SPY, QQQ Diverge as Trump Meets Nvidia CEO and Brazil Threatens Tariff Retaliation
Market Digests Strong Jobless Claims, Tariff Risks, and Uncertainty Over Fed Policy
Market Recap: SPY Holds Gains, QQQ Slips Despite Positive Start
Thursday’s trading session saw mixed action for U.S. equity ETFs as investors weighed fresh economic data, global trade tensions, and major tech headlines. The S&P 500 ETF (SPY) managed to close up 0.27%, while the Nasdaq 100 ETF (QQQ) lost early momentum and ended down 0.16%.
- The session opened on a positive note after the U.S. Department of Labor reported initial jobless claims of 227,000 for the week ending July 5—lower than the 235,000 estimate.
- However, continuing claims reached 1.965 million, the highest since November 2021, signaling layoffs are limited but new hiring is sluggish.
U.S.–Brazil Trade Tensions Escalate
President Trump’s announcement of a 50% tariff on imported Brazilian goods ignited immediate pushback from Brazil’s President Lula da Silva, who vowed reciprocal action under Brazil’s Economic Reciprocity Law.
- Lula highlighted that the U.S. has enjoyed a goods trade surplus with Brazil for 15 consecutive years, including a $7.4 billion surplus in 2024.
- Market watchers are now bracing for the potential impact on industries tied to bilateral trade as both leaders appear entrenched in their positions.
Trump Shifts Focus to Tech and Nvidia
Despite the brewing trade spat, Trump downplayed Lula’s tariff threat and pivoted to celebrating tech sector performance, especially the rally in Nvidia (NVDA) and cryptocurrencies.
- Trump’s Truth Social post highlighted:
“Tech Stocks, Industrial Stocks, & NASDAQ, HIT ALL-TIME, RECORD HIGHS! CRYPTO, ‘Through the Roof.’ NVIDIA IS UP 47% SINCE TRUMP TARIFFS.” - Today, Trump is scheduled to meet with Nvidia CEO Jensen Huang—an event closely watched by investors as Nvidia designs a China-compliant version of its Blackwell RTX Pro 6000 to navigate U.S. export restrictions.
Pressure Mounts on Fed and Jerome Powell
Trump also renewed his criticism of Fed Chair Jerome Powell, arguing that interest rates are “at least 3% too high” and cost the U.S. economy billions annually.
- Although some Fed officials like Christopher Waller agree rates are restrictive, the market sees only a 6.7% probability of a rate cut at the late-July FOMC meeting.
- Waller noted that while Trump’s tariffs could drive a one-time price bump, the unemployment rate remains steady, keeping overall policy debate lively.
Sector and Market Performance Snapshot
- S&P 500 (SPX): +0.27%
- Nasdaq 100 (NDX): -0.16%
- SPY ETF: -0.35%
- QQQ ETF: -0.23%
- Nvidia (NVDA): +0.50%
Key Takeaways
- SPY and QQQ diverged on trade war risk, tech leadership headlines, and ongoing Fed uncertainty.
- The outcome of Trump’s meeting with Nvidia’s CEO and any further developments on U.S.–Brazil tariffs will remain in focus for investors.
- A hawkish Fed, paired with political pressure for lower rates, sets up more volatility ahead of the late July FOMC meeting.
