After a quiet holiday week, US stock markets are heading into potentially choppier waters, with the clock ticking down to a critical trade deadline and investors warily eyeing a light but meaningful economic calendar.
The biggest story? Tariffs, again.
On Wednesday, a 90-day pause on reciprocal tariffs expires, and President Donald Trump has made it clear: no extensions. Instead, he’s expected to begin sending out letters detailing new tariff rates for trading partners—an announcement he’s teased for 12pm ET on Monday via his Truth Social account.
Markets have taken it in stride—so far. But Kathleen Brooks, research director at XTB, warns that the calm may not last. “The market remains sanguine about the prospect of tariffs,” she said. “But that raises the risk of a deeper selloff. This is a crucial week for the dozens of countries trying to reach trade agreements with the US.”
In other words, headline risk is back on the table. And this time around, it may be more targeted. Analysts expect tariff impacts to be sector- and region-specific, with autos and metals among the likely focal points. That means risk aversion could hit hardest in countries—like Japan and Canada—that have struggled to make progress in negotiations.
Still, some argue that the broader market may prove resilient. “The macro story remains strong,” Brooks added, pointing to last week’s jobs report showing a still-solid US labor market. That strength is helping prop up confidence, even as investors brace for what could be a bumpy start to the week.
Trade twists and the Fed’s fog
Deutsche Bank analysts echoed a similar tone, noting that while the administration may impose new tariffs on lagging trade partners, a return to “Liberation Day” levels (north of 20%) seems unlikely. Treasury Secretary Bessent has hinted at progress in negotiations, and the Senate’s removal of a contentious “revenge tax” provision from last week’s newly passed budget bill could help reduce friction.
Still, as Swissquote’s Ipek Ozkardeskaya put it, “you can’t count on the tariffs announced in the next few hours staying unchanged for more than a day. That’s just the reality.” And with Trump threatening extra duties for countries aligning with BRICS, the geopolitical drama is unlikely to ease.
Adding to the mix is Wednesday’s release of minutes from the Federal Reserve’s June policy meeting. The Fed has been sharply divided over whether rate cuts are needed this year, and last week’s labor market data did little to push consensus in either direction. The minutes will be closely watched for clues on how deep those divisions go.
Only two Fed officials are scheduled to speak this week—both non-voters—so the market will likely key off the minutes and bond market signals, especially after the passage of Trump’s “One Big Beautiful Bill,” which includes an extension of tax cuts, more defense spending, and Medicaid cuts. The bill is expected to add over $3 trillion to the US debt over the next decade—raising concerns about borrowing costs.
Oil slips, energy stocks sputter
Meanwhile, oil is under renewed pressure as OPEC+ agreed to boost production by an additional 548,000 barrels per day—well above expectations—with more increases likely in September. Shell is down over 2.8% after warning of a weak second quarter, citing underperformance in its trading division and refining losses. The company also recently ruled out a bid for rival BP, adding to investor concerns.
Musk moves markets again
Tesla is back in the headlines for all the wrong reasons. Shares dropped more than 7% in pre-market trading Monday after Elon Musk announced the launch of a new political party aimed at challenging Democrats and Republicans alike. The move, which drew immediate backlash from Trump, is renewing investor worries that Musk is distracted from the core business, even as EV sales slide and competition ramps up.
Earnings season kicks off—softly
While the Q2 earnings season doesn’t ramp up in earnest until mid-July, Thursday brings results from Delta Air Lines Inc (NYSE:DAL), Conagra Brands Inc (NYSE:CAG), and Levi Strauss & Co (NYSE:LEVI), offering early clues on consumer demand and corporate profitability.
For now, US equity markets remain near record highs, but with tariffs looming, oil under pressure, and earnings season kicking off against a backdrop of geopolitical uncertainty, it’s shaping up to be a test of investor confidence—and nerves.