US stock market: "Tariffs expected to eventually be lowered" – Losses narrowed amid optimism

Cryptocurrency-related stocks rally across the board on Bitcoin surpassing $120,000

This week: CPI release, start of corporate earnings season

Ahead of both the June consumer price index and corporate earnings announcements this week, US stocks opened lower on the 14th (local time) as the Trump administration ramped up tariff threats. However, losses were limited on expectations that negotiations for tariff reductions would eventually materialize.

At 10 AM Eastern Time on the 14th, the S&P 500 fell 0.12% and the Nasdaq Composite declined 0.2%, while the Dow Jones Industrial Average fluctuated.

Ahead of the June Consumer Price Index (CPI) report to be released on the 15th, the yield on 10-year Treasury notes rose by 2 basis points (1bp=0.01%) to 4.43%.

With the House of Representatives expected to handle a number of cryptocurrency-related bills this week, Bitcoin surpassed $120,000 for the first time ever. Earlier in the morning, Bitcoin even surpassed $123,000, and around 10 AM, it was trading up 2.3% at $121,846.192. Ether also gained 1.8% to $3,045.31.

Cryptocurrency-related stocks led the gains in the market that day. Marathon Holdings soared 11% while Riot Platforms jumped 8%. MicroStrategy advanced 4.5%, and Coinbase and Robinhood both rose more than 2% each. Circle Internet climbed 1.5%.

Tesla shares rose 1.1%; among major tech stocks, NVIDIA slipped 0.6%, but Alphabet, Amazon, and Meta Platforms were trending upward.

President Trump threatened to impose a 30% tariff on the European Union (EU) and Mexico over the weekend, putting the resilience of the US stock market to the test. Most market participants regarded this as a negotiating tactic and expect final tariffs to be eased.

Nevertheless, Deutsche Bank strategist Jim Reid commented, "The market generally views this as a negotiating tactic, but posturing can sometimes become reality." He noted that if some of the large tariffs slated for August 1st take effect in a relatively inactive second half, it could deliver a significant shock to the market.

This week, the start of quarterly earnings reports for corporations begins with results from major banks such as JPMorgan Chase on the 15th.

Glen Smith, Chief Investment Officer (CIO) at GDS Asset Management, emphasized, "The market has withstood tariff issues well so far, but whether corporate earnings can still mask tariff-related problems remains to be seen."

Another potential risk for investors to watch is the tension between the Trump administration and the Federal Reserve System. Kevin Hassett, the National Economic Council (NEC) chairman, said in an interview with ABC News the previous day that President Trump "could dismiss Federal Reserve Chair Jerome Powell if justified." Members of the Trump administration are pressing Powell for rate cuts while scrutinizing the costs of renovations at the Federal Reserve’s headquarters. The Fed has pushed back against criticism of this renovation project.

Deutsche Bank’s strategist George Saravelos said the possibility of Powell’s dismissal is an extremely underpriced risk that could provoke a sell-off of the US dollar and Treasurys.

Regarding the US Consumer Price Index (CPI) report out on the 15th, Wall Street economists expect inflation to have increased as companies have started passing on higher import costs. Along with retail sales, industrial production, and consumer sentiment figures due later in the week, this data may test the Fed’s wait-and-see approach on rate cuts.

Freelance reporter Kim Jung-ah kja@hankyung.com