Monday, July 21, 2025 — U.S. equities continued to trade in a high-level consolidation range. The S&P 500 and Nasdaq notched fresh record highs, while the Dow Jones Industrial Average extended its recent pullback. With monetary policy tensions (Fed scrutiny and interest rate outlook) and trade uncertainty (tariff delays) dominating headlines, and earnings season entering a pivotal week led by Big Tech, the market remained in a tug-of-war between bullish catalysts and technical fatigue.
1. Index Performance: Divergence Between Highs and Pullbacks
- S&P 500 gained 8.81 points (+0.14%), intraday hitting a record 6,336 before closing at 6,305.
- Nasdaq Composite rose 78.52 points (+0.38%) to a new high of 21,077, but a late-session fade left an upper shadow on the daily candle.
- Dow Jones underperformed again, failing to reclaim recent highs over the past two weeks.
Morning Rally Drivers:
- Bond yields declined, reflecting rising rate-cut expectations.
- Tariff delay signals from USTR Becerra (“no rush on trade talks”) lifted near-term sentiment.
Late-session Reversal:
Primarily a technical pullback with no fundamental shift. The modest ~30-point drop suggests likely short-term stabilization.
Trend Structure:
On the Nasdaq daily chart, recent candles show a “cluster of small bullish candles with minimal bearish overlap.”
The moving average system remains in a bullish configuration, offering upward support.
The short upper shadow lacks the magnitude to indicate reversal pressure.
2. Fed and Policy: From Political Crossfire to Rate Cut Bets
Powell Faces Perjury Allegations; Former Fed Chairs Defend Independence
Fed Chair Jerome Powell came under fire from House member Anna Paulina Luna, who accused him of making false statements during congressional testimony:
- VIP Facility Denial: Powell denied inclusion of luxury amenities (private restaurant, elevator, rooftop garden) in the Fed’s renovation plan, but architectural filings revealed otherwise.
- Historical Inaccuracy: Powell claimed the Eccles Building hadn’t been renovated in 100 years; records show renovations occurred between 1999–2003.
Congress has moved to refer Powell to the Department of Justice for potential criminal investigation.
In response, former Fed Chairs Bernanke and Yellen (both Nobel laureates) issued a rare joint statement, warning that politicizing monetary policy could lead to lasting damage — citing the inflationary spiral of the 1970s as a precedent for undermining Fed independence.
Rate Cut Expectations Remain Market’s Core Pillar
Despite Powell’s legal headwinds, dovish voices within the Fed — notably Christopher Waller, a leading candidate to succeed Powell — continue advocating for a July rate cut.
- The market still prices in two cuts in H2 2025, underpinning equity valuations.
- Morgan Stanley’s Mike Wilson reiterated a bullish outlook, noting any Q3 weakness as a buy-the-dip opportunity, with a 12-month S&P target of 7,200.
3. Tariffs & Sentiment: TikTok Speculation and Trump Stocks in Play
Tariff Negotiations Delayed Again – TikTok Trades in Focus
USTR Becerra signaled further delays in U.S.-EU tariff negotiations, saying “there’s no rush,” raising expectations that August 1 tariff threats may be deferred.
As a result, TikTok-linked names and volatility plays surrounding its valuation have become short-term trading favorites.
Trump SPAC DJT: Bitcoin Hype vs. Fading Momentum
Shares of Trump-linked DJT rose 3.11% after the company announced a $2 billion purchase of Bitcoin (currently trading at $120,000).
However, broader enthusiasm around DJT has faded post-election. Analysts highlight this move as a textbook momentum chase, where speculative buying at highs is reframed as bullish news.
4. Earnings Watch: Big Tech in the Spotlight, Tesla & Google in Focus
This week marks the start of Big Tech earnings, which collectively represent over one-third of the major index weight. With valuations stretched, results from key players like Tesla and Google could drive the next market move.
Tesla (TSLA): Low Expectations May Set the Stage for a Rebound
Tesla will report Q2 earnings after the close on Wednesday, with street expectations already subdued:
- Revenue: Futu forecasts $22.43B (-12.04% YoY); IBKR analyst consensus stands at $22.83B.
- EPS: Futu estimates $0.33 (-20.52% YoY); consensus is $0.42.
However, Q1 earnings also underwhelmed — and the stock still rallied, as results came in “less bad” than feared. If Q2 numbers meet or slightly beat expectations, a “bad news priced in” rebound could occur.
Alphabet (GOOGL): Low Valuation + AI Tailwinds
Google shares outperformed today as investors position ahead of earnings.
- Forecasts: Q2 revenue expected at $93.83B (+10.73% YoY); EPS at $2.17 (+14.92% YoY).
- The 15% EPS growth appears reasonably priced at a forward P/E of ~21.
- Analysts will be focused on its AI-driven segments, including cloud and ad tech, which could determine post-earnings trajectory.
5. Other Developments: Interactive Brokers Still a Long-Term Play
Interactive Brokers (IBKR) posted strong Q2 results:
- Commission income: $516M
- Net interest income: $860M
- New accounts added: 250,000+
Amid China’s crackdown on foreign securities holdings, more investors are migrating to U.S.-based brokers like IBKR, maintaining its long-term strategic appeal.
Conclusion: Market Awaits Earnings Confirmation Amid Elevated Valuations
The U.S. equity market continues to hover near all-time highs, supported by policy optimism (rate cuts, tariff relief) and speculative flows. However, technical signals (e.g., Dow weakness, upper shadows) suggest short-term volatility risks remain.
Trading Implications:
New capital should wait for earnings clarity before committing;
Existing positions should monitor how megacap tech stocks deliver against expectations;
Despite near-term noise, monetary easing and innovation trends remain the structural drivers of the U.S. bull market.
In markets, the goal is not to bet on direction—but to wait for confirmation. In high-altitude trading zones, every pullback is a test of conviction and positioning logic.
