 10-year US Treasury, the global benchmark for bond yields, is up 2 basis points (1bp = 0.01 percentage points) from the previous session to 4.41%. The yield on the 2-year Treasury, which is sensitive to monetary policy, is up 1bp to 3.92%.

By stock, Nvidia rose 1.87%. Tesla increased by 3.02%, and Meta, Facebook's parent company, was up 0.69%. MS and Alphabet, Google's parent company, declined by 0.24% and 0.34%, respectively.