S&P 500 Snaps Six-Day Winning Run as Bonds Climb: Markets Wrap

(Bloomberg) — Wall Street traders sent stocks lower in the run-up to the Federal Reserve decision, with concerns about high valuations overshadowing hopes for an extension of a tariff truce between the world’s two largest economies. Bonds climbed alongside the dollar.

The S&P 500 snapped a six-day winning streak. A rally in Treasuries gained steam after a solid $44 billion sale. Longer-dated bonds led gains, with 30-year yields down 10 basis points ahead of the US announcement on the size of future debt auctions. Oil jumped as President Donald Trump reiterated the US may impose additional levies on Russia unless it reached a truce with Ukraine.

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Treasury Secretary Scott Bessent said that the US and China will continue talks over maintaining a tariff truce before it expires in two weeks and that Trump will make the final call on any extension. Adding an extra 90 days is one option, Bessent said.

Just as it happened after the US tariff deal with the European Union, the underwhelming market reaction to signs of progress in China talks illustrates the steady decline in the ability of those initiatives to spur big moves on Wall Street.

There are other market-moving factors on the horizon. Those include Wednesday’s Fed decision and key data like the jobs report on Friday. The market also faces a crucial test, with four tech giants reporting earnings over a two-day stretch.

“Investors are now more focused on hard data to validate the economic and policy outlook, rather than over-interpreting trade agreements,” said Dilin Wu at Pepperstone Group Ltd.

On the economic front, US consumer confidence increased as concerns eased about the outlook for the broader economy and the labor market. While job openings fell, they hovered at a level that indicates generally stable demand for workers.

“Overall, it was a mixed round of data that has done little to materially challenge the price action or macro narrative,” said Ian Lyngen at BMO Capital Markets.

In a rare occurrence, policymakers will convene in the same week that the government issues reports on gross domestic product, employment and the Fed’s preferred price metrics.

Forecasters anticipate the heavy dose of data will show economic activity rebounded in the second quarter, largely due to a sharp narrowing of the trade deficit, while job growth moderated in July. The third marquee report may show underlying inflation picked up slightly in June from a month earlier.

With the Fed’s benchmark rate holding at a target range of 4.25% to 4.5% since December, the business world is looking for any clue that officials are moving toward a rate reduction in the fall. Fed Chair Jerome Powell could face dissent from one or more colleagues arguing it’s time for the central bank to provide more support to a slowing labor market.

A survey conducted by 22V Research showed investors anticipate a mixed/negligible market reaction to the Fed decision, 33% said “risk-on” and only 11% “risk-off.” Assuming no cut on Wednesday, the majority of respondents expect two Fed reductions in 2025.

“We believe the Fed wants to maintain flexibility on when to deploy further rate cuts. In our view, the Fed will remain on hold until ‘hard data’ begins to confirm the slowdown story,” said Luis Alvarado at Wells Fargo Investment Institute. “The Fed will have the opportunity to cut rates later in the year if the economy slows and as long as inflation allows.”

At eToro, Bret Kenwell says consumers and businesses continue to show their optimism and resilience in the face of multiple headwinds.

“As good as that feels right now, we have yet to take on this week’s main hurdles, which include tomorrow’s Fed meeting, Friday’s jobs report, and a bevy of earnings,” Kenwell said. “If those events tell a similar story of economic and labor market stability, equity markets have the catalysts in place to continue higher, with pullbacks likely being viewed as buying opportunities.”

Wall Street strategists have a message for investors worrying about signs of excessive optimism emerging as US stocks extend their record run: Any near-term pullback will likely create a buying opportunity.

Strategists from HSBC Holdings Plc, Morgan Stanley and UBS Group AG are maintaining their long-term bullish views even as concerns build that valuations have become stretched at the moment. They see strong corporate earnings and economic data, growing clarity around tariffs and the tailwind of artificial intelligence propelling stocks higher into next year.

“While we expect equities to advance over the next 12 months, investors should be mindful of potential market swings in the coming weeks,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “We think capital preservation or phasing-in strategies can be effective in navigating near-term volatility.”

Investors are pricing the US stock market as if there’s no longer any risk of a tariff-driven recession. Peter Oppenheimer isn’t so sure.

