Delta Beats but Stocks Flat as Tech Surge Wanes

Published as of: July 10, 2025, 9:18 a.m. ET

(Thursday market open) Earnings season doesn't unofficially take off until next Tuesday, but today's results from Delta Air Lines (DAL) lifted spirits, especially among airline shares. Major indexes were otherwise flat after yesterday's all-time high for the Nasdaq Composite. Initial jobless claims of 227,000 today were 8,000 below the Bloomberg consensus and likely another strike against a July rate cut.

Trade remains in the picture and could keep market participants on edge. The Trump administration continues to send letters to various countries outlining tariffs on their products effective August 1. The latest is a 50% tab on imports from Brazil, though the U.S. enjoys a trade surplus with that country. The 50% tariff on copper also starts in August, Trump said, a possible headwind for many companies that rely on the industrial metal.

"Markets appear to have become desensitized to tariff news," said Michelle Gibley, director of international research at the Schwab Center for Financial Research. "There may be some thought that the rates announced won't be the final tariffs—some of the figures seem random and part of a negotiation."

1. Rate cut chances analyzed in Fed discussion: Minutes from the Fed's June meeting showed policy makers reticent to cut rates last month but more open to possible cuts before the end of the year. "Most participants assessed that some reduction in the target range for the federal funds rate this year would likely be appropriate," the minutes release noted. The meeting was before last week's solid June nonfarm payrolls report, after which the market dialed down odds of near-term rate cuts. Still, the jobs market remains imperfect. Continuing jobless claims reached 1.965 million in today's report, up 10,000 from a week earlier and near three-year highs. Chances of a July rate cut are 7% and odds of at least one cut by September are about 70%, according to the CME FedWatch Tool. The minutes suggested an emerging divide among Fed officials who differ on how much tariffs may affect inflation, Bloomberg noted. The question is whether the tariffs will have a one-time inflation impact or a more prolonged effect. Fed Governor Christopher Waller speaks later today after recently expressing dovish views.
    
2. Sentiment yardstick remains positive: Market breadth—a helpful measure of investor sentiment—remains healthy levels with about 73% of S&P 500 stocks trading above their respective 50-day moving averages. However, another technical indicator, the relative strength index (RSI), climbed above 70 for the S&P 500 index and to nearly 70 for the Nasdaq Composite, a level historically considered overbought. The tech-packed Nasdaq made a new all-time high Wednesday amid a broad rally with nine of 11 sectors up. General strength in tech, symbolized by Nvidia (NVDA) surpassing $4 trillion in market capitalization lifted major indexes. "Buy the dip remains in force," said Liz Ann Sonders, chief investment strategist at Schwab. However, she warns that "complacency remains a risk in and of itself."
    
3. Volatility muted despite heavy summer news flow: Considering all the events ahead including earnings, the July Fed meeting, and what's now an August 1 tariff deadline, the market isn't pricing in much volatility. The 30-day Cboe Volatility Index (VIX), which spans all those events, fell below 16 this week, meaning the market is charging an unusually low price for downside insurance given a still high level of uncertainty. However, next week's inflation data and big bank earnings may challenge the market's current positive sentiment. Judging from VIX, investors seem relatively certain that new deals or deadlines can be hammered out and aren't rushing to hedge, though deadlines appear locked in per President Trump's recent post. Looking further into the year, investors seem a bit less sanguine as VIX contracts for September through December rise above 20, meaning the market is in contango, with longer-dated futures at a premium to spot prices. Still, the levels in the low 20s for late 2025 aren't historically all that high.

• Delta climbed 12.6% ahead of the open as the company's second quarter earnings of $2.10 per share were $0.04 above the average Wall Street estimate while revenue of $15.51 billion exceeded the FactSet consensus of $15.46 billion. Perhaps more importantly, the company's guidance for the third quarter and full fiscal year were in line with analysts' estimates. This came after Delta pulled guidance the previous quarter, citing tariff uncertainty. In an interview with CNBC after the results, Delta CEO Ed Bastian said fall bookings look strong and he's optimistic about corporate travel.
   
• United Airlines (UAL) and American Airlines (AAL) each rose 8% in pre-market trading after the Delta earnings news, and Southwest (LUV) climbed 3.5%.
   
• Conagra (CAG) fell about 6% as earnings for the packaged goods company came in short of analysts' views and revenue also disappointed. The company cited higher-than-expected inflation, foreign exchange headwinds, and supply constraints.
   
