Trump demands a rate cut — Will the Fed blink? 07/05/2025

HOT stories for today

US market wrap:

• U.S. equities fell Tuesday after President Donald Trump delivered ambiguous comments on international trade, undermining hopes for swift resolution on the tariff front. Market participants also looked ahead to the Federal Reserve’s upcoming policy decision, adding to the day’s cautious tone. The Dow Jones Industrial Average dropped nearly 390 points, or 1%, while the S&P 500 lost approximately 0.8%. The Nasdaq Composite declined by around 0.9%.
• Volatility increased following an afternoon meeting between Trump and Canadian Prime Minister Mark Carney—their first official engagement since Carney assumed office earlier this year. During the meeting, Trump tempered earlier optimism, stating, “We don’t have to sign deals,” casting doubt on the likelihood of near-term trade agreements. His remarks stood in stark contrast to those of Treasury Secretary Scott Bessent, who told CNBC on Monday that the U.S. is “very close to some deals,” mirroring Trump’s own comments from Sunday. Elsewhere, semiconductor giant AMD reported solid quarterly earnings, but cautioned that future government policies could pressure profit margins in the coming quarters, weighing on investor sentiment.
   

Trump demands a rate cut — Will the Fed blink?
 

• Despite pressure from President Trump and investor hopes for a rate cut, the Federal Reserve is expected to hold interest rates steady this week. Fed Chair Jerome Powell remains focused on combating inflation, citing ongoing economic uncertainty and the lingering effects of trade tensions. While Trump pushes for cuts to juice the economy ahead of the election, the Fed is signaling only modest reductions in 2025—a slower pace than markets had hoped for.
• Markets, fresh off a nine-day rally, may have to wait until July or beyond for any policy shift, depending on inflation and broader economic trends. Fed officials are also navigating a complicated landscape shaped by unpredictable trade policies, making future moves harder to pin down. Investors will be watching every word from Powell, as even subtle shifts in tone could rattle Wall Street—or fuel the next rally.
   

Stocks on the move:

• Super Micro Computer (SMCI) — Shares declined roughly 5% after the server manufacturer missed Wall Street expectations for its fiscal third quarter and issued a downbeat forecast for the current quarter. The company posted adjusted earnings of 31 cents per share on $4.60 billion in revenue, falling short of LSEG estimates of 50 cents per share and $5.42 billion in revenue.
• Advanced Micro Devices (AMD) — The semiconductor firm jumped nearly 4% following a stronger-than-expected first-quarter earnings report. AMD reported adjusted earnings of 96 cents per share and revenue of $7.44 billion, surpassing analyst forecasts of 94 cents and $7.13 billion, respectively.
• Wynn Resorts (WYNN) — Shares dipped 2% after the casino company reported first-quarter adjusted earnings of $1.07 per share on $1.70 billion in revenue, missing LSEG estimates of $1.19 per share and $1.74 billion in revenue.
• Electronic Arts (EA) — The gaming giant climbed 5% after delivering fiscal fourth-quarter adjusted revenue that exceeded analysts’ expectations.
   

Today’s action
 

• Hong Kong markets led regional gains Wednesday, with the Hang Seng Index jumping 2.07% after China’s central bank and financial regulators unveiled aggressive interest rate cuts aimed at stimulating the economy amid trade tensions. Japan’s Nikkei 225 rose 0.22%, while the broader Topix added 0.38%. South Korea’s Kospi ticked up 0.32%, though the tech-heavy Kosdaq slipped 0.7%. Australia’s S&P/ASX 200 edged 0.17% higher.
• In the U.S., stock futures advanced Tuesday night as investors awaited the Federal Reserve’s interest rate decision, expected Wednesday afternoon. Dow futures gained 270 points, or 0.7%, while S&P 500 and Nasdaq 100 futures rose 0.8% and 1%, respectively. Optimism grew after officials confirmed Treasury Secretary Scott Bessent and trade envoy Jamieson Greer would meet Chinese counterparts in Switzerland this week. Markets will also parse consumer credit data and corporate earnings from Disney, Carvana, and Uber later in the day.

Watchlist: AMD, WYNN, UPST, AMD, EA, DIS, CVNA, UBER

Bitcoin
 

• Bitcoin (BTC) surged to $97,469 after hovering near $94,000 earlier in the day, gaining over $3,500 from its May 5 intraday low. Trading volume hit $24.27 billion, accounting for 33.11% of total crypto market activity. The rally reflects a revival in investor sentiment, though BTC now contends with tough resistance levels at $97,800 and $98,000.
• Analysts say holding above $95,000 is crucial for any retest of the $109,000 all-time high; a drop below could trigger a deeper pullback. All eyes are on the Federal Reserve’s rate decision on May 7, which could shape BTC’s trajectory in the near term.
  Watchlist: Bitcoin: 74 000-100 000, Ethereum:1500-2800, Solana: 80-180

Forex
 

• The Japanese Yen (JPY) lost ground Wednesday, snapping a three-day winning streak against the U.S. Dollar (USD), as renewed optimism around U.S.-China trade talks reduced safe-haven demand. A modest uptick in the greenback and lingering uncertainty over the Bank of Japan’s future rate path further pressured the JPY, lifting USD/JPY from a one-week low.
• Meanwhile, the euro held steady near 1.1300 against the dollar, with EUR/USD stuck in a tight consolidation zone. Traders remain cautious ahead of the Federal Reserve's policy decision later today, with markets largely expecting no change in rates but closely watching for any shift in tone from Fed Chair Powell.
  Watchlist: EUR/USD: 1.0700-1.1600, USD/JPY: 140-144
   

Basic Materials
 

• Gold (XAU/USD) edged higher from session lows near $3,360 but remained under pressure Wednesday as optimism over renewed U.S.-China trade talks dulled demand for safe-haven assets. A stronger U.S. dollar, buoyed by pre-Fed positioning, also weighed on bullion, limiting its ability to extend recent gains.
• Meanwhile, WTI crude oil continued its recovery, rising over 1% to trade near $59.40—its highest level in a week. The rally builds on a rebound from a one-month low near $55, fueled by improved sentiment surrounding U.S.-China negotiations. Still, traders remain cautious ahead of the Federal Reserve’s policy decision, which could set the tone for both commodities in the days ahead.
  Watchlist: GOLD 2600-3500, US Oil: 55.60-70.00
   

Key Economic Events Today:

EST time
10:30 am: USD Trade BalanceCrude Oil Inventories
02:00 pm: USD FED rate decision
02:30 pm: USD FOMC Press Conference
03:00 pm: USD Consumer Credit
 

Earnings

BMO (Before the US Market opens)
NVO            Novo Nordisk
UBER          Uber Technologies
DIS              Walt Disney Company
AMC (After the US Market closes): ARM, APP, MELI, FTNT, CVNA
 

The TEFS Analyst team wishes you a successful day!