Stocks Face a Trade Reckoning. Why Tesla, Google, Coca-Cola Earnings Are Key.

Imported Tesla electric vehicles awaiting shipment are parked at a port in Yokohama, Japan. (Tomohiro Ohsumi/Getty Images)

It’s the moment when the rubber meets the road for President Donald Trump’s impact on corporate America. Second-quarter earnings season will rev up over the next few days.

Trump unveiled his across-the-board tariffs at the start of the quarter, and the stock market swiftly tanked. He walked them back, though certainly not completely, and markets have steadily recovered. The Dow is close to a record. The Nasdaq finished last week at an all-time high, and the S&P 500 posted a record high Thursday.

So we know how investors are coping with the new tariff regime so far as the critical Aug. 1 deadline approaches. This week we’ll learn a lot more about how companies are responding as more than 100 names in the S&P 500 present results.

Big technology, the driver of market gains in 2024, will get insight from Google parent Alphabet and electric-vehicle maker Tesla on Wednesday. In theory, Big Tech should still be OK as services aren’t subject to tariffs. Yet Google stock is more or less flat on the year, and its search business may be getting hurt by the growth strength of artificial intelligence, which is replacing traditional search. Tesla is down almost 20%, weakened by CEO Elon Musk’s foray into politics, and the loss of green subsidies.

On Tuesday, soft drink maker Coca-Cola and car giant General Motors will lift the lid on the financial health of the consumer. Are worries about inflation returning? And Trump’s tariffs are designed to protect the domestic car industry. Does GM expect to increase profits faster?

With any luck, two other key issues for markets will be on the back burner. Trump seems resigned to keeping Federal Reserve Chair Jerome Powell in his post for now. And while more trade deals are yet to be announced—the European Union and India seem most likely—markets can be more certain that tariffs will be even higher in the third quarter than in the second.

American Inc. may have come around to the market’s view that tariffs won’t be that bad. But closely watched CEO commentary will highlight trade speed bumps ahead.

—Brian Swint

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Elon Musk Is Sleeping in the Office as Tesla Earnings Loom

Elon Musk is back to his old ways, telling his 220 million social media followers he’s back to working seven days a week and sleeping in the office. It should be welcome news to Tesla investors ahead of this week’s earnings report and expected updates on robo-taxis and robots.

• Tesla investors have been on a whirlwind ride. After endorsing and backing President Trump’s candidacy, Musk joined the Trump administration as an advisor on slashing the government, a job that proved controversial. After leaving the role, he picked a fight with Trump and now threatens to form a new political party.
• Musk has to figure out how to turn around flagging Tesla sales. The EV maker sold 721,000 cars in the first half of 2025, down 13% from last year’s first half, stirring fears that Musk’s politics were turning off core Tesla buyers. Wall Street’s expectations were far higher for the first half, according to FactSet.
• Tesla’s 384,000 second-quarter deliveries was the largest percentage drop in company history. Wall Street expects earnings of about 40 cents a share, down from 52 cents in the second quarter of 2024, and revenue of $22.4 billion, down from $25.5 billion in the year-ago quarter, according to FactSet.
• Morgan Stanley’s Adam Jonas expects deliveries to remain subdued in the second half of 2025, down 13% year over year, “highlighting the continued strategic importance of robo-taxi rollout and Optimus advancements.” Second-half sales could reflect buyers pulling forward purchases ahead of the expiring EV tax credits.

What’s Next: While the robo-taxi testing has already started in Austin, Texas, investors will have to wait for Tesla’s artificial intelligence-trained robots, which it expects to start selling next year. They are also awaiting updates on a long promised lower-priced Tesla model.

— Al Root, Bill Alpert, and Janet H. Cho

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Tech Also on Deck. Alphabet Is This Week’s Big One.

This week also features earnings from fellow Magnificent Seven company Alphabet and big tech companies IBM and Intel as the artificial intelligence arms race accelerates. Like its Mag 7 peers, Alphabet is plowing billions of dollars into AI projects and infrastructure even as AI threatens its core search business.

• Search demand at Google was likely strong despite the worries, according to Truist analyst Youssef Squali. Alphabet should also post solid results from YouTube and its cloud operations. Despite concerns about AI and search, the business remains Google’s “war to lose,” he said.
• Recently BofA analysts noted that AI-driven chatbots like OpenAI’s ChatGPT and Anthropic’s Claude are giving people alternative ways to find information online. And they noted that Alphabet faces existential questions about its future given the antitrust issues it faces.
• Optimism about Alphabet remains, as some analysts note its deep relationships with publishers and its advertising business, and point out that its nonsearch operations, including its cloud business and the autonomous driving division Waymo are underappreciated, MarketWatch reported.
• Tech stocks have driven the Nasdaq to multiple fresh highs. Michael Arone, chief investment strategist at State Street Investment Management, expects most companies to beat expectations and he forecast second-quarter earnings growth to come in at around 9% yearly.

