Key Takeaways
- European bank stocks have surged, reaching their highest levels since September 2008, with the STOXX 600 Bank Index climbing 1.9% today and 29% in the first half of the year.
- Senator Josh Hawley has proposed $600 rebate checks for Americans, funded by tariff revenue, as India prepares for potential U.S. tariffs between 20% and 25%.
- Merck & Co. Inc. (MRK) is intensifying efforts to boost Gardasil demand in China after a significant 18% year-over-year sales decline in late 2024, leading to a pause in shipments to the region.
- PayPal Holdings Inc. (PYPL) shares have fallen up to 10% today, marking their largest drop since February 4, amid concerns over slowing growth and increased competition.
- GE Vernova Inc. (GEV) faces negative sentiment as the U.S. plans to reintroduce regulations for wind turbines near highways and railways.
The U.S. stock market opened with modest gains today, as the Dow Jones Industrial Average rose 21.43 points, or 0.05%, to 44,858.99. The Nasdaq advanced 117.75 points, or 0.56%, to 21,296.34, while the S&P 500 increased 18.19 points, or 0.28%, to 6,407.96.
European Banks Exhibit Strong Performance
European bank stocks have demonstrated remarkable resilience, reaching their highest levels since September 2008 with a 1.9% increase today. The STOXX 600 Bank Index has surged by an impressive 29% in the first half of the year, marking its best half-year performance since 1997. This robust performance reflects strong investor confidence, driven by increased trading activity and improved profitability. Analysts note that European banks have become substantially less risky since the 2008 financial crisis, having raised significant capital. Their profits have been boosted by rising interest rates and effective cost control, leading to a doubling of their return-on-equity over the past decade. Despite this strong performance, European bank stocks are considered relatively inexpensive, trading at a price-to-earnings multiple of 6.5x.
Tariff Debates and Rebate Proposals Take Center Stage
Senator Josh Hawley (R-Mo.) has introduced the "American Worker Rebate Act," proposing $600 rebate checks for eligible American adults and dependent children, to be funded by tariff revenues. The Treasury Department reported approximately $27 billion in customs duties for June alone. The proposed legislation, modeled after COVID-19 stimulus checks, would provide a minimum of $600, with potential for higher amounts if tariff revenues exceed projections. However, the rebate would be reduced by 5% for individuals earning over $75,000, heads of household over $112,500, and joint filers over $150,000. Economists have cautioned that such rebate checks could contribute to higher inflation.
Meanwhile, India is preparing for potential U.S. tariffs, anticipating rates between 20% and 25%. The August 1 deadline for the suspension of these tariffs is rapidly approaching. India is actively seeking the removal of a 26% additional duty and reductions on tariffs impacting its steel and aluminum exports (50%) and automobiles (25%). The U.S., in turn, is pushing for concessions on a broad range of its exports to India, including electric vehicles and agricultural goods.
Merck's Gardasil Faces Headwinds in China
Merck & Co. Inc. (MRK) is actively working to increase demand for its HPV vaccine, Gardasil, in China, a critical market that typically accounts for 60% to 70% of its international sales. This comes after Gardasil sales declined by 18% year-over-year to $1.6 billion in the last three months of 2024, primarily due to lower adoption in China. As a result of this soft demand and elevated channel inventories, Merck has paused shipments of Gardasil doses to China and has withdrawn its previous $11 billion peak sales target for the vaccine. The company has launched marketing and HPV prevention campaigns in China, including lighting up landmark buildings and promoting male vaccination following Gardasil's approval for males aged 9-26 in January 2025. Merck does not expect to resume shipments to China through at least the end of this year.
PayPal Shares Drop Amid Competition and Slowed Growth
Shares of PayPal Holdings Inc. (PYPL) fell by up to 10% today, marking their most significant single-day drop since February 4. This decline follows reports of lower active accounts and a tepid outlook for profit growth. In February, PayPal's shares had already dropped 20% due to slowed growth in its unbranded card processing business and a contraction in operating margins. The company is facing intensifying competition from rivals such as Visa Inc. (V), Mastercard Inc. (MA), Apple Pay, and Adyen, which are challenging PayPal's dominance in the digital payments sector.
GE Vernova Faces Regulatory and Market Challenges
GE Vernova Inc. (GEV) is experiencing negative sentiment as the U.S. prepares to reintroduce regulations for wind turbines located near highways and railways. This development comes as GE Vernova's Onshore Wind business secured orders in 2024 to repower over 1 gigawatt (GW) of wind turbines in the U.S. Repowering projects are designed to increase the efficiency, power capacity, and lifespan of existing turbines. Despite these onshore developments, GE Vernova's offshore wind unit has a $3 billion backlog but has paused efforts to secure new offshore wind turbine orders due to market uncertainty and challenging conditions.
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.