• WPP PLC (WPP) edged up 1.5% in early trading. Shares of the advertising firm dropped 18% yesterday after the company trimmed its profit forecast. Other ad firm stocks fell in sympathy, and the weakness raised concerns that AI-powered advertising may be gaining a foothold. Experts warn that AI is causing brands to promote themselves more through digital players, rather than traditional agencies, Barron's reported.
   
• PTC (PTC) rallied as much as 19% ahead of the open but then pulled back. Bloomberg reported the engineering software provider is a possible acquisition target for Autodesk (ADSK).
   
• Nvidia climbed another 0.9% ahead of the open. Shares hit new all-time highs yesterday and the market capitalization topped $4 trillion for the first time to become the most valuable company in history. That's almost $1 trillion larger than the entire S&P 400 Midcap Index ($SP400). In related news, shares of Nvidia competitor Advanced Micro Devices (AMD) climbed 2% this morning after an upgrade to Buy from Hold by HSBC.
   
• Homebuilder stocks including KB Home (KBH), Lennar (LEN), Pulte Group (PHM), and Toll Brothers (TOL) were mostly up this morning after all rose 3% or more yesterday. A sharp jump in weekly mortgage demand accompanied by falling 10-year Treasury note yields after a successful Treasury auction Wednesday helped the sector.
   
• Coinbase (COIN) inched lower after a 5% gain yesterday while Circle Internet Group (CRCL) climbed 2.5%. Meanwhile, bitcoin (/BTC) prices flagged a bit this morning but hit an all-time high above $112,000 overnight. Coinbase got downgraded to Sell from Buy at H.C. Wainwright, which believes valuation has outstripped near-term fundamentals.
   
• Oracle (ORCL) gained 1.5% ahead of the open. Shares got upgraded to Overweight from Neutral by Piper Sandler, which noted a "bullish spending backdrop" for AI infrastructure.
   
• McDonald's (MCD) rose 1% early today following an upgrade to Buy from Neutral by Goldman Sachs (GS). The firm sees the company using its "marketing power" to elevate consumer awareness around its new menu offerings to generate traffic and check growth.
   
• Roku (ROKU) rose nearly 3% in early action. Shares were upgraded by KeyBanc to Overweight from Sector Weight, as the analyst cited a budget shift and advertising innovation.
   
• WK Kellogg (KLG) climbed 54% ahead of the open. The food manufacturing firm, which split from Kellogg's in 2023, has received a $3 billion acquisition offer from Ferrero, according to The Wall Street Journal.

Fixed income FAQ: In their latest installment, Schwab experts answered some of the questions they've been getting about fixed income trends. "Increasing deficits and debt relative to the size of the economy likely will mean that long-term Treasury yields will be higher than otherwise would be the case," they noted. "However, we don't anticipate a default by the Treasury."

With hedging demand still low, the Cboe Volatility Index (VIX—candlestick) dipped to close below 16 yesterday for the first time since February 20, when stocks hit initial highs this year before the sharp tariff-related pullback in April. They've now recovered and surpassed the February peaks, and falling VIX can sometimes provide a rally more running room. On the other hand, the history shows that a low VIX can sometimes be a contrarian signal of volatility ahead. Investors might want to watch for any dichotomy between major indexes and volatility. If indexes rise and volatility also climbs, it could be a sign that the stock rally could fade. The historic level of VIX is around 20, slightly above the current 50-day moving average (blue line).

Check out the Investors' Calendar for a summary of the top economic events and earnings reports on tap this week.

July 11: No major earnings or data expected.
July 14: Expected earnings from Fastenal (FAST) and FB Financial (FBK). 
July 15: July Consumer Price Index (CPI) and expected earnings from JPMorgan Chase (JPM), Citigroup (C), BlackRock (BLK), Wells Fargo (WFC), Albertsons (ACI), and J.B. Hunt Transport Services (JBHT).
July 16: July Producer Price Index (PPI) and expected earnings from ASML (ASML), Goldman Sachs (GS), Johnson & Johnson (JNJ), Morgan Stanley (MS), Alcoa (AA), and United Airlines (UAL).
July 17: June retail sales and expected earnings from Abbott Laboratories (ABT), Marsh & McLennan (MMC), PepsiCo (PEP), Taiwan Semiconductor Manufacturing (TSM), Travelers Companies (TRV), and Netflix (NFLX).