Tariffs Test Market Nerves, Yet Tech Keeps Midday Rally Alive

Introduction
Markets opened tentatively on Friday, July 4 2025, with traders digesting an overnight barrage of tariff headlines and a mixed batch of economic updates. By lunchtime, the major U.S. benchmarks had staged a surprisingly resilient advance, shrugging off early downticks in futures trading that followed President Trump’s warning of tariff letters carrying levies of up to 70 percent. According to intraday data compiled by Monexa AI from the Cboe, trade volumes remain well below average because of the holiday-shortened session, but buying interest in heavyweight technology names has been strong enough to carry the broader tape into positive territory.

Market Overview#

Intraday Indices Table & Commentary#

Ticker	Current Price	Price Change	% Change	Day Low	Day High	52-Week High
^SPX	6 279.35	+51.93	+0.83%	6 246.46	6 284.65	6 284.65
^DJI	44 828.53	+344.11	+0.77%	44 550.42	44 885.83	45 073.63
^IXIC	20 601.10	+208.00	+1.02%	20 480.22	20 624.51	20 624.51
^NYA	20 725.79	+128.86	+0.63%	20 596.93	20 725.79	20 742.38
^RVX	22.45	–0.98	–4.18%	22.23	24.08	48.34
^VIX	17.48	+0.84	+5.05%	16.92	17.67	35.05
Source: Cboe Global Markets, 12:30 p.m. ET

After a shaky pre-market driven by a 300-point slide in Dow futures (Reuters), all four headline equity benchmarks are now firmly green. The NASDAQ Composite set an intraday record at 20 624.51, propelled by outsized moves in semiconductor-design stalwarts CDNS +5.10 percent and SNPS +4.90 percent. The S&P 500 is tracking its own record as it pierces 6 280 for the first time, reiterating the “melt-up” narrative flagged in morning commentary by Reuters.

The Cboe Volatility Index (^VIX) is notably higher—up +5.05 percent—signalling that demand for downside hedges is rising even as spot equities advance. Meanwhile the small-cap-focused ^RVX plunged –4.18 percent, reflecting narrower hedging demand in the Russell 2000 universe after yesterday’s thin extended-hours downdraft failed to produce follow-through selling.

Macro Analysis#

Economic Releases & Policy Updates#

The only major datapoint released after the open was the Commerce Department’s international trade in goods gap, which narrowed more than expected to –$82.7 billion for May (Bloomberg). While narrower deficits are typically a growth positive, the improvement was driven chiefly by a pull-forward in exports ahead of potential tariffs, according to analysts at Oxford Economics quoted by Reuters.

Investors also continue to parse Thursday’s June payrolls report, which showed 147 000 jobs added and an unemployment rate easing to 4.1 percent. However, private-sector hiring decelerated sharply, enhancing the “stagflation watch” theme. In fixed income, the 10-year Treasury yield is steady at 3.98 percent, down 2 basis points from Wednesday’s close, implying the bond market is still hedging against a growth slowdown rather than an inflation spike.

Global/Geopolitical Developments#

The macro backdrop remains dominated by tariff brinkmanship:
• President Trump reiterated this morning that “10 or 12” tariff letters would go out today with levies reaching 70 percent on select imports (Bloomberg).
• Europe faces a July 9 deadline to secure concessions before reciprocal tariffs snap back, a risk cited by Reuters as a top reason European IPO pipelines are stalling.
• In Asia, China welcomed the U.S. decision to reverse a May ban on exporting chip-design software, a concession likely aimed at tempering trade tensions ahead of G-20 meetings.

Despite the harsh rhetoric, equity traders appear to be betting that worst-case outcomes may be deferred—explaining why defensives are outperforming but not outright surging.

Sector Analysis#

Sector Performance Table#

Sector	% Change (Intraday)
Utilities	+1.26%
Technology	+0.90%
Industrials	+0.84%
Financial Services	+0.53%
Energy	+0.51%
Consumer Defensive	+0.39%
Consumer Cyclical	+0.23%
Healthcare	+0.04%
Basic Materials	–0.19%
Communication Services	–0.30%
Real Estate	–0.88%
Source: Monexa AI heat-map, 12:30 p.m. ET

Technology continues to supply the index horsepower. Hardware giant AAPL is up +0.52 percent after UBS cited an 8 percent YoY iPhone sales increase in China. High-beta cybersecurity name CRWD is +3.63 percent, extending yesterday’s breakout.

Utilities have quietly emerged as the day’s standout, with the group adding +1.26 percent and pushing month-to-date gains near +5 percent. The bid owes partly to the defensive appeal of regulated cash flows in a tariff-clouded macro as well as a burst of interest in energy-transition plays: AES +3.50 percent and VST +2.77 percent.

Energy is positive across both fossil fuel and renewable sub-industries. UBS reaffirmed its Buy rating on XOM, forecasting Q2 EPS of $1.66 versus Street consensus of $1.52 even in the face of lower Brent pricing. That call helped lift the major integrateds, while solar bellwether FSLR leapt +8.51 percent after reporting robust module-booking momentum.

Real Estate remains the primary laggard, off –0.88 percent. Office-centric PGRE gave back early gains despite a UBS outlook upgrade, reflecting persistent scepticism toward central-business-district landlords at a time when hybrid work is curbing demand.

