By Nikhil Sharma and Pranav Kashyap
(Reuters) -Wall Street futures ticked up on Monday, fueled by a U.S.–EU trade pact that set an upbeat tone for a high-stakes week featuring megacap earnings, a Fed meeting and a looming U.S. tariff deadline.
U.S. President Donald Trump and European Commission President Ursula von der Leyen announced a trade framework on Sunday, slashing EU import tariffs to 15% – half the rate Trump had threatened from August 1.
The prospect of a U.S.-EU deal already propelled the S&P 500 and the Nasdaq to record closes on Friday, with the Dow just shy of its all-time high.
At 6:50 a.m. ET, S&P 500 E-minis were up 10.5 points, or 0.16%, Nasdaq 100 E-minis were up 74.25 points, or 0.32%, and Dow E-minis were up 41 points, or 0.09%
A wave of agreements with key U.S. trade partners including Japan, Indonesia and the Philippines helped Wall Street notch robust gains last week.
The EU deal comes after weeks of suspense, and could potentially avert a trade war with Washington's largest trading partner.
“The deal optimism has boosted financial market risk appetite. Futures point to new all-time highs for U.S. equity markets,” said Elias Haddad, senior markets strategist at Brown Brothers Harriman.
Meanwhile, other global partners are scrambling to ink deals before Trump's deadline, with U.S.-China talks later on Monday expected to extend their fragile trade truce for another 90 days.
This week, the market's unprecedented momentum faces a gauntlet, with “Magnificent Seven” tech titans Meta, Microsoft, Amazon and Apple leading an earnings parade that could set the tone for Wall Street.
Last week saw Alphabet surprise Wall Street with a bold capital spending spree, reviving AI optimism, even as Tesla cast a shadow by warning of tough times ahead amid shrinking electric vehicle subsidies.
Tesla rose 1.3% in premarket trading after the automaker signed a $16.5 billion deal to source chips from Samsung Electronics.
Eyes will also be on the Federal Reserve, which is set to kick off a two-day policy meeting on Tuesday. Traders are betting the central bank will hold rates steady, but the real intrigue lies in policymakers' signals on future cuts, especially as tariff-fueled inflation remains a concern and Trump on Fed Chair Jerome Powell.
According to CME's FedWatch, markets see nearly a 60% chance of a rate cut in September.
Trump on Friday suggested Powell might be ready to lower interest rates.
Among a deluge of key economic indicators this week, attention will be on the Personal Consumption Expenditure report (PCE) – the Fed's preferred inflation measure – and non-farm payrolls data to gauge how tariffs have affected consumer prices and the labor market.
