President Trump threatens new Japan tariffs, Senate pulls all-nighter on tax bill

President Trump threatens new Japan tariffs, Senate pulls all-nighter on tax bill

[Music] Welcome to Yahoo Finance’s flagship show, the morning brief. I’m Brad Smith. Let’s get to the three things that you need to know today. First up, US stock futures pulling back from fresh highs this morning after the S&P 500 saw back-to back records, marking the best quarter for the index since 2023. Investors are closely monitoring the latest developments on the tax bill and trade in Washington with President Trump threatening to proceed with ramping up tariffs on Japan as his top economic adviser says the White House aims to finalize deals with partners after the 4th of July. Meanwhile, US senators pulled an all-nighter as they look to pass President Trump’s $3.3 trillion tax and spending bill amid division within the Republican party. Senators voted through the night and into the morning on a series of amendments to the massive bill, including proposed energy and healthc care provisions. Treasury Secretary Scott Besson told Fox News he expects the bill to be passed by this afternoon. And President Trump lashing out at Elon Musk after the Tesla CEO criticized his tax bill. Trump threatened to withdraw government subsidies from Musk’s companies after Musk called the spending bill insane. The president suggested the department of government efficiency that Musk led for months may take a hard look at US funding for rocket launches, satellites, and electric car production. [Music] Let’s get a check on US stock futures this morning. We’re down across the board. Fractionally as it may be, the Dow is lower by about onetenth of a percent. S&P 500 that moving lower here this morning by about 3/10en of a percent and then additionally the NASDAQ futures. You’re seeing those pointing lower this morning by 4/10en of a percent. Let’s turn now to our top stories of the day. Kicking it off with today’s market action as futures drop after back-to-back records. Plus the latest in Washington as senators pull an allnighter. Hope they had some good coffee. with lawmakers voting on amendments to President Trump’s tax bill. And we’ll get a fresh read on the economy with comments from Fed Chair Pal and fresh jobs and manufacturing data. All that and much more. And joining me now, we’ve got Alli Canal, Jennifer Shawnburger, and live from the NASDAQ, Brook Depal. Great to have you all here this morning. Ally, how are the markets looking 30 minutes out from the start of trade off of some of these fresh records? Yeah, Bravo, as you were just saying, we are seeing a bit of a pullback here for stocks across the board after we saw those back-to-back record highs for both the S&P 500 and the NASDAQ. So, we have this exuberance in stocks right now. And we also have this broadening out of the rally to end the first six months of the year. We have industrials and communication services sectors leading the way higher. Tech is number three. We’ve also seen a significant bounce back in financials as well. So on a sector basis, the rally is broad. However, on a company specific basis, we’re still seeing those megga cap stocks outperforming some of those smaller and midcap companies. So that’s something that strategists tell me they’ll want to see more of this broadening out the more we get into the summer trading. Uh and one thing that I’ve been interested in is just this disconnect that we seem to have between Wall Street sentiment and retail sentiment. Wall Street has been pretty bearish on the outlook, especially when we talk about the economic picture, but we’ve seen retail traders really lead this market higher, this aggressive buying of the dip. They have their hands all over this rally. And you can look at some of the best performing stocks of the year to paint that picture. Palunteer, super micro computer. I mean, these were meme stocks not that long ago, and now they’re poster children for the AI tech trade. So, we’re in this momentum-driven FOMO chasing rally here and that’s really forced institutions to catch up as well. So, everything that we will see in the summer suggests that we could potentially go higher, but we could also see some volatility, some choppiness in the trade. However, we will be past peak uncertainty hopefully because we will be receiving some confirmation on the trade and tariff front along with the tax bill and that will just give markets as well as the Fed more clarity on what to do next. And Brooke, uh, speaking of the retail traders out there, I know you’re looking at different pockets of the market that have actually benefited and they’ve been a little riskier, right? A little riskier indeed. When you take a look at what exactly Q2 consisted of, it really started at that peak when Trump announced that liberation day until now. And if you take a look here, investors really leaned into what quote unquote uh Goldman Sachs said was the riskier corners of the market over the past three months as we kick off Q3 today. Taking a closer look since then, since that beginning of April, one of the riskier index that investors really have flocked to is that Bitcoin uh sensitive index at Goldman Sachs. And if you take a look, that has become a top performing asset over the past three months. If you take a closer look at Bitcoin, it’s up more than 14% year to date. If you take a look at specific stocks, think of Coinbase, one of the companies that has been more of a riskier uh companies. They did close at a record high for the first time since November 2021 last week. Also year to date, they’re up more than 40%, now backing down a bit off those highs as we roll into this lighter trading week with trading set to close on Thursday at 100 p.m. Also keeping a close eye on Strategy, formerly known as Micro Strategy, that bought another that company bought another $532 million in Bitcoin. That’s also up around 40% year to date. Another outperforming index under that Goldman Sachs uh note there was the high beta momentum index. Think equities, think fixed income, think commodities over the past few months. But me, I’m always keeping an eye on that retail favorites index. If you could see there, that pink line there trending higher than the S&P 500. And what we’ve seen really lead that majority of retail stocks include things like Dollar Tree and Dollar General to companies that have really been outperforming the S&P 500 as consumers really turn to lowcost goods, lowcost items in this environment where truly uncertainty is leading their spending decisions here. Brad,
yeah, good synopsis there, Brooke. And and Jennifer, I want to bring you in. I mean, it’s a late night and early morning for lawmakers in the Senate debating the president’s big tax bill here. I I imagine that they were doing shots of 5H hour energy, perhaps chasing that with some energy drinks, some Celsius. What What is the latest right now?
