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Investing.com -- The Dow Jones Industrial Average (DJIA) slipped on Friday following reports that President Donald Trump is pushing for higher tariffs on the European Union (EU).
The Dow dropped 142.30 points, or 0.32%, to close at 44,342.19. The S&P 500 edged down 0.01% to 6,296.79 after briefly touching a record high during the session. The Nasdaq Composite rose 0.05%, ending the day at 20,895.66.
According to the Financial Times, Trump is seeking a minimum tariff of 15% to 20% as part of ongoing trade discussions with the EU. The bloc is working to strike a deal before Trump’s August 1 deadline, when he has threatened to impose 30% tariffs on European imports.
Investors also assessed a batch of fresh earnings results and economic data.
Despite Friday’s muted moves, the S&P 500 and Nasdaq each posted a weekly gain, up 0.6% and 1.5%, respectively. The Dow finished the week slightly lower.
This week, investor attention will be firmly on the second-quarter earnings season, which kicked off on a strong footing last week.
In addition to corporate results, markets will be closely watching developments around the Federal Reserve.
President Donald Trump has renewed pressure on Fed Chair Jerome Powell to step down as he continues to push for interest rate cuts. The Fed is set to hold its next policy meeting on July 29-30.
On the data front, several key economic indicators are due in the coming days, including updates on manufacturing and services activity, weekly jobless claims, and changes in existing home sales.
Big earnings week ahead: Google, Tesla, Intel to report
U.S. industrials have been the standout performers in a volatile year for equities, but their resilience will be put to the test as earnings season gathers steam.
So far in 2025, the S&P 500 industrials sector—spanning aerospace, machinery, transportation, and building products—has climbed 15%, more than twice the broader index’s gain and the best showing among the 11 major sectors.
Aerospace and defense names have played a key role, with the sub-sector up 30% year-to-date amid rising geopolitical tensions and increased defense spending in Europe.
Key players like Rtx Corp (NYSE:RTX), Lockheed Martin (NYSE:LMT), and General Dynamics (NYSE:GD) are due to report results this week.
But the biggest spotlight this week will be on the Magnificent 7 tech giants Alphabet (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA), with both set to report earnings on Wednesday after the market close.
General Motors (NYSE:GM), Coca-Cola (NYSE:KO), Intel (NASDAQ:INTC), and IBM (NYSE:IBM) will also release results this week.
Q2 earnings have started on a strong note. Of the 59 S&P 500 companies that have reported so far, 61% have exceeded estimates by more than one standard deviation, well above the historical average of 48%.
Still, expectations have been tempered. JPMorgan notes that Q2 earnings growth for the S&P 500 is now projected at 3.5% year-on-year, down from 11% at the beginning of 2025.
For the Magnificent 7, Q2 EPS growth is expected at 14%, down from the 17% anticipated last quarter, while the rest of the index is projected to grow just 1%, the bank said.
What analysts are saying about U.S. stocks
JPMorgan: "The unassuming hurdle rate suggests beats at headline level for Q2, but this is in the backdrop of strong recent equity rally, so there could be disappointments if earnings do not deliver, or if the guidances are mixed."
Evercore ISI: "AI is different this time. What is not is the cycle of Greed and Fear that is a part of every market cycle. FOMO, once it appears, doesn’t move stocks in a straight line, at least not in the beginning. There is volatility, particularly around the Seasonally challenging time of late July into Aug and Sept – selloffs in 1999 prior to the Dotcom Bubble accelerating and Fall 2021 into the Jan 2022 peak are historical examples. A similar near term correction (7-15%) within the prevailing Structural Bull Market is EVR ISI Strategy’s base case. At 24.7x EPS, stocks have overdiscounted the potential for continued good news."
Citi: "This earnings season is critical, in our view. The growth trajectory, or cyclical driver of the broadening trade, has been in question for some time amidst the Small/Mid Cap earnings growth malaise. Whether good results and some confidence in back half numbers can reasonably hold, especially post OBBBA, will be key to emerging from the double-dip EPS growth recession down cap, in our view. A growth inflection could also be a trigger to closing the widening valuation gap to the S&P 500."
Goldman Sachs: Continued USD weakness should support the outperformance of firms with high international sales exposure over stocks with more domestic-facing sales, all else equal.
The recent pattern of relative outperformance of international facing stocks is broadly consistent with previous episodes of dollar weakness. However, while our economists expect continued USD weakness, they also expect U.S. economic growth to outpace most other major economies in both 2025 and 2026, which should provide a relative tailwind to domestic-facing firms. In addition, further trade conflict escalation would create the largest risk for companies with elevated international sales exposure."