Perfect Storm Of Tariffs, Jobs And Interest Rates News

The S&P 500, NASDAQ Composite and the Dow Jones Industrial Average showed mixed results Tuesday morning as investors absorb news on tariffs, U.S. President Trump’s spending bill, the health of the U.S. labor market and hints on when the Fed may lower interest rates.

FXTM Senior Market Analyst Lukman Otunuga describes the economic events unfolding this week as a “triple threat” that could shape expectations on interest rates, inflation and risk. These are the topics to watch:

1. Tariffs: The 90-day pause on President Trump’s aggressive reciprocal tariffs expires on July 9. The U.S. has formalized deals with the U.K. and China. U.S. Commerce Secretary Howard Lutnick also reported progress on 10 other agreements with “major trading partners.”
2. One Big Beautiful Bill Act: The Senate passed Trump’s massive tax and policy bill Tuesday, sending it back to the House for approval. Broadly, the bill includes tax cuts primarily funded by cuts in Medicaid and food assistance programs.
3. Jobs: On Tuesday, the Labor Department reported 7.8 million open jobs in May, higher than expected and up from 7.4 million in April. Unemployment and nonfarm payroll (NFP) data for June and weekly jobless claims will be published July 3. Analysts expect the June unemployment rate to be 4.3%, up from 4.2% in the prior month, according to Marketwatch.com. Nonfarm employment is expected to rise by 110,000 vs. 139,000 in the prior month. Jobless claims are also projected to be higher at 240,000, up from 236,000 in the previous report.
4. Interest Rates: While speaking at an event in Portugal Tuesday, Federal Reserve Chair Jerome Powell was questioned about the timing of an interest rate cut. He did not dismiss the possibility of a rate reduction at the Fed’s next meeting on July 29.

Otunuga said the conflicting forces in play could create volatility in stock prices. “While Trump’s ambitious tax bill could boost household and business spending, its $3.3 trillion deficit cost may rattle investor confidence.” Otunuga continued, “At the same time, Powell’s remarks and a softer-than-expected NFP print could reinforce dovish bets—putting further pressure on the dollar and lifting gold. Volatility is likely to spike as traders navigate this perfect storm.”

The S&P 500 was flat midday on Tuesday after pulling back a few points from a new high set Monday. The NASDAQ Composite dipped 126 points to 20,243.64 and the Dow Jones Industrial Average rose 1% to 44,539.05.