U.S. stocks closed lower, with the broad S&P 500 and tech-laden Nasdaq retreating from fresh record highs notched just after the opening bell.
On July 28, the S&P 500 scored its sixth straight record high close. It was also the S&P 500’s 15th record high close this year. The tech-heavy Nasdaq also closed at an all-time high.
Despite the turn lower, some analysts see the S&P 500 marching this year to 7,000 from under 6,500.
“It’s increasingly looking as though the S&P 500 will continue to power ahead,” wrote Thomas Mathews, head of markets in the Asia Pacific region at research firm Capital Economics, in a note. “With the worst of the risks around trade seemingly fading, we suspect there are fewer remaining obstacles to further investor enthusiasm for AI (artificial intelligence) and its implications for U.S. companies. So, we suspect expectations for earnings and valuations could rise further, perhaps quite a bit for the “tech” sectors … our end-2026 number of 7,000 seems as though it could plausibly come a bit sooner than we had anticipated.”
The blue-chip Dow dipped 0.46%, or 204.57 points, to 44,632.99; the S&P 500 lost 0.3%, or 18.91 points, to 6,370.86; and the Nasdaq shed 0.38%, or 80.29 points, to 21,098.29. The 10-year Treasury yield slipped to 4.322%.
Stocks got a boost after the European Union struck a trade deal with the United States over the weekend. The deal included billions of dollars worth of investments by the EU in the United States and a 15% tariff on most European goods entering the United States.
Countries that haven’t agreed on a trade deal with the United States have until Aug 1 to reach one. Otherwise, President Donald Trump said the baseline global tariff rate will be between 15% and 20%. Treasury Secretary Scott Bessent held another day of trade talks with Chinese Vice Premier He Lifen in Stockholm, Sweden. They are reportedly considering extending the trade deal deadline.
This morning’s economic data were mostly positive. Consumer confidence rose more than expected in July and the trade deficit unexpectedly narrowed in June. There were fewer job openings, but also fewer people quit their jobs in June.
“On the whole, the economy was on wobbly footing in the second quarter, but looks to be firming as the second half of 2025 begins,” said Bill Adams, chief economist at Comerica Bank.
Since mid-April, the S&P 500 has surged nearly 28%, the fastest rebound in over 50 years. Now comes the real test, said Chief Investment Officer Gene Goldman at investment management firm Cetera.
Stocks will face a triple threat this week that could either justify the recent rally or create headwinds, he said. The first potential threat is earnings, especially from so-called Magnificent Seven influential megacap tech companies Facebook parent Meta, Microsoft, Amazon and Apple. Investors will be looking at whether artificial intelligence spending is slowing at all. AI spending has boosted tech companies this year.
The second potential threat is the Federal Reserve policy meeting. “The Fed is likely to hold rates steady in July with dissents from Governors Waller and Bowman, marking the first time two governors have dissented at a meeting since 1993,” said Russell Investments’ Global Chief Investment Strategist Paul Eitelman. Eitelman expects the next rate cut at the Fed’s September meeting.
The last potential threat is the July employment report at the end of the week. It’s expected to show 102,000 new jobs, down from 147,000 in June and an uptick in the unemployment rate to 4.2% from 4.1%.
PayPal launched “Pay with Crypto” to allow consumers to use many types of cryptocurrencies to complete their purchases, and use wallets such as Coinbase and MetaMask. Once the transaction is completed, the payments will automatically convert to fiat or stablecoin.
Pay with Crypto will allow companies to accept cross-border payments in cryptocurrencies and lower their costs for accepting such a transaction, PayPal said.
Bitcoin was last slipped 0.64% to $117,265.40.
(This story was updated with new information.)
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.