The chief global equity strategist at Goldman Sachs Group Inc. says it’s possible that tariffs bite hard enough to hurt equity prices even as Washington agrees on deals with key trading partners. And while the US might dodge a recession, valuations are high enough that it’s prudent to keep diversifying into other markets.

Corporate Highlights:

Starbucks Corp. sales and profit fell more than anticipated, signaling that a plan to revive growth by speeding up service and making cafes more welcoming has yet to bear fruit. Visa Inc. reported a fiscal third-quarter profit that topped Wall Street estimates as the world’s biggest payments network reported double-digit gains in cross-border purchases and processed transactions. United Parcel Service Inc. said economic volatility continues to roil its operations, underscoring the challenges for the courier’s effort to reconfigure its network and revitalize its business. United Airlines Holdings Inc. flight attendants rejected a new contract that would have provided cumulative pay increases of as much as 45.6% over five years. JetBlue Airways Corp. posted a smaller-than-expected loss in the second quarter as demand rebounded and efforts to turn around the struggling carrier gained traction. Procter & Gamble Co. issued a wider range than usual for its annual sales outlook, underscoring the volatility US companies continue to navigate even as the Trump administration begins to strike trade deals. UnitedHealth Group Inc. offered fresh profit guidance that was far below its early projections and below all analyst expectations. Executives also declined to explicitly affirm a long-term growth outlook that the company has pointed investors to for years, a sign that its challenges aren’t going away any time soon. Merck & Co. is slashing $3 billion from its annual spending as it braces for off-brand competition to its cancer drug Keytruda, the best-selling medicine in the world. Whirlpool Corp. tumbled as tariff uncertainty upended expected benefits from the levy regime, forcing the appliance-maker to slash its outlook and dividend to shore up its financial position. Royal Caribbean Cruises Ltd.’s quarterly profit outlook trailed expectations because of costs related to its newest ship. Union Pacific Corp. agreed to acquire Norfolk Southern Corp. in a $72 billion cash-and-stock transaction, forming the only US transcontinental railroad in what stands to be the industry’s largest deal ever. Baker Hughes Co. agreed to buy industrial equipment maker Chart Industries Inc. for about $9.6 billion in cash, expanding the oilfield service giant’s reach into liquefied natural gas, data centers and other technologies. JPMorgan Chase & Co. is in advanced talks to replace Goldman Sachs Group Inc. in its credit-card joint venture with Apple Inc., according to people familiar with the matter. Microsoft Corp. is in advanced talks to land a deal that could give it ongoing access to critical OpenAI technology, an agreement that would remove a major obstacle to the startup’s efforts to become a for-profit enterprise. Boeing Co. almost halted its cash burn in the second quarter, indicating that a turnaround initiated by Chief Executive Officer Kelly Ortberg a year ago is paying off as the company delivers more aircraft. PayPal Holdings Inc. reported slower growth in payment volume and company executives said they were seeing softer retail spending as a result of the US tariff wars. Spotify Technology SA swung to a loss in the second quarter, missing analysts’ estimates after the music-streaming service recorded higher-than-expected expenses related to employee compensation. Novo Nordisk A/S named its head of international operations as chief executive officer after slumping weight-loss drug sales led to a profit warning that wiped $93 billion off its market value. Sarepta Therapeutics Inc. climbed after US regulators reversed course and recommended that patients who can walk be allowed to take its gene therapy Elevidys again. Some of the main moves in markets:

Stocks

The S&P 500 fell 0.3% as of 4 p.m. New York time The Nasdaq 100 fell 0.2% The Dow Jones Industrial Average fell 0.5% The MSCI World Index fell 0.4% Bloomberg Magnificent 7 Total Return Index fell 0.7% The Russell 2000 Index fell 0.6% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.3% to $1.1551 The British pound was little changed at $1.3358 The Japanese yen was little changed at 148.51 per dollar Cryptocurrencies

Bitcoin fell 0.4% to $117,509.14 Ether fell 0.6% to $3,764.8 Bonds

The yield on 10-year Treasuries declined nine basis points to 4.32% Germany’s 10-year yield advanced two basis points to 2.71% Britain’s 10-year yield declined one basis point to 4.63% Commodities

West Texas Intermediate crude rose 4% to $69.36 a barrel Spot gold rose 0.3% to $3,325.20 an ounce ©2025 Bloomberg L.P.