As the second half of 2025 commenced, United States’ equity futures indicated a downward trend early Tuesday. The recently ended quarter witnessed the S&P 500 setting yet another record, painting an extraordinary picture. The Dow Jones Industrial Average futures experienced a downward shift of 60 points, a slight decrease by 0.1%. Meanwhile, the S&P 500 futures along with the Nasdaq-100 futures registered a decrease of 0.3%.
On the preceding day, the broad market S&P 500 escalated by 0.5%, achieving another record-peak close. The tech-focused Nasdaq Composite also touched new peaks, gaining 0.5%. The blue-chip Dow made an upward leap of 275.50 points, constituting an increase of 0.6%. Meanwhile, the markets had moved in response to Canada reversing its digital services tax, which was aimed at enhancing trade discussions with the U.S.
Ottawa’s decision to revoke this new levy came in the wake of U.S. President Donald Trump’s Friday declaration. The President expressed a stern stand against all trade discussions with Canada. This was considered a significant underpinning for traders, who were keen on accommodative deals between the U.S. and its associated trade counterparts. Simultaneously, these traders were eyeing the ending of Trump’s 90-day tariffs relief period, set to culminate the following week.
In the wake of significant setbacks due to steep falls back in April as a result of Trump’s sweeping tariff policy, stocks have remarkably rebounded. The S&P 500 was pushed to the brink of bear market territory. Nevertheless, a stark pivot occurred, and the primary averages witnessed a sharp recoupment. The broad market index concluded the second quarter with a spectacular gain of 10.6%, while the Nasdaq rose roughly 18% during this period.
The Money Report suggested a ‘broader recovery’. Analysts predict a Federal Reserve rate cut in either the latter part of the current year or the next, and they’re anticipating a rolling recovery due to substantial pent-up demand. The demand is especially noteworthy in sectors sensitive to interest rate changes, with key examples being manufacturing and housing.
Market participants are eagerly awaiting the S&P Global Purchasing Managers’ Index, slated for release at 9:45 a.m. ET. This index will shed light on manufacturing sector activities. Additionally, the ISM manufacturing report at 10 a.m. will also contribute valuable insights. The Job Openings and Labor Turnover Survey (JOLTS) set to be released Tuesday morning will also provide crucial figures for analysis.
As trading commenced in Europe, stocks demonstrated a hesitant inclination towards growth. The pan-European Stoxx 600 traded at a marginal 0.1% increase, but the index’s fluctuation between the gain and flatline was evident through the session. Although several sectors displayed a green, utilities stocks led the industry gains with an increase around 1%. Out of the major exchanges, only the FTSE 100, exhibiting an upswing by 0.2%, traded positively.
Simultaneously, the scenario in the Asia-Pacific market was a mix of the figures as investors tried to comprehend the record Wall Street gains and the global influence of Trump’s impending tariff decisions. With the expiration of the 90-day tariff relief the following week, the anxiety prevailed in the market. Japan’s prime index, the Nikkei 225, dropped 1.24% to close the day at 39,986.33 after an over f11-month high in earlier sessions. This downward trend also impacted the broader Topix index which fell by 0.73% to settle at 2,832.07.
Contrastingly, South Korea witnessed the Kospi index rise by 0.58% to close at 3,089.65, while the small-cap Kosdaq too registered a gain of 0.28% arriving at 783.67. In Australia, the S&P/ASX 200 wrapped up the day flat at 8,451.10. India’s benchmark Nifty 50 and BSE Sensex were seen to remain flat near the midday mark (1 p.m. IST). Meanwhile, Hong Kong’s markets took a day off due to a public holiday.
Goldman Sachs made an interesting shift in its Federal Reserve rate-cut projection from December to September. ‘Tariff effects appear to be a tad smaller than initially anticipated, other disinflationary forces stronger. We suspect that the Fed leadership shares our viewpoint that tariffs will only elicit a one-time price level effect.’, stated an analyst. Despite the labor market appearing robust, job hunt has become increasingly challenging.
Issues like residual seasonality and immigration policy changes loom as potential risks that could negatively impact payrolls in the near term. Goldman Sachs anticipates three 25 basis point cuts in the months of September, October and December, followed by two more cuts in 2026. Consequently, their terminal rate forecast takes a reverse leap from the previous projection of 3.5%-3.75% to the revised estimate of 3%-3.25%. The existing target range for the federal funds rate is 4.25%-4.5%.
In an after-hour tête-à-tête, discussing what plans the companies have in store, AeroVironment raised eyebrows with a drop in shares by over 6%. This downturn was caused after the drone manufacturer announced plans of issuing $750 million of its common stock along with $600 million in convertible senior notes due 2030 in order to repay its debt.
The business application software maker, Progress Software, too saw a dip in shares by 3% following announcement of its Q2 sales. The reported figures of $237.4 million fell short of the expected $237.5 million. On the positive side, the adjusted earnings of $1.40 per share topped the anticipated $1.30 per share.
On Monday evening, as the trading commenced, U.S. equity futures insinuated a slight drop. The triggering event was the Dow Jones Industrial Average which slipped off 59 points, marking a decrease of 0.1%. Similar downtrends were reported by S&P 500 and Nasdaq 100 futures, both dropping 0.1%.
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