US stocks were mixed on Monday, as President Trump’s announcement about a 90-day extension on China tariffs sent ripples through the market. The Dow Jones Industrial Average (DJI) fell by 0.4%, while the S&P 500 (GSPC) dipped 0.1%. The Nasdaq Composite (^IXIC) saw a slight dip of 0.2% after previously rising as much as 0.4%. Despite these shifts, traders remained cautious ahead of critical inflation reports and the ongoing tariff negotiations between the US and China.
Market Movers:
- Nvidia (NVDA) -0.13%: Nvidia fell 0.13% amid President Trump’s clarification on the H20 chip deal. The company will be allowed to resume sales of its older chips to China, but the deal comes with the condition that the US government will receive a 15% cut of the revenue. While the deal is a win for Nvidia in the short term, analysts are awaiting more details on its impact on the company's broader strategy and future product sales.
- C3.ai (AI) -23%: Shares of C3.ai plummeted by more than 23% after the company lowered its revenue guidance for the upcoming quarters. The AI software firm reported weaker-than-expected sales, blaming it on internal restructuring efforts. Additionally, CEO Tom Siebel’s health issues have raised concerns about leadership stability, further adding to investor uncertainty.
- Tesla (TSLA) +3.31%: Tesla gained 3.31% as news broke that the company had applied for an electricity supply license in the UK. The application aims to expand Tesla’s energy business, which has grown 30% year-over-year, enabling the company to compete with established energy firms. This marks a significant step as Tesla seeks to diversify its operations beyond electric vehicles and energy storage.
- Micron (MU) +3.36%: Micron’s stock rose 3.36% after the company raised its Q4 financial guidance. The memory chipmaker now expects revenue between $11.1 billion and $11.3 billion, boosted by improved pricing in DRAM chips. This positive outlook is a key indicator of the strong demand for semiconductors, especially in devices like smartphones and personal computers.
Tariff Deadline Extension and Its Market Impact
President Trump has decided to extend the deadline for China’s tariff increases to November 9.. The additional 90-day extension offers some relief to traders who were bracing for more severe duties that were set to go into effect on Tuesday. While the delay eases immediate pressure on certain sectors, including tech, uncertainty remains about how long this extension will last and how it will affect future negotiations.
The tariff situation continues to be a key driver for market volatility, particularly for companies with significant exposure to Chinese markets, such as Nvidia and Apple. With the extension, these companies now have more time to navigate the complexities of the trade war, but the looming possibility of higher tariffs still hangs over the market.
Inflation Reports Under Scrutiny
The financial markets are closely watching inflation data this week, particularly the upcoming Consumer Price Index (CPI) report. Economists expect the July CPI report, due Tuesday, to show a slight uptick in inflation to 2.8% year-over-year, compared to 2.7% in June. The data is crucial for assessing the broader economic outlook, especially in light of the tariffs, which could contribute to higher consumer prices.
Wall Street is worried that rising tariffs may continue to fuel inflationary pressures, adding to the cost of goods and services. The CPI report could provide further insights into how much these pressures are seeping into the economy. Additionally, the Producer Price Index (PPI) set for Thursday and retail sales data on Friday will offer a more comprehensive view of how tariffs are impacting both businesses and consumers.
Looking Ahead
As the week unfolds, the market’s focus will remain on the economic data coming in, with key reports on inflation and retail sales expected to shape investor sentiment. The tariffs remain a wild card, especially with the upcoming November deadline, and traders will likely continue to adjust their positions based on any new developments in US-China negotiations. Additionally, companies with significant exposure to tariffs, like those in tech and manufacturing, will be under closer scrutiny.
The outlook for stocks will hinge on how these factors—tariffs, inflation, and economic data—interact with the broader market dynamics. Investors will be keeping a close eye on the Federal Reserve’s response, particularly as market expectations lean toward rate cuts in September. With these elements in play, volatility is expected to persist as market participants navigate the complexities of trade, inflation, and policy decisions.