Definitely some late night pizza, Brad. And yeah, it looks like they don’t have the votes yet in the Senate after a marathon session of voting on amendments all day Monday that stretched into the wee morning hours of Tuesday. It looks like that big, beautiful tax bill remains in flux in the Senate this morning. Republicans jockeying to find the votes to really pass this bill. They can only afford to lose three votes and still pass this bill. Senators Tom Tillis and Ran Paul are firm nose. Meanwhile, Senator Lisa Marowski from Alaska is looking for protection against cuts on Medicaid and food stamps. She’s also looking for a slower phase out of those clean energy tax credits, something that she has not gotten yet. So, her vote remains outstanding at this present time. At the same time, Senator Susan Collins from Maine has also not committed to yes. So, negotiations continue in the Senate as lawmakers race to try to make the president’s self-imposed deadline of this Friday, July 4th. Once they get over the hurdle in the Senate, they’ve got to get it through the House. And the price tag on this bill is higher than when it passed out of the House. So, there are some fiscal hawks in the House that are probably going to bulk at this legislation. So, there are still hurdles to come even after the Senate with such a short timeline. And meanwhile, Brad, this morning we are also going to hear from Fed Chair Jay Pal, who is set to speak on a panel in Portugal at the European Central Bank’s monetary policy conference. He’s going to be flanked by other members uh of central banks, including Christine Lagarde of the ECB, as well as the heads of uh the Bank of England, the Bank of Japan, and the Bank of Korea. I fully expect him to reiterate that the Fed remains in this wait and see posture as they wait to see what impact tariffs are going to have on inflation through the summer months. Chair Pal and many of his colleagues believe that we have not yet seen the impact from uh tariffs on inflation yet. And of course, all of this coming in the midst of President Trump’s continued attacks on Pal uh yesterday posting uh on social media a note that he apparently uh sent to the chair saying uh Jerome too late Pal and his entire board should be ashamed of themselves for allowing this to happen in the United States. In other words, not lowering rates. Uh again, chiding the Fed for costing um the the US trillions in interest. Uh, one thing that I’m going to be looking for today from Pal is whether he sheds any insight on whether he’s going to leave the board of governors after his term is up as chair next May. Uh, it’s something that Treasury Scott, Treasury Secretary Scott Bessant seemed to imply could happen. Yeah, Jennifer, and and with everything that you were just mentioning as well, the significance of PAL’s timing in Portugal, of course, as the EU is really looking to kind of come down to the wire on their own tariff negotiations, too. So, it’ be interesting to see what commentary is offered there. His international trip coming just after he was in Capitol Hill, of course, last week. Also, Ally, while we have you, we’re expecting some jobs and manufacturing data. No doubt the Fed continuing to pay very close attention to how this data comes in. What should investors watch out for, though? Yeah, the Jolts data that we’ll be receiving later this morning is going to be closely watched as we will have that labor report out on Thursday. An economist poll by Bloomberg expect job openings to come in at 7.3 million in May compared to the 7.39 million openings that we saw in April. I’ll be looking for any revisions to that April number since that did come in higher than expected. And of course, if we see that May figure disappoint, that suggests a more tightening labor market, a cooling labor market. And we have seen signs of that with continuing claims edging higher in recent weeks. But overall, the job picture remains strong. We have hiring and quits rates hovering near decade lows. The unemployment rate is still historically low at 4.2%. But that doesn’t mean that there’s risks um that there does not exist risks on the horizon here. And then we’ll also be getting a few updates on the manufacturing sector. The ISM manufacturing index is expected to show continued contraction in the month of June. We’ve seen contraction here since April as new orders fall. Prices remain sticky on the heels of Trump’s tariff announcements. We’ve had slightly better survey data from S&P Global, but there is still a lot of tariff uncertainty there as well. So when it comes to these surveys, this sentiment data, a lot of back and forth has been made about whether we should take this seriously, especially when the Fed has consist consistently said they’re looking at those hard data points, the unemployment rate, inflation, retail sales. But strategists tell me that it’s important to look at all the data in totality and that includes surveys and sentiment indicators because that just gives you a little more insight and a good gut check when it comes to how these businesses are feeling about the state of the economy and it could also be a precursor to what we could see in the hard data there. So, a lot to track later this morning, Brad. But like I said, labor market remains strong. Manufacturing remains a bit um you know, unstable there. But we’ll see what today’s readings bring.
