Can Wall Street overcome tariff headwinds and Fed uncertainty?

Mixed week for US equity markets amid tariff uncertainty

United States (US) equity markets closed lower on Friday, weighed down by a Financial Times report that President Trump is calling for a minimum 15 to 20% tariff on imports from the European Union (EU), suggesting a harder stance is being taken. For the week, the US Tech 100 (Nasdaq 100) gained 1.25%, the US 500 (S&P 500) added 0.59%, and Wall Street (Dow Jones) fell 29 points (−0.07%).

If President Trump's tariffs announced in recent weeks come into effect, they will see the average US tariff rate rise to around 20 to 22% from approximately 14 to 15%. This would inevitably be a hit to growth and consumer and business confidence and boost inflation. Offsetting these concerns, the current 1 August deadline could be extended again, and additional trade deals may be announced.

Federal Reserve officials remain divided on rate policy

Ahead of the upcoming Federal Open Market Committee (FOMC) meeting next week, Federal Reserve (Fed) Governor Christopher Waller continues to fight a lonely dovish fight as he again pressed for a rate cut later this month, citing a slowdown in private sector hiring. However, apart from Michelle Bowman, he appears to be outnumbered by those led by Fed Chair Powell, who remain firm in a wait-and-see mode. Fed speakers are now in the blackout period ahead of the Fed's next interest rate meeting on 30 July.

On a more positive note, reports have emerged over the weekend that Treasury Secretary Scott Bessent urged President Trump not to fire Fed Chair Jerome Powell. Multiple sources indicated Bessent cautioned Trump about the potential economic, political, and legal consequences, stressing that such a move could destabilise financial markets.

Mixed earnings results from major companies

In stock news, Netflix shares fell 5.1% to $120.24 on Friday despite beating revenue and earnings estimates, while Charles Schwab rose 2.90% to $95.80 amid strong results. Tesla gained 3.21% to $329.65 ahead of its earnings report this week, previewed here. Tesla will be joined by approximately 119 other companies reporting this week, including General Motors, Alphabet, IBM, American Airlines, and Intel.

On the data front, and apart from new tariff headlines, there will be interest this week in the Flash purchasing managers' index (PMI), home sales, and durable goods orders. The US rates market starts the week pricing in 16 basis points (bp) of Fed rate cuts for the September FOMC meeting and a cumulative 43 bp of cuts priced between now and the end of the year.

US tech 100 technical analysis

Post the US Tech 100's surge higher on 12 May, we have been working with the view that the rally in the US Tech 100 from the 21 April 17,592 low is a Wave III (Elliott Wave) and once it's complete, it should be followed by a Wave IV pullback.

The rebound in late June from our key 21,500 to 21,450 support zone opened the way for the US Tech 100 (Wave III) to push to record highs, taking it to within a stone's throw of strong weekly trend channel resistance now at 23,350.

We do expect this weekly resistance level to at least stall the US Tech 100's recent gains. However, a sustained break of short-term support at 22,650 to 22,550 is needed to indicate that the Wave III is complete and that a Wave IV pullback is underway.

The initial target for the Wave IV is a band of support near 22,000 with a sustained break of this level opening the way for a deeper Wave IV decline towards support at 21,500 to 21,300.

US tech 100 daily chart

US 500 technical analysis

Post the US 500's surge higher on 12 May, we have been working with the view that the rally from the 21 April 5101 low was a Wave III (Elliott Wave) that should be followed by a Wave IV pullback.

The rebound in late June from our key 5950 to 5920 support zone opened the way for the US 500 (Wave III) to push to new highs. While some bearish divergence is evident on the weekly chart (the relative strength index (RSI) failing to confirm the break to new highs), we note the US 500 is still well below weekly trend channel resistance at 6650.

With this in mind, a sustained break of short-term support at 6200 to 6180 is needed to provide an initial indication that the Wave III is complete and that a Wave IV pullback is underway. The initial target for the Wave IV is a band of support at 6150 to 6130 area coming from previous highs with a sustained break of this level opening the way for a deeper Wave IV decline towards support at 5970 to 5950.

US 500 daily chart

• _{Source: TradingView. The figures stated are as of 21 July 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}