S&P 500 & Nasdaq Surge: Trade, Earnings & Fed in Focus

US-EU Trade Deal Boosts Energy Stocks, Tech Earnings Loom Large

A new trade agreement between the United States and the European Union is sending ripples through global markets, lifting energy stocks and setting the stage for a crucial week of Big Tech earnings reports. The deal, struck Monday, aims to bolster energy security for Europe while simultaneously addressing trade imbalances and tariff concerns.

The agreement centers on increased liquified natural gas (LNG) exports from the US to the EU, a move designed to help European nations reduce their reliance on Russian energy sources following the invasion of Ukraine. According to statements from President Trump, the 27 EU member countries are expected to purchase $750 billion worth of LNG and other energy resources from the US over the next three years. Shares of Cheniere Energy (LNG), a leading LNG provider, rose as much as 5% Monday before settling up 1.5% in afternoon trading, reflecting investor optimism.

Beyond energy, the broader trade pact introduces a 15% tariff on exports from the EU into the US, while simultaneously opening the EU market to American exports without tariffs. The agreement also includes a commitment from the EU to invest $600 billion more in the US economy and procure a “vast amount” of military equipment from American manufacturers.

Tech Sector Eyes AI Monetization and Tariff Impacts

While the energy deal grabbed headlines, investors are also keenly focused on the upcoming earnings releases from tech giants Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), and Meta (META) this week. Artificial intelligence (AI) will be the dominant theme, with investors eager for updates on capital expenditures and the monetization of AI investments.

Alphabet (GOOGL) and Tesla (TSLA) have already reported earnings, leaving Nvidia (NVDA) as the final member of the “Magnificent Seven” to report, scheduled for late August. One analyst noted that the debate over whether US tech companies were overspending on AI has largely subsided, as evidenced by Alphabet’s recent increase in its full-year capital expenditure forecast to $85 billion, driven by demand for cloud computing.

The question now shifts to whether these investments are translating into tangible financial gains. “AI is positively impacting every part of the business, driving strong momentum,” said Alphabet CEO Sundar Pichai in the company’s second-quarter earnings release. Executives reported that Google is successfully monetizing AI-powered search results at a rate comparable to traditional search.

Apple Faces Tariff Concerns Amidst AI Development

For Apple, trade policy is a particularly pressing concern. While President Trump exempted smartphones and consumer electronics from “reciprocal” tariffs in April, his administration is considering invoking national security concerns to impose Section 232 duties on these same products. These Section 232 tariffs are considered more legally defensible than previous country-specific duties, posing a greater risk to Apple. The company estimated in May that tariffs could add $900 million to its costs in the second quarter alone.

Investors will also be watching for any updates on the development and rollout of Apple Intelligence, though experts anticipate limited details on timing or potential partnerships. “We don’t expect an update on Apple Intelligence timing (2026), any material change in quarterly capex, an update on Apple Intelligence approval in China, and/or any new partnership announcements,” wrote a Morgan Stanley analyst in a recent earnings preview.

Nike Receives Analyst Upgrade on Turnaround Strategy

In other market news, Nike (NKE) shares reached a five-month high Monday after JPMorgan upgraded the stock, citing the athletic apparel maker’s ongoing turnaround strategy. The analysts playfully echoed Nike’s iconic slogan, issuing a “Just Buy It!” recommendation and raising their price target from $64 to $93. The upgrade reflects optimism surrounding Nike’s plans to improve inventory alignment, accelerate wholesale orders, and introduce new performance products, particularly in anticipation of the 2026 FIFA World Cup hosted in the US.

Market Futures Point to Continued Gains

Looking ahead, futures markets indicate a positive open for US stocks. As of early Tuesday, futures tied to the Dow Jones Industrial Average were up 0.1%, S&P 500 futures rose 0.2%, and Nasdaq 100 futures added 0.3%. The confluence of a new trade agreement, anticipation of strong tech earnings, and positive market sentiment suggests continued momentum for US equities in the days ahead.