All right, Ally, Jen, Brooke, thanks so much for teing up today’s market activity and everything we’re going to be tracking. Appreciate it. The S&P 500 is entering the second half of the year after notching several all-time highs. But some technical indicators show that the rally could be under pressure as stocks enter overbought territory. So, what does this mean? Well, take a look here at the relative strength index, the RSI, which shows that stocks are at their most overbought since July of 2024 here. And so, one of the things that we can take into consideration with some of these overbought levels are the trades that continue to be crowded into as well. And one of the most popular long trades continues to be long mag 7. However, in the conversations that we’ve had over the course of this week, what is key even at these all-time high levels is to look for more breadth in this market. if we did see more broadening out into the other 493 S&P 500 names. Oh yeah, and all of the other areas of the market that have not gotten the same type of fanfare as those. And next to the AI trade, that’s what analysts and investors are going to be looking for over the rest of the course of the summer where we were already anticipating some volatility, some chop on lower volume. And then additionally, you have the additive of some of the major events, two of which kicking off July. one, the tax bill, and then two, of course, the post liiberation day and now liberation day 2.0 where we’re expecting even more of the talk around trade negotiations. Now, a downside risk to the market, of course, right now is if we don’t see any of these trade deals come forward, where the White House had already talked about looking for multiple deals to come over the finish line and good faith negotiations that were moving forward from the EU. It sounds like they’re willing to accept some of the tariffs that the US and the counterparts and trade representatives are putting forward. But the larger consideration there is if we see more push back and more tough talk on trade, how that could potentially rattle markets, especially if you continue to hear some of the rhetoric targeted towards Asia-Pacific countries that have the larger outsized GDP footprint. Think China, think Japan. And so that’s where we’re going to be continuing to track how stocks are in moving in reaction to some of those headlines here, especially if we do have weaker than expected volume that could catapult or leg up, leg down uh some of the activity, especially as we’ve just recently got back to these all-time high levels that were unseen since February of this year. But some of the strength that we’re seeing also may be tested going into this earnings season where hopefully we’ll get a little bit more clarity on outlooks this coming after a quarter where tariffs were the most repeated word over the course of the S&P 500’s earnings reports. Coming up on Morning Brief, we count you down to the opening bell on Wall Street with stocks set to open in the red. All that much more coming up on Morning Brief. Here’s a shot of New York. [Music] [Applause] Now, time for some of today’s trending tickers. We are watching Tesla, Apple, and Robin Hood. First up, President Trump threatened to pull back government subsidies for Elon Musk’s companies after the Tesla CEO again criticized the president’s sweeping tax bill. In a post on Truth Social, the president, suggested Doge could help slash funding for Musk’s businesses, declaring there was big money to be saved. Musk, a once close ally of the president, hinted that he’d support candidates who ran against lawmakers that supported the tax bill. Trump and Musk have been lobbying public attacks against one another since their falling out back in early June over the spending bill. Next up, Apple considering using external AI to power Siri. According to a report from Bloomberg, the iPhone maker has reportedly spoken with both Anthropic and Open AI about utilizing their LLM’s language learning models for Siri. If the company moves forward with a third party, it would be a major recognition that it’s struggling to keep up in the AI race. Apple’s foray into AI, dubbed Apple Intelligence, has fallen short of expectations thanks to engineering snags and delays. The launch of its ramped up Siri, originally slated for early 2025 release, had been postponed indefinitely. And finally, Robin Hood opening in the green after hitting a fresh record high. The upward momentum comes after the company launched tokens allowing users in the EU to trade hundreds of US stocks and ETFs. The commission free tokens can be traded 24 hours a day, 5 days a week. tokens will mirror the prices of US assets, providing exposure to the US market without owning the actual stocks. Robin Hood also offered plans to offer tokens linked to stocks of privately held companies, including SpaceX and Open AI. You can scan the QR code below to track the best and worst performing stocks with Yahoo Finance’s trending tickers page. Well, stock futures popping on the first trading day for the second half of the year after a volatile start to 2025 that ended with stocks at record highs. What