Company-Specific Insights#

Midday Earnings and Key Movers#

Ero Copper (NYSE: ERO
BMO Capital’s pre-open upgrade to “Outperform” has been overshadowed by a ‑2.81 percent price slip after the company confirmed commercial production at its Tucumã mine in Brazil. Traders attribute the dip to mild “sell-the-news” flows rather than fundamental misgivings; guidance for FY25 tonnage remains intact.

Paramount Group (NYSE: PGRE
Shares pared an early +1.2 percent pop and are now marginally lower despite UBS shifting to a Positive internal rating. The desk chatter points to rising vacancy fears in Manhattan as tenants wait out tariff headlines before committing to new leases.

Franklin Covey (NYSE: FC
The stock is –8.56 percent after beating EPS but missing revenue. Management blamed “elongated enterprise sales cycles,” a phrase investors increasingly hear across the consulting space whenever C-suites push back on discretionary spend.

UniFirst (NYSE: UNF
UNF is flat at lunchtime after posting a third straight EPS beat. The muted reaction suggests investors are waiting for management to quantify tariff-related fabric cost inflation during the post-close call.

Apple (NASDAQ: AAPL
A mid-morning note from Bank of America estimated App Store revenue up 12 percent YoY in June, driving Services strength even as hardware unit sales in China softened. With 219 million shares traded by noon, AAPL is the day’s second-most-active listing after NVDA.

Exxon Mobil (NYSE: XOM
UBS’ forecast for upstream income of $5.16 billion (versus consensus $4.71 billion) is lending credibility to the view that tight cost discipline can cushion commodity-price swings. XOM’s +1.04 percent gain outpaces the broader energy sector.

Leslie’s (NASDAQ: LESL
Pool-supply retailer Leslie’s slides –4.81 percent after Mizuho cut its price target to $1, citing leverage of ~6× net-debt/EBITDA. The move underscores how tariff-driven margin compression can be existential when balance sheets are stretched.

Extended Analysis#

Intraday Shifts & Momentum#

The morning tape illustrates an intriguing barbell dynamic: investors are rewarding long-duration growth franchises (software, renewables) and classic defensives (utilities, insurers) while penalising mid-cycle consumer names caught between margin pressure and fragile demand.

Tariff rhetoric is acting as a sentiment accelerant rather than a discrete valuation cut, at least for now. The S&P 500 melt-up thesis aired by several strategists finds validation in today’s broad-based advance, but the rising VIX warns that tail risk hedges are being quietly accumulated. In other words, traders are willing to pay for upside exposure so long as they can buy protection cheaply—a strategy mirrored in the sharp drop in ^RVX as small-cap risk is deemed less immediate.

Cross-asset signals stay remarkably orderly. WTI crude trades at $75.60/bbl, down 0.3 percent, while gold holds at $2 432/oz, flat on the session—hardly panic levels. The dollar index (DXY) is unchanged near 103.9. These benign moves imply that for all the tariff noise, currency and commodity desks see limited near-term disruption to real-economy flows.

From a factor perspective, quality and profitability factors are outperforming, chiefly because names like MA and JPM offer both pricing power and balance-sheet resilience. Meanwhile momentum remains dominated by AI-adjacent semis and infrastructure software: NOW +3.46 percent extended its three-week run, and ORCL +3.19 percent moved on speculation that its cloud tie-up with OpenAI will accelerate capex recognition in FY 26.

If there is a hidden fault line, it is Consumer Discretionary. Homebuilders took it on the chin—LEN is –4.07 percent—even as travel names such as EXPE and NCLH popped on summer-booking optimism. The bifurcation mirrors uneven household balance sheets: wage gains favour service-oriented leisure spending, while rate-sensitive housing suffers under 30-year mortgage rates still hovering near 6.9 percent.

Conclusion#

Midday Recap & Afternoon Outlook#

By midday, Wall Street has absorbed a fresh volley of tariff headlines without cracking. Record prints in the NASDAQ and S&P 500 underscore investor faith in secular growth, but a 5 percent jump in the VIX cautions that protective positioning is accelerating. Sector leadership sits with Technology, Utilities, and Energy Transition names, while Real Estate and Basic Materials struggle under the weight of a strong dollar and demand uncertainty.

Heading into the afternoon, three catalysts loom:

1. Any White House clarification on tariff timing could sway risk appetite.
2. Thin holiday liquidity magnifies the odds of outsized swings; a single large program trade can tilt the tape.
3. Traders will watch for end-of-week repositioning ahead of Monday’s full session, particularly in options markets where gamma profiles reset.

Key Takeaways
• Tariff risk is now the principal macro swing factor. Yet for the moment, investors view it as a volatility event, not an earnings shock.
• Tech’s leadership remains intact. Strength in design software and cybersecurity hints that enterprise capex on AI and cloud is not slowing.
• Utilities’ outperformance signals a defensive rotation beneath the surface—investors are buying income streams insulated from trade spats.
• Volatility is bid. A higher VIX alongside rising equities suggests prudent hedging rather than outright fear.
• Stock picking trumps sector calls. Wide dispersions—FSLR up +8.5 percent vs. LEN down –4 percent—underline the need for idiosyncratic analysis in a headline-driven market.