What’s Next: Expectations have been rising. At the end of June, analysts projected S&P 500 earnings to rise 4.9% in the second quarter from a year ago. That projection is now up to 5.6% as of last week, according to FactSet.

— Liz Moyer

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Trump Celebrates Six Month Mark Amid Shrinking Approval

President Trump is taking a victory lap after six months in office, but new polling suggests his major initiatives, including tariffs and inflation, are unpopular. A majority of those polled by CBS News/YouGov disapprove of Trump’s handling of inflation and oppose new tariffs. Half see themselves financially worse off.

• The poll found 60% oppose new U.S. tariffs on imported goods, and 47% “strongly disapprove” of Trump’s job performance, versus 24% who “strongly approve.” Just 18% said they were financially better off now, versus the combined 82% who said they were worse off (50%) or about the same (32%).
• Despite the administration’s claims that tariffs will bring in billions of dollars and make the economy stronger for all Americans, 60% of those polled disapprove of how Trump has handled the economy; 64% disapprove of his handling of inflation; and 56% disapprove of his handling of immigration.
• Trump continues to hammer out tariff policies. Commerce Secretary Howard Lutnick told CBS’ Face the Nation that the next two weeks are going to be “for the record books,” suggesting more trade deals are coming. Countries have until Aug. 1 to negotiate better deals than Trump’s unilaterally proposed tariff rates.
• Lutnick said Trump is “absolutely” going to renegotiate the U.S.-Mexico-Canada Agreement that took effect in July 2020, during Trump’s first term, but not until next year. Current U.S. tariffs on Canada and Mexico don’t apply to 75% of imported goods covered under the USMCA.

What’s Next: European Union representatives are expected to meet this week to decide their response to Trump’s threat to slap 30% tariffs on their imports to the U.S., including potential retaliatory measures. Trump has also imposed 25% tariffs on imported cars and auto parts, and 50% tariffs on steel, aluminum, and copper.

— Janet H. Cho and Liz Moyer

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Trump Is Poised to Grab Control of the Fed Next Year

President Trump wants the Federal Reserve to slash interest rates by three percentage points, a massive cut that could push borrowing costs back to pandemic lows. With two seats at the Fed likely opening up soon, he may get the chance to reshape the central bank and force his demands.

• Gov. Adriana Kugler’s term expires in January 2026 and Jerome Powell’s term as chair ends in May 2026. If Trump replaces both and Powell steps down from the board entirely (a typical move for departing chairs), the president will be responsible for appointing four of the seven governors.
• That is a working majority alongside a chair who may share his appetite for deep rate cuts. In theory, this could tilt the Fed’s policymaking committee toward the kind of easing Trump wants. In practice, it isn’t that simple.
• The Fed has held its benchmark rate steady despite cooling inflation and softening job growth. Powell says the committee needs more time to study how tariffs and fiscal policy will affect the economy. A cut at the Fed’s meeting this month seems unlikely.
• Some of Trump’s Fed appointees are already laying the groundwork for easier policy. Gov. Christopher Waller argues the labor market is weaker than the numbers suggest and inflation risks are fading. Vice Chair for Supervision Michelle Bowman has turned more dovish recently.

What’s Next: Trump has hinted he might fire Powell early. The Wall Street Journal reported that Treasury Secretary Scott Bessent has privately laid out the case why he shouldn’t do that. On Sunday, Trump said he understood markets better than anyone. “Nobody had to explain that to me.”

—Nicole Goodkind and Liz Moyer

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This Giant Pension Bought Up Palantir, MicroStrategy Stock

One of America’s biggest public pensions, Ohio Public Employees Retirement System, increased positions in some of its more volatile stock investments, notably Bitcoin-buyer MicroStrategy and data-analytics company Palantir Technologies.

• The pension, known as Opers, bought 171,441 more Palantir shares in the second quarter to lift its investment to 908,712 shares, it disclosed in a filing with the Securities and Exchange Commission.
• It also bought 21,499 additional shares of MicroStrategy to end the second quarter with 101,880 shares. Opers didn’t respond to a request for comment.
• At the end of 2024, the pension had total assets of $155.6 billion, making it the 14th largest public fund in the U.S.
• Both Palantir and MicroStrategy have had a strong 2025 so far, up 80% and 46%, respectively, while the S&P 500 has gained 5.5%.

What’s Next: MicroStrategy has issued over $3 billion of preferred stock with rates as high as 11.5%. Barron’s has noted that investors debate whether that high yield is enough compensation to offset the risks resulting from the fact that there isn’t a readily identifiable source of cash to pay the dividends. But the company’s view is that investors can feel secure because its holdings of the digital coin are worth far more than what it owes.

— Ed Lin and Elsa Ohlen

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MarketWatch Wants to Hear From You

A majority of American adults are banking on a government safety net to provide long-term care when they’re older. But what should people be prepared for when it comes to that?

A MarketWatch correspondent will answer this question soon. Meanwhile, send any questions you would like answered to thebarronsdaily@barrons.com.

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—Newsletter edited by Liz Moyer, Rupert Steiner