trades should investors be watching for in the second half of the year? Joining me now, we’ve got Chad Morgan Lander, Washington Crossing Advisor, senior portfolio manager. Chad, good to have you back on Yahoo Finance with us. First and foremost, in your second half outlook, how are you looking across some of the most overcrowded areas of the market and looking for new opportunities? Right. This uh last three months have been quite robust regarding pro uh the outperformance of some of the MAG 7. Uh we would fade that trade a bit here uh and look more at some of those steady eddies that have been left behind like consumer staples and perhaps healthcare. Uh there was a lot of window dressing going into the last month of of the quarter. Uh that that should reverse itself a bit. uh by no measure will it be, you know, a massive um uh tradeoff, you know, sellown, but but again, you know, we be a little bit more conservative with uh with the trading book at this point. And so where where are those opportunities, especially considering how some investors may may heed the call, may say, you know what, if I’m trimming positions right now and and putting some of those profits back to work in other areas of the market that valuations haven’t run too high on, where are those areas where valuations are are proving a little bit more attractive right now and offering a little bit more growth? Yeah, that that’s uh the big question and and the the answer to that is you can look at consumer discretionary names like Walmart. You can look at consumer staple names like Proctor and Gamble, Clorox and Church and Dwight for a you know 3 to 5% type of per outperformance relative to the S&P. And then there are tech names in particular within the MAG 7 uh like Alphabet that uh have been left behind this year that are attractive valuations at a multiple of you know 16 17 times next year’s earnings.
And so as we’re going and staring down a fresh earning season, one of the stats that continues to come to mind for me and I I know our viewers probably hear me say this all the time. It’s from Faxet and the reason why it’s important is because it’s actually thinking through what the earnings growth rate could look like for the quarter. If 5% is the actual growth rate for the quarter, it would mark the lowest earnings growth reported by the S&P 500 since Q4 of 2023. And so if we’re looking at that earnings growth profile yet valuations right now for forward 12-month PE sitting at about 21.9 above the 5-year average it’s almost like a make it make sense for us and and what are we getting wrong perhaps or or what is there too much around right now?
Yeah, it’s aopium. It’s a bizarro world and it seems like an episode of Stranger Things at the same time. Okay, here’s the reality. uh deceleration of US economic activity and global activity because of the uncertainty regarding trade and other issues like geopolitical issues have taken down that consensus estimate for 2025. Uh we believe that that is legitimate. The market though has been running hot a bit because of the hope that the trade related issues will get put behind them in the next quarter or so and that it will be a one-time bump to inflation and then 2026 you’ll be off to the races regarding business investment in the United States capital investment in that whole AI trade and energy infrastructure trade will continue to reacelerate akin into the internet uh uh uh market back in 93 to to 99. So you’re at a 23 times multiple on S&P equally weighted 19 times and then the value index is trading at 17 times. So you’re 100% correct to believe that perhaps we are ahead of ourselves.
Chad, always a great pleasure to get some of your insights and analysis. Thanks so much for joining us ahead of the opening bell.
Thank you. Coming up on Yahoo Finance opening bid. Our own executive editor Brian Sazy joins us now to preview what’s coming up on the show. Hey Brian.
Hey Brad. What’s uh cracking here this morning. Uh lots going on on the show. Of course we’re going to dive further into the Tesla stock selloff, but really three things right off the top. We’re going to look into some of these debt bomb calls by the likes of Ray Dalio and Elon Musk. Going to look at the case for cutting rates uh not this year but 2026. That’s already becoming a big call on Wall Street. And last but not least, the FOMO rally. It’s something we’ve been covering uh the past week. Really going to dig into it now. We see it’s spreading. Yes, Brad. To penny stocks because that’s what happens when FOMO kicks in on Wall Street.
All right. A penny for your thoughts. Thank you so much, Brian. We’ve got much more coming up. That does it for Morning Brief. Opening bid starts next. [Music]

Morning Brief anchor Brad Smith breaks down the latest financial news for July 1, 2025.
President Trump threatened Tesla and SpaceX CEO Elon Musk with withdrawing government subsidies after Musk criticized the “big, beautiful bill.”
Trump also threatened to proceed with ramping up tariffs on Japan over rice and car exports as the White House looks to finalize deals ahead of a July 9 deadline.
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