U.S. Stocks End Six-Day Winning Streak Ahead of Earnings, Tariff Deadline

U.S. stocks ended a six-day streak of record highs on Tuesday, with the market experiencing a slight pullback. The S&P 500 index, which had been on a continuous upward trajectory, closed lower for the first time in seven trading days. This marked the end of a six-day run of new highs for the index.

Market participants are now bracing for what is being dubbed the "48-hour make-or-break period" for the U.S. market. This critical window will be defined by a series of economic events, corporate earnings reports, and the deadline for tariffs set by the U.S. President. These factors are expected to test the resolve of Wall Street investors.

The market's recent surge has been driven by the resilience of the U.S. economy amidst trade tensions and optimism surrounding the growth potential of artificial intelligence for tech giants. However, analysts are warning that the upcoming events could significantly impact market sentiment.

Several major corporations, including Microsoft, Meta, Apple, and Amazon, are set to release their earnings reports this week. These companies, with a combined market capitalization exceeding 11 trillion dollars, hold substantial influence over the broader market. Their financial performance will be closely scrutinized by investors.

Additionally, the deadline for the implementation of reciprocal tariffs, initially set for July 9th and later extended to August 1st, is looming. This deadline could see the U.S. President imposing tariffs on numerous countries, adding another layer of uncertainty to the market.

Analysts have noted that any of these events could have a significant impact on market dynamics. The upcoming earnings reports and economic data releases are expected to drive market volatility, as investors reassess their positions in light of new information.

Despite the recent pullback, overall market sentiment remains optimistic. Positive economic data and inflation figures have helped investors shift their focus away from trade tensions. The U.S. has also reached preliminary tariff agreements with key trading partners, including the European Union, Japan, and the United Kingdom.

Economic forecasts suggest that the U.S. GDP growth rate for the second quarter will rebound to 2.9%, reflecting a decrease in imports. This follows a period of import surges related to stockpiling, which had previously weighed on the U.S. GDP in the first quarter.

The Federal Reserve is expected to maintain interest rates within the current range of 4.25% to 4.5% during its two-day meeting concluding on Wednesday. However, there is speculation that internal divisions within the Federal Open Market Committee (FOMC) could become more apparent, with some members advocating for an immediate rate cut while others prefer to wait and assess the impact of tariffs on inflation.

The upcoming non-farm payroll report, scheduled for release on Friday, is expected to show a slowdown in job growth, with an estimated 115,000 new jobs added in July. This figure is lower than the 147,000 jobs added in the previous month. Any deviation from these expectations could trigger market volatility.

Investors are also keeping a close eye on the potential for tariff implementation on August 1st. While many are betting that the U.S. President will avoid imposing tariffs that could cause excessive market disruption, there remains a level of uncertainty surrounding this issue. The potential for tariffs to be delayed until trade agreements are reached is also a possibility, but the overall risk remains significant.