July 21st, 2025
Stocks Edge Higher to Start the Week
U.S. stocks opened modestly higher on Monday, with all three major indexes in positive territory. The tech-heavy Nasdaq is showing slight outperformance compared to the S&P 500 and Dow Jones. In contrast, Canadian and European markets are trading lower, as both regions continue to grapple with tariff-related uncertainty. Despite Monday’s move, Canadian and European indexes have outpaced U.S. markets year-to-date, though the U.S. has narrowed the gap somewhat since hitting lows on April 8.
The tech-heavy Nasdaq gained about 0.6% following last week’s record-setting rally in growth names. The S&P 500 rose 0.5%, while the Dow Jones Industrial Average (^DJI) also climbed around 0.5%.
Economic Takeaways:
- Bond yields declined, with the 10-year U.S. Treasury yield falling about 0.04% to 4.38%.
- Last week’s U.S. inflation data for June came in at or slightly below expectations.
- Second-quarter earnings season is now underway, and early results have been better than expected. So far, around 12% of S&P 500 companies have reported, with 86% beating earnings forecasts—well above the 10-year average of 75%.
- Trade uncertainty persists—particularly ahead of the August 1 deadline. Over the weekend, Commerce Secretary Howard Lutnick reaffirmed the White House’s August deadline for new tariffs, calling it a “hard stop” for compliance.
- Energy costs have eased, with WTI crude oil prices mostly staying within the $60–$70 range.
- The Trump administration recently suggested it might ease export restrictions, potentially allowing companies like NVIDIA to resume selling certain AI chips to China.
- Bitcoin (BTC) and crypto-related stocks, including Strategy (MSTR) and Coinbase (COIN), rebounded early Monday following a rough Friday. The sell-off may have been driven by “sell on the news” sentiment after the U.S. House of Representatives passed the Genius Act, establishing a regulatory framework for stablecoins—cryptocurrency tokens pegged to the dollar. Bitcoin recently reached a record high above $122,000 last week.
- Early Monday, the CME FedWatch Tool showed less than a 5% chance of a Fed rate cut next week, with odds of at least one cut by September around 63%.
U.S. Treasury’s Bessent Calls for Institutional Review of the Federal Reserve
U.S. Treasury Secretary Scott Bessent said Monday that the Federal Reserve as a whole should be evaluated as an institution, raising questions about its performance and direction.
In an interview with CNBC, Bessent declined to address a report that he had advised President Donald Trump against firing Federal Reserve Chair Jerome Powell, stating that such a decision would ultimately rest with the president.
“I think that what we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent said. He specifically pointed to what he described as “fear-mongering over tariffs,” despite minimal evidence of inflation so far.
Bessent is scheduled to deliver a keynote speech Monday evening at the Fed’s regulatory conference, being held at the central bank.
“If this were the (Federal Aviation Administration) and we were having this many mistakes, we would go back and look at why. Why has this happened?” Bessent said. “All these PhDs over there, I don’t know what they do.”
President Trump has frequently criticized Powell, urging him to resign due to the Fed’s hesitation to lower interest rates. More recently, Trump has also voiced frustration over a $2.5 billion renovation project at the Fed’s Washington headquarters, which has exceeded its budget. The president has suggested possible fraud may be involved and implied it could be grounds for Powell’s removal.
Powell responded last week to a Trump administration request for details about the cost overruns, explaining that the project is extensive, includes necessary safety upgrades, and involves the removal of hazardous materials.
Bessent declined to speculate on the potential market reaction if Powell were to be dismissed.
Powell’s term as Fed chair runs through May 2026, and he is expected to remain a governor on the Federal Reserve Board until January 2028. Bessent noted both those dates, adding that another Fed governor position will open in January.
Data Center Demand Surges, Driven by Oracle and OpenAI
Demand for data centers among Big Tech firms is reaching unprecedented levels, according to TD Cowen analyst Mike Elias, who says the current leasing pipeline has hit an all-time high.
“The U.S. hyperscale data center leasing pipeline is the largest we have seen in history,” Elias wrote in a client note on Monday.
Major tech companies are racing to lock in data center space to power their artificial intelligence initiatives. This push, however, has created new challenges for their climate commitments. These facilities house vast servers running AI applications on GPUs, primarily from Nvidia (NVDA). The explosive growth in data centers has also triggered backlash in U.S. communities due to concerns over energy consumption, water usage, and the lack of transparency around new developments.
Elias pointed to Oracle (ORCL) as a key driver of the latest wave in data center demand, particularly as it ramps up support for OpenAI, the maker of ChatGPT. He noted that Oracle has signed a letter of intent for a site in New Mexico and is in active negotiations for another in Missouri, “contributing to the record leasing pipeline.”
According to Elias, “natural gas is expected to be leveraged at each of the sites” to help Oracle “expedite the timeline to delivery.”
He also observed rising demand from other tech giants, saying there is “accelerating demand” from Google (GOOG) and an “incremental increase in demand” from Amazon (AMZN).
On the Move
- Sarepta Therapeutics (SRPT) slid after the FDA ordered the company to stop shipments of its bestselling drug.
- Alphabet (GOOGL, GOOG) shares climbed over 2% on Monday, leading the “Magnificent Seven” Big Tech stocks higher as analysts reaffirmed their bullish outlook ahead of the Google parent’s quarterly earnings report on Wednesday.
- Meta (META) rose 1.3%, while Apple (AAPL) climbed 1.1%. Amazon (AMZN) gained nearly 1%, while Nvidia (NVDA) and Microsoft (MSFT) fell fractionally.
- Cleveland-Cliffs (CLF) shares surged nearly 11% Monday morning after the steelmaker posted second-quarter results that topped Wall Street expectations, despite year-over-year declines in both earnings and revenue.
- Trump Media stock jumped 6% Monday morning after the company announced a $2 billion investment in bitcoin (BTC-USD) and related securities, according to Yahoo Finance’s David Hollerith.
- Verizon (VZ) shares climbed nearly 4% in premarket trading after the telecom giant raised the lower end of its full-year profit outlook and posted earnings that beat expectations.
- Block (XYZ) stock surged 9% following its addition to the S&P 500 index, signaling the growing mainstream acceptance of digital payments.
- Tesla (TSLA) shares rose 1.75% ahead of this week’s earnings report.
- Opendoor (OPEN) moved higher. The iBuyer extended its rally fueled by retail investor enthusiasm, gaining more than 180% last week after activist investor Eric Jackson made a bullish case for the stock.
- Shares of Domino’s Pizza rose about 3% in premarket trading following its second-quarter results, as Wall Street weighed strong sales performance against weaker-than-expected earnings per share.
- Big Three automaker Stellantis (STLA) cautioned on Monday that it anticipates a net loss of 2.3 billion euros ($2.7 billion) for the first half of 2025, driven by restructuring expenses, declining sales, and initial impacts from U.S. tariffs.
- Target (TGT) dropped 1.5% after Barclays downgraded the retailer from Equal Weight to Underweight, citing expectations that Target’s sales will continue to lag.
What’s Ahead
The August 1 tariff deadline looms with eyes on Japan and the EU.
Alphabet (GOOG) and Tesla (TSLA) set to release updates on Wednesday — the first of the “Magnificent Seven” to report for the second quarter.
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