Eyes on 7,000: Trade Deals, Fed's QT Policy, Industrial Earnings

Market Overview - President Trump is signaling openness to reducing fentanyl tariffs, which is creating optimism in the market [2][3] - Potential easing of trade tensions could allow Nvidia to ship advanced chips to China, further boosting market sentiment [2][3] - China has reportedly purchased some soybeans, indicating possible positive developments in trade negotiations [3][4] Federal Reserve Meeting - The market is anticipating a 25 basis point rate cut from the Federal Reserve, with a focus on potential halting of quantitative tightening (QT) [6][7] - Currently, the Fed is rolling off $5 billion in treasuries and $30 billion in mortgage-backed securities monthly, which could impact mortgage rates and financial stocks if QT is stopped [7][8] - A halt in QT could signal readiness to address economic slowdowns and may lead to lower mortgage rates, benefiting the housing market [8][9] Company Earnings - Boeing - Boeing reported revenue of $23.27 billion, exceeding expectations of $21.97 billion, but posted a larger-than-expected loss of $747 million due to a $4.9 billion charge related to the 777X program [12][13] - Despite ongoing issues with the 737, Boeing turned cash flow positive for the first time since 2023, indicating a stabilizing trend [13][14] Company Earnings - Caterpillar - Caterpillar's adjusted earnings per share came in at $4.95, beating expectations of $4.50, with revenue of $17.6 billion reflecting a 10% year-over-year growth [16][17] - The energy and transportation unit saw a 17% increase in sales, driven by artificial intelligence developments, contributing to 40% of total revenue [17][19] - Caterpillar's performance suggests that capital expenditure from major companies is beginning to positively impact the industrial sector [19] S&P 500 Outlook - The S&P 500 is at a record high but lacks broad participation, with a focus on potential movements based on the Fed's QT announcement [20][21] - A potential slingshot move for the S&P 500 is anticipated if QT is halted, with the market expecting a 1% move either up or down [21][22]