Key Takeaways
- US Treasury Secretary Robert Bessent stated that Fed Chair Jerome Powell has not indicated he will leave his board seat and reiterated that President Trump will not fire Powell, aiming to calm speculation regarding the central bank's leadership.
- Bessent also addressed Trump's tariff plans, noting the market "took it pretty well" and that the administration is "back on track with China negotiations," with potential discussions on Russia and Iran oil and issues like the Microsoft hack.
- General Dynamics (GD) and AT&T (T) reported strong Q2 2025 earnings, beating analyst expectations on both EPS and revenue, while Texas Instruments (TXN) issued a soft outlook, causing its shares to drop 11% in pre-market trading.
- The US pre-market saw a sentiment boost following a new US-Japan trade deal, but SAP (SAP) shares fell 4% after its CEO indicated that tariff-hit clients are reviewing cloud spending, and the company is considering cutting 1-2% of its workforce.
- US MBA Mortgage Applications increased by 0.8% for the week ended July 18, reversing a previous decline, though the 30-year mortgage rate rose to 6.84%.
US markets are showing a positive pre-market sentiment, bolstered by a recent trade deal between the US and Japan, which saw Japan secure a 15% auto import tariff rate due to an "innovative financing mechanism". However, this optimism is tempered by mixed corporate earnings and ongoing commentary from US Treasury Secretary Robert Bessent on critical economic and trade policies.
Treasury Secretary Bessent's Remarks Shape Market Outlook
US Treasury Secretary Robert Bessent provided extensive commentary on a range of high-profile issues today, including the future of Federal Reserve leadership and the administration's trade strategy. Bessent clarified that Fed Chair Jerome Powell has not indicated any intention to leave his board seat, and he reiterated that President Trump has affirmed he will not fire Powell. Bessent also suggested that it "would be very good for Fed if Powell leaves in May" and mentioned a "simultaneous process for picking Kugler replacement". On the topic of a new Fed Chair nomination, Bessent stated, "we're not in a rush".
Regarding trade, Bessent observed that the market "took it pretty well" when reacting to Trump's tariff plans, suggesting the President "created maximum negotiating leverage on tariffs". He characterized the EU's retaliatory preparations as a "negotiating tactic". Bessent expressed confidence in US-China relations, stating, "we are back on track with China negotiations" and are "in good place with China," ready to discuss larger issues. He indicated that "things like Microsoft hack" would be on the China agenda, and there is potential for discussions on Russia and Iran oil. While no dates are set for a Trump visit to China, Bessent anticipates a "good cadence of regular China meetings".
Corporate Earnings Deliver Mixed Signals
The earnings season continues to provide varied results across sectors. General Dynamics (GD) reported a strong second quarter, with EPS of $3.74 against an estimated $3.55, and revenue of $13.04 billion exceeding the $12.39 billion estimate. Similarly, AT&T (T) surpassed expectations in Q2 2025, posting adjusted EPS of 54 cents (est. 52 cents) and revenue of $30.88 billion (est. $30.43 billion). The telecommunications giant also saw robust growth in wireless postpaid phone net adds, reaching +401,000 against an estimated +300,876, and anticipates $6.5 billion to $8 billion in tax savings from Trump's bill through 2027.
In contrast, Texas Instruments (TXN) faced investor disappointment, with its stock dropping 11% in pre-market trading due to a soft outlook and a "more negative tone" adopted by management during its earnings call. Intuitive Surgical (ISRG), however, saw a positive reaction, with its shares up 1.8% after reporting EPS, revenue, and net income that topped estimates. Enterprise software giant SAP (SAP) experienced a 4% decline in its shares. The company's CEO noted that "tariff-hit clients are reviewing spending on cloud services," and SAP is considering cutting 1% to 2% of employees while investing in new roles requiring AI and data skills.
Economic Data and Regulatory Developments
The latest US MBA Mortgage Applications data showed a 0.8% increase for the week ended July 18, a significant rebound from the previous week's -10.0% decline. Despite this uptick in applications, the 30-year mortgage rate rose to 6.84% from 6.42%.
In regulatory news, the UK is ramping up scrutiny of Apple and Google in a push for changes in mobile services. Meanwhile, an EU Tech Chief stated there are "no plans to make Big Tech pay for digital law compliance costs", addressing concerns about new digital regulations. Elsewhere, a Ukrainian diplomatic source indicated that Ukraine is prepared for "significant steps toward peace and full ceasefire" during talks with Russia later today. Deutsche Bank also raised its price target for eBay (EBAY) to $90 from $75.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.