Briefing.com Summary:
*Rate cut expectations continue to swell after comments from Fed’s Daly
*Caterpillar loses ground after reporting earnings
*June Trade Balance Report shows the effects of U.S. tariff actions and the uncertainty surrounding them.
The stock market got off to a very good start this week, recouping most of what was lost in Friday’s sell-off following the July employment report. It doesn’t appear ready to go back to last week either.
Currently, the S&P 500 futures are up six points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 61 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are down 23 points and are trading fractionally above fair value.
These indications have the major indices on course for a flat to modestly higher open, with support coming in again from the mega-cap stocks and expectations of lower interest rates in the months ahead.
San Francisco Fed President Daly (non-FOMC voter) helped massage the latter view with an observation that the time for a rate cut may be near and that perhaps more than two rate cuts may be needed before the end of the year.
The fed funds futures market is pricing in two rate cuts before the end of the year (in September and October), but a third cut is turning into a coin toss, per the CME FedWatch tool.
Treasury yields are little changed this morning. That doesn’t mean the market is dismissive of Ms. Daly’s view. On the contrary, the Treasury market, which will digest a $58 billion 3-yr note auction today, quickly angled to get out in front of it after the weak payrolls data on Friday. The 2-yr note yield is up two basis points to 3.70%, and the 10-yr note yield is up one basis point to 4.21%.
The stock market, for its part, is digesting another load of earnings results. Dow component Caterpillar (CAT) is trading 1.3% lower after its results, while Eaton Corp. (ETN) is down 5.2% following some disappointing Q3 guidance. Pfizer (PFE), Palantir Technologies (PLTR), Sealed Air (SEE), and Duke Energy (DUK), on the other hand, are among the notable companies trading higher after their earnings results.
We won’t call it a “wash” in terms of the earnings reactions, as there are more positive reactions than negative reactions. Still, investors aren’t getting overly excited by the earnings results relative to what many of the mega-cap stocks managed to deliver.
The market hasn’t gotten too worked up either by the June Trade Balance Report, which showed a continued narrowing in the trade deficit.
Specifically, the trade deficit narrowed to $60.2 billion in June (Briefing.com consensus: -$62.0 billion) from a downwardly revised $71.7 billion (from -$71.5 billion) in May. That improvement stemmed from imports being $12.8 billion less than May imports, while exports were $1.3 billion less than May exports.
The key takeaway from the report is that it reflects the fact that tariff actions by the U.S. and the uncertainty related to the tariffs have impeded global trade activity.
—
Originally Posted on August 5, 2025 – In a digestion phase
Disclosure: Interactive Brokers Third Party
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Briefing.com and is being posted with its permission. The views expressed in this material are solely those of the author and/or Briefing.com and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Disclosure: Futures Trading
Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at the Warnings and Disclosures section of your local Interactive Brokers website.
Disclosure: ETFs
Any discussion or mention of an ETF is not to be construed as recommendation, promotion or solicitation. All investors should review and consider associated investment risks, charges and expenses of the investment company or fund prior to investing. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
If you have a general question, it may already be covered in our FAQs page. go to: IBKR Ireland FAQs or IBKR U.K. FAQs. If you have an account-specific question or concern, please reach out to Client Services: IBKR Ireland or IBKR U.K..
Visit IBKR U.K. Open an IBKR U.K. Account