Retail ETFs jumped on Monday as the United States clinched a trade deal with the European Union, setting tariffs at 15%. The deal comes just ahead of the Aug. 1 deadline the White House set for all tariff negotiations, refusing to extend or delay any further.
Speaking alongside U.K. Prime Minister Keir Starmer, President Donald Trump explained that going forward, there would be a “global tariff” in the range of 15%-20%. Retail ETFs jumped on the news while broad markets also inched higher before paring gains.
The SPDR S&P Retail ETF (XRT) rose mildly in early trading Monday before falling by 0.5% midday. The ProShares Online Retail ETF (ONLN) fared much better, jumping nearly 1% before giving back some gains, boosted in part by tech darling Amazon.com Inc. (AMZN).
The EU is the largest trading partner to the United States with major imports in the furniture, wine/alcohol, rubber and machinery categories. The $600 billion dollar deal would see the EU increase American energy and defense imports. The Vanguard FTSE Europe ETF (VGK) fell 1.9% as of midday Monday on the news.
But despite the White House lauding the trade agreement as a “landmark deal,” investors have set their sights on earnings and an upcoming Fed decision.
Four members of the “Magnificent Seven”—Meta Platforms Inc. (META), Microsoft Corp. (MSFT), Apple Inc. (AAPL) and AMZN—are set to report quarterly earnings this week, turning investor interest to the tech sector.
Markets are set to pay close attention to any news about artificial intelligence and investments into AI tech and strategies. The Roundhill Magnificent Seven ETF (MAGS) jumped Monday as investors were more attracted to risk ahead of earnings. The Invesco QQQ Trust (QQQ), which mirrors the tech-heavy Nasdaq-100 index, also notched gains.
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Tech companies will have to clear a lower bar this quarter after analysts slashed estimates amid tariff concerns and the central bank holding rates steady. Last week, Alphabet Inc. (GOOGL) beat earnings expectations and raised spending forecasts. But Mag 7 member Tesla Inc. (TSLA) disappointed, pointing to slumping revenue and tougher margins. Tesla CEO Elon Musk told investors to brace for some rough quarters in the future.
Rounding out a busy week ahead, the Federal Reserve is set to meet this week and make a decision on rates. According to the CME FedWatch Tool markets are pricing a 97% chance that the Fed will hold rates steady. A rate cut is largely not expected until the fall at the September FOMC meeting.