Trump Giving Diplomacy ‘Some Space’: 8 Key Items Shaping the Stock Market Monday

These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, futures point to a strong open when U.S. equity markets open later this morning.

1. The US and Iran held off attacks on one another for a third straight night, helping lift global stock and bond markets and push down oil prices. US President Donald Trump, who last week threatened to step up attacks in Iran, is giving diplomacy “some space”… Brent crude fell more than 6% in early trading on Monday to $91 a barrel, after climbing 10% last week on the worsening fighting and Trump telling Axios he was considering a “massive attack.” US Treasury yields also dipped… (Bloomberg)

The above development is driving equity futures meaningfully higher on Monday morning, and while we are cautiously optimistic, we have been here before and only to see those efforts unravel. In the vein of once bitten twice shy, this likely means investor mindsets are likely to be somewhere between cautious and skeptical until more concrete developments are had.

It could, however, pop the S&P 500 back over its 50-day moving average near 7.472, but as we discussed last week, we will want to see a positive test of that support level. And we’ll use that to transition to our next item, which may be viewed as a bit of a gauntlet for the market to get through — and it has the potential to deliver either a positive or negative test of that support level.

2. A wobbly U.S. stock market will take its cues in the coming week from a Federal Reserve meeting set to shed light on the path for interest rates, and from a packed slate of corporate earnings led by technology companies and heavyweights in artificial intelligence… About one-third of S&P 500 companies are expected to post results, making it the busiest week of the second-quarter reporting season, including Apple, Visa, Chevron, and Coca-Cola. (Reuters)

Boeing, Coca-Cola, and Visa will announce earnings on Tuesday, followed by Meta Platforms, Microsoft, Procter & Gamble, and Starbucks on Wednesday. Amazon.com, Apple, Bristol Myers Squibb, and Mastercard will report on Thursday, and AbbVie, Chevron, and Exxon Mobil Holdings close out the week on Friday. (Barron’s)

This week will be the busiest we have had in some time as we barrel toward the end of July, especially as nine Portfolio holdings are reporting this week. Today’s fall in oil prices could soften potential post policy meeting comments by the Fed, but odds are the central bank’s message will be one we’ve heard before from former Fed Chair Powell — the need to see more data. That will mean whether the developments currently unfolding between the U.S. and Iran jumpstart peace talks and clear a path to a sustained agreement, that includes a full re-opening of the Strait of Hormuz.

3. Investors will soon have another way to bet on the hottest stocks from Nvidia Corp. to SpaceX, without trading a single share. CME Group Inc. will launch single-stock futures Monday, allowing investors to hedge or speculate on more than 50 of the largest US companies. The contracts, offering leverage without the complexity of options, will be cash-settled on the closing price of the stocks they’re tied to. (Bloomberg)

We’ve talked about how the adoption of leveraged ETFs has played a role in increasing market volatility, and we see the above move by the CME (CME) doing more of the same. If knowing is half the battle, recognizing the above will help us navigate the likely impact of an even more volatile market, but odds are it will give those who are not mentally prepared a lot more agita when it happens. More reason to keep a calm head, and follow the data, keeping our emotions in check.

4. Nvidia and South Korea’s SK Group on Friday unveiled a more than $500 ‌billion AI initiative spanning large-scale AI data centers and next-generation memory, Nvidia said. The initiative includes a long-term partnership with SK Hynix ⁠to secure next-generation memory supply for Nvidia and jointly develop high-bandwidth memory for AI training, AI agents and physical AI applications. (Reuters)

Nvidia is in talks to provide a roughly $250 billion backstop for OpenAI as part of a massive data-center project, one of the most ambitious financial transactions yet in America’s artificial-intelligence boom… In total, the project could cost more than $500 billion, including the chips that would go inside the data centers. It would be the largest data-center project announced to date. (WSJ)

On the one hand, some folks will see this as Nvidia (NVDA) once again flexing its balance sheet to position itself for future revenue growth, while in some cases tying up supply capacity. Nvidia’s move should also help address concerns about OpenAI and finances, potentially alleviating some concern as OpenAI moves toward its eventual IPO. And yes, Nvidia is an investor in OpenAI. That should help our shares of Neostellar Capital (NSLR), which were hard hit late last week, rebound as well.

Some would call Nvidia’s move prudent, especially given tight industry capacity for memory and other key inputs. We are in that camp, but we recognize these headlines will likely stoke questions over circular financing but for us it will mean keeping a watchful eye on company cash flows. That goes for the hyperscalers as well as Nvidia.

5. Samsung Electronics Co. won a contract worth more than $200 billion to make chips for Broadcom Inc., as the companies race to win a larger share of the AI infrastructure market. The pact, to run for five years through 2030, will focus on Samsung’s 2-nanometer and below process technologies for Broadcom’s products, the South Korean chipmaker said in a statement on Saturday. The deal expands the two companies’ strategic collaboration across memory and foundry technology. (Bloomberg)

AI developer Anthropic PBC has asked SK Hynix Inc., one of the world’s biggest manufacturers of memory chips, for supplies to make its own semiconductors, SK Group Chairman Chey Tae Won said. (Bloomberg)

The Samsung (SSNLF) news reaffirms the robust outlook delivered by Broadcom (AVGO) when it reported its most recent quarterly results. It also underscores Samsung’s capital spending plans that bode well for our position in Applied Materials (AMAT). The comment about Anthropic and SK Hynix (SKHY) is supportive for those chip companies that Anthropic is working with and that roster includes not only Broadcom, but also AMD (AMD) and Nvidia (NVDA) as well as Google (GOOGL) and Amazon (AMZN). Distilling that down one step further, let’s remember that Google and Amazon are custom silicon customers for Broadcom and Marvell (MRVL).

6. Shoppers are especially focused on value and spacing out purchases as they shop for back to school this summer, but overall spending is still expected to reach record levels. That’s according to the latest National Retail Federation’s survey of consumers. The NRF said that back-to-school spending is expected to hit $146.8 billion this year — more than spending for Mother’s Day, Father’s Day, Easter, and the Super Bowl combined. Families with children in kindergarten through 12th grade are expected to spend a record $43.3 billion this year, while spending by college students will reach a record $103.5 billion, the highest level since at least 2003. (Barron’s)

We haven’t finished July, but with Arizona, Hawaii, Mississippi, and Georgia starting the new school year in the next few weeks, it’s understandable consumers are starting to contemplate the Back-to-School shopping season. And for retailers, it represents the second-biggest retail shopping period of the year. While we are seeing some relief in oil prices on Monday, prices for gas, food other items sapping consumer budgets remain elevated. We see this leading the consumer to embrace shopping at companies like Costco (COST), TJX (TJX) and Amazon (AMZN) that we have in the Portfolio.

7. Economic data today per TipRanks: Durable Orders (June), Dallas Fed Manufacturing Index (July).

8. Companies reporting on Monday per TipRanks: PM – Applied Digital (APLD), Celestica (CLS), F5 Networks (FFIV), Navitas Semiconductor (NVTS), Nucor (NUE), Welltower (WELL).

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At the time of publication, TheStreet Pro Portfolio was long AMAT, AMZN, AVGO, COST, GOOGL, MRVL, NSLR, NVDA and TJX.