Both the S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ) fell from their respective intraday highs following the Fed’s 9-2 vote to maintain interest rates in a range between 4.25% and 4.50%.
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Fed Governors Michelle Bowman and Christopher Waller voted in favor of a rate cut, with both officials previously expressing support for easing monetary policy. At the same time, the odds of a September rate cut are now much lower at 45.1% compared to 63.3% yesterday and 59.9% a week ago, according to CME’s FedWatch tool.
Wells Fargo (WFC) has joined several other investment banks in raising their year-end S&P 500 (SPX) price targets. The bank hiked its target to between 6,300 and 6,500, up from its prior estimate of 5,900 to 6,100. “The dilution of tariff implementations and the new business tax provisions should improve earnings growth and investor sentiment,” said Wells Fargo in a research note. Wells Fargo also raised its 2025 S&P 500 EPS estimate to $265 from $260.
On the trade front, President Trump has announced a 25% tariff on India, effective August 1. He also said that the U.S. would impose a “penalty” on the country for purchasing Russian energy, although he didn’t elaborate further. India has the “most strenuous and obnoxious non-monetary Trade Barriers of any Country,” said Trump in a Truth Social post. The U.S. had a $45.7 billion goods trade deficit with India in 2024.
Trump has also signed an executive order imposing an additional 40% tariff on Brazil, bringing the country’s effective rate to 50%. Some goods, like wood pulp, energy products, and orange juice, are exempt.
Finally, gross domestic product (GDP) is expected to grow by 3.0% during the second quarter, above the consensus estimate of 2.6%. The Bureau of Economic Analysis (BEA) noted that imports dropped by 30.3% during the second quarter compared to a rise of 37.9% during the first quarter. Rising imports negatively impact GDP.
The S&P 500 (SPX) closed with a 0.12% loss while the Nasdaq 100 (NDX) returned 0.16%.
