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Aug 1 deadline looms for US trading partners

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Fed policy decision Weds, US jobs report Fri

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Results due from Apple ( AAPL ), Microsoft ( MSFT ), Amazon ( AMZN ), Meta

By Lewis Krauskopf

NEW YORK, July 25 (Reuters) - A looming U.S. deadline

for more severe global tariffs is among a barrage of upcoming

events threatening to disrupt an increasingly calm U.S. stock

market that has set a string of all-time highs.

President Donald Trump has extended a deadline to August 1 for

when higher levies will take effect on an array of trading

partners unless deals are struck. That could boost market

volatility heading into next Friday.

Much more is on the calendar that could move markets.

Investors will watch the Federal Reserve's monetary policy

meeting, the monthly U.S. employment report and earnings reports

from megacap companies Apple ( AAPL ), Microsoft ( MSFT ) and

Amazon ( AMZN ).

"There is going to be a lot to digest for markets into next

week," said Matthew Miskin, co-chief investment strategist at

Manulife John Hancock Investments.

"Expectations from the markets have gone up relative to

several months ago," Miskin said. "So it's just going to be

another big week for trying to meet loftier expectations."

RECORD HIGHS, FALLING VOLATILITY

The benchmark S&P 500 kept tallying new all-time highs

during the week. Equities have recovered from a plunge after

Trump's April 2 "Liberation Day" tariff announcement set off

fears of a recession that have since ebbed.

The S&P 500 has surged 28% since its low for the year a week

later, while the tech-heavy Nasdaq Composite has jumped

38% in that time.

"We just got three years of return in three and a half

months," said Chris Galipeau, senior market strategist at the

Franklin Templeton Institute. "The equity market needs to

consolidate this move."

Market volatility measures have eased considerably. The Cboe

Volatility Index spiked to 60 in April, but has been

below its long-term median of 17.6 for most of July and on

Wednesday posted its lowest close in five months.

However, pockets of volatility have emerged in the past week.

Eye-popping gains in highly shorted stocks such as Kohl's

and Opendoor Technologies ( OPEN ) heralded the possible

return of a "meme stock" craze that could signal some

over-exuberance in risk appetite, at least among retail

investors.

Meanwhile, the record-setting rally has lifted valuations to

historically expensive levels. The S&P 500 was trading at 22.6

times earnings estimates, well above its long-term average P/E

ratio of 15.8, according to LSEG Datastream, which could make

the market vulnerable to disappointments in the coming week.

Higher tariffs on the European Union and many other

countries could take effect on August 1. Trump had paused many

of the most severe of his reciprocal tariffs in April, following

the bout of extreme market volatility.

"There is a particular belief and conviction that the market

has that the administration just won't be as aggressive as

they've been threatening because of what was experienced in

early April," said Kevin Gordon, senior investment strategist at

Charles Schwab. "The next hurdle in the trade (situation) is

really to see what sticks."

FED OFFICIALS AWAIT TARIFF IMPACT

The Fed is widely expected to hold interest rates steady in its

monetary policy decision on Wednesday, as central bank officials

want more data to determine if tariffs are worsening inflation

before they ease rates further.

But tensions between the White House and the central bank over

monetary policy have heightened, with Trump repeatedly

denouncing Fed Chair Jerome Powell for not cutting rates. Two of

the Fed Board's Trump appointees have articulated reasons for

supporting a rate cut this month.

A packed week of corporate results includes Apple ( AAPL ), Microsoft ( MSFT ),

Amazon ( AMZN ) and Facebook parent Meta Platforms ( META ), four of the

"Magnificent Seven," whose stocks heavily influence benchmark

indexes because of the companies' massive market values.

With about 30% of S&P 500 companies having reported results,

overall second-quarter earnings are on track for a 7.7% increase

from a year ago, according to LSEG IBES. That would beat a 5.8%

estimated rise on July 1.

The week ends with the monthly U.S. employment report on

Friday. Employment in July is expected to have increased by

102,000 jobs, according to Reuters data as of Thursday, after

rising by 147,000 jobs in June.

"We've had relatively strong economic data that almost shows

a modest re-acceleration in the economy in June and I think

markets are priced to reflect this re-acceleration," Miskin

said.