S&P 500 flat ahead of busy week as ’Mag 7’ earnings, Fed decision loom

Investing.com-- S&P 500 was flat Monday, as investors parsed the U.S.-EU trade deal ahead of a busy week of data including earnings from the ’Magnificent Seven’ and the Federal Reserve decision 

At 12:57 p.m. ET (16:57 GMT), the Dow Jones Industrial Average traded 42 points, or 0.1%, lower, while the S&P 500 index 0.01%, and the tech-heavy NASDAQ Composite climbed 75 points, or 0.3%.

The S&P 500 and Nasdaq have recently hit record closing highs, helped by upbeat quarterly results, as well as the prospect of more certainty around often erratic U.S. tariff plans.

US, EU reach framework trade deal

The United States and European Union reached a landmark trade agreement over the weekend, a deal that includes a 15% tariff on EU goods entering the U.S..

The broad-strokes deal encompasses significant EU purchases of U.S. energy and military gear, along with substantial investments in the American economy. The EU has committed to purchasing $750 billion worth of energy from the U.S, and has agreed to make $600 billion in investments in the U.S.

Of the $3.3 trillion in goods imported by the U.S. last year, more than $600 billion came from the 27-member EU.

The pact has helped to further ease market jitters, which had grown over fears of a deadlock before Trump’s "reciprocal" tariffs take effect on August 1. 

“The big caveat to today’s deal is that there is nothing on paper, yet. The next hours and days will hopefully bring more clarity,” ING analysts said in a note.

Fed meeting, PCE inflation on tap

Away from trade negotiations, the U.S. Federal Reserve kicks off its two-day policy meeting this week, wrapping up on July 30. While rates are expected to stay at 4.25%–4.5%, investors will watch closely for signals on a possible cut in September.

“We see no interest rate cut this month, but the Fed is expected to start laying the groundwork for a move, most likely in December,” ING analysts added.

The Bank of Japan also holds a key meeting on Thursday, ahead of June’s PCE price index, the Fed’s preferred inflation gauge.

Investors will also watch key labor data this week, including JOLTS on Tuesday, ADP private payrolls on Wednesday, jobless claims on Thursday, and the key July jobs report on Friday.

"Magnificent Seven" earnings due

Investors are also gearing up for the busiest week of the earnings season, with more than 150 companies in the S&P 500 due to post their quarterly results.

This includes “Magnificent Seven” members, Facebook-owner Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT) on Wednesday, followed by Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) on Thursday.

Investors will be listening for companies’ comments on AI spending for direction on whether big investments in hyperscalers this year are justified.

Morgan Stanley (NYSE:MS) equity strategist Michael Wilson believes the S&P 500 could rally to 7,200 by mid-2026, citing a “rolling recovery” in earnings and supportive macro trends.

“We’re leaning more toward our bull case for the S&P 500 by the middle of next year—7200 (22.5x forward EPS of 319),” Wilson wrote in a note published Monday. 

He added that “earnings growth is on solid footing” and pointed to Morgan Stanley’s non-PMI earnings model, which is “pointing to mid-teens EPS growth.”

Tesla Inc (NASDAQ:TSLA), meanwhile, climbed  4% after chief executive Elon Musk unveiled that the automaker had agreed a $16.5B chip deal with Samsung (KS:005930). Under the deal, Samsung Electronics will reportedly produce semiconductors for Tesla.

Nike Inc (NYSE:NKE) jumped 4% after JPMorgan upgraded its rating on stock to overweight from neutral, citing optimism in company’s the ongoing recovery. 

 — The maker of computer networking equipment lost nearly 2% after a downgrade at Evercore to in line from outperform. The investment bank said any upside in Cisco (NASDAQ:CSCO) is now largely priced into the stock.

Peter Nurse, Ayushman Ojha contributed to this article