Dow Jones Industrial Average rebounds on earnings as Trump trades one war for another

The Dow Jones Industrial Average (DJIA) climbs around 340 points, or 0.7%, on Tuesday, snapping a three-day slide that has pulled the index away from the early July record just above 53,300. The rebound runs out of steam at the 52,200 level, and the Dow changes hands just beneath that ceiling at lunchtime in New York, roughly 2% short of the high-water mark.

The advance comes with CENTCOM's air campaign against Iran running into a tenth consecutive night and Crude Oil adding 2%. West Texas Intermediate (WTI) climbs back above $85 with Brent above $91. Equity investors have filed the war under background noise for now: reports of a mediator-drafted, 10-day ceasefire proposal give the peace trade a faint pulse, and a strong earnings tape gives the index a reason to look elsewhere.

Earnings do the lifting

3M (MMM) jumps more than 9% after a second-quarter beat, and General Motors (GM) clears both revenue and profit estimates for a 3% gain, extending a reporting season that has beaten emphatically. Nearly 88% of the roughly 66 S&P 500 companies reporting so far have topped profit estimates, per FactSet. Alphabet, IBM and Tesla headline the docket later this week.

Semiconductors supply the torque beneath the surface with the benchmark iShares Semicondcutor ETF (SOXX) up 5%, Micron (MU) adding 7%, Intel (INTC) rising more than 5%, and Marvell Technology (MRVL) gaining around 6%. Sell-side commentary frames the coming fortnight as the defining stretch of the season and warns that, after the run to records, good results are no longer automatically good enough. A market priced for perfection has started grading on a curve, and companies that miss are being sent home with a note.

A tariff sequel timed to a stale print

Washington supplies the counterweight to the cheer with Monday's 50% tariff on most Canadian goods taking effect as retaliation for what administration officials call discrimination against American products. US Trade Representative Jamieson Greer added Tuesday that action against dozens of countries is coming soon, responding to a Financial Times report that the White House plans a fresh tariff wave before its 10% global levy expires.

The sequencing tells its own story: after weeks in which Iran supplied every headline, the president is steering attention back toward the trade war he prefers, and the apparent license is June's Consumer Price Index (CPI), which fell 0.4% on the month and cooled to 3.5% YoY. Reading that print as room to manoeuvre ignores what produced it. The decline was almost entirely a peace-dividend energy artifact, with gasoline down 9.7% in a month, and the ceasefire behind those pump prices collapsed before the ink on the release dried.

The import bill argues even more directly against the manoeuvre: all-import prices rose 7.1% YoY in June, the fastest since August 2022, with nonfuel imports up 4.2%, and because the index excludes duties, those are border prices before any tariff applies. Exporters are not absorbing the levies, so a 50% surcharge on Canadian goods lands on top of the steepest import-price inflation in four years and gets paid, ultimately, by the constituents the president answers to.

A silent Fed and a freezing labour market

The Federal Reserve (Fed) sits in its pre-meeting blackout ahead of the 29 July decision, and for once the silence subtracts nothing: under its new chair the statement runs about 130 words, forward guidance has been struck entirely, and the standing philosophy holds that markets should react to data rather than guess the committee. A blackout is difficult to distinguish from the communications policy it interrupts.

The data offered for reaction keeps softening at the margin: the weekly estimate from ADP, a 4-week moving average born during last autumn's official data blackout, shows private employers adding an average of 16.5K jobs a week, down from 19.25K, a fourth straight week of slowing that fits the low-hire, low-fire freeze in June's 57K Nonfarm Payrolls print. Rate markets barely blink, still pricing a July hold near 86%, at least one hike roughly two-thirds priced by September, and a full hike by year-end.

A thin docket until Friday's PMI double bill

The calendar offers little resistance before the back of the week: Initial Jobless Claims land Thursday at 12:30 GMT, with consensus at 212K against 208K prior, a drift higher that would corroborate the freeze without alarming anyone. Friday at 13:45 GMT brings July's flash S&P Global Purchasing Managers Index (PMI) round, Manufacturing seen accelerating to 54.5 from 53.9, while Services slips to 51 from 51.2 and the Composite starts from 51.9, before June New Home Sales at 14:00 GMT follow May's 7.3% drop.

The split inside that PMI pair is the tell worth watching, because a goods sector accelerating into a tariff regime, while services grind toward the stagnation line reads like the tariff economy in miniature: Output pulled forward and prices pushed up on one side, the consumer-facing side stalling on the other. It is the first red-band test of whether the trade-war pivot lands on an economy that can absorb it.

Dow Jones Industrial Average technical levels

Resistance: The 52,200 level caps the rebound, with mid-July's congestion around 52,400 stacked behind it and the record just above 53,300 the destination beyond that.

Support: The 52,000 handle is the first floor, backed by the week's low near 51,800. Below there, the rising 50-day Exponential Moving Average near 51,400 is the line that keeps the summer uptrend intact.

Bias: Bullish while the index holds the 52,000 handle, though the daily Stochastic Relative Strength Index easing through the 40 area says the bounce still needs Friday's data to refuel. A daily close above the 52,200 level reopens the record; a break below 51,800 turns this pullback into a deeper retracement toward the 50-day average.

Dow Jones daily chart