U.S. Stocks Fall as Trump Renews Trade Tensions

Summary

WSJ What’s News: U.S. Stocks Fall as Trump Renews Trade Tensions

Release Date: July 7, 2025
Host: Alex Osola
Guest Speakers: Michael Gordon (National Security Correspondent), Peter Grant (Real Estate Reporter), Hayley Zimmerman (Industry Reporter)

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1. Devastating Flash Floods in Texas

The episode opens with an urgent report on the severe flash floods ravaging Texas. As of the report, the disaster has claimed at least 90 lives, including 27 girls and counselors from Camp Mystic, a summer camp located along the Guadalupe River in the state's Hill Country. The camp's longtime director is also feared dead. Rescue operations are ongoing, though efforts have been hampered by continuous heavy rainfall.

Alex Osola highlights the grim situation:

"Search and rescue operations have continued across the region today, with an unknown number of people still missing. Bad weather has impeded some of those efforts over the past few days, and today residents are bracing for even more heavy rains" (00:48).

The National Weather Service has extended flood warnings, anticipating up to 10 inches of rain by evening. In response to the disaster, White House Press Secretary Caroline Levitt announced that President Trump will visit Texas later this week to assess the damage. Levitt vehemently defended the administration's response, countering claims that federal service cuts hindered rescue efforts:

"Blaming President Trump for these floods is a depraved lie and it serves no purpose during this time of national mourning. Here are the facts. In the lead up to this tragic natural disaster, the National Weather Service did its job" (02:00).

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2. Renewed Trade Tensions Impact U.S. Markets

In a significant development, President Trump has decided to extend the pause on reciprocal tariffs until August 1, following his announcement on his Truth Social platform about potentially reimposing tariffs ranging from 25% to 40% on countries including Japan and South Korea. Levitt confirmed that approximately 12 more nations would receive similar tariff threats, which will also be communicated via Truth Social.

This escalation in trade tensions has had a tangible impact on the U.S. stock market:

"US Stocks fell today after President Trump's tariff announcements reignited trade tensions. The S&P 500 was down about 0.8%, while the Dow and the Nasdaq both dropped about 0.9%" (02:22).

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3. Saudi Investment in Manhattan’s Real Estate

A notable story covered by WSJ reporter Peter Grant reveals that Saudi Arabia's government fund is acquiring a two-thirds stake in a site designated for a new skyscraper in Manhattan, located just one block from Central Park. The total investment, including development costs, is projected to exceed $1 billion, with the Saudi fund currently contributing $200 million.

Peter Grant explains the significance of this investment:

"Saldians in recent years have been trying to diversify as much as possible in their types of investments, and real estate has been one of the big areas of diversification. This is globally. New York is one of the most attractive markets in the US. So naturally the Saudis will be interested in New York" (04:40).

He further discusses the resilience of New York's real estate market post-pandemic, noting a strong recovery in tourism, apartment rents, and particularly the office sector, driven by the financial services industry’s return to in-office operations.

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4. Trump and Netanyahu’s Strategic Middle East Meeting

A significant portion of the episode delves into the upcoming meeting between President Trump and Israeli Prime Minister Benjamin Netanyahu. Hosted at the White House, this meeting is pivotal for regional diplomacy, especially following recent military engagements involving Israel, the U.S., and Iran.

Michael Gordon outlines the primary objectives:

"The big prize that both Israel and the US are seeking is normalization of relations between Israel and Saudi Arabia. During President Trump's first term, there were the Abraham Accords, which led to normalization between the UAE and Israel, Bahrain and Israel. But the Saudi Kingdom is really the big prize that everyone is seeking" (07:03).

The discussions are expected to cover:

• Normalization with Saudi Arabia: A strategic goal that involves complex negotiations and preconditions, including resolving conflicts in Gaza and addressing Palestinian statehood aspirations.
• Gaza Ceasefire: Efforts to establish a temporary, potentially permanent, ceasefire amid ongoing tensions.
• Iran's Influence: Balancing diplomatic relations with Iran, especially in light of recent military strikes that have altered the regional power dynamics.

Gordon emphasizes the challenges ahead:

"Are we just going to have another temporary ceasefire in Gaza that will be followed by more fighting, some talks with Iran that are not likely to be productive, or is there going to be a more sweeping architecture put into place that would transform the region with a permanent settlement in Gaza, some sort of understanding with Iran, a movement toward Israeli Saudi normalization, and something for the Palestinians?" (09:31).

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5. Additional Global Developments

Beyond the primary stories, the podcast touches on several other international events:

• Houthi Attacks in the Red Sea: Yemen's Houthi rebels attacked a ship in the Red Sea, leading to its abandonment. This marks the first such incident since President Trump declared a truce in May. The Houthis claim their actions support Palestinians in Gaza, citing violations by the ship’s company regarding entry bans to occupied Palestinian ports. In retaliation, Israel conducted airstrikes on Yemen, with officials noting the attacks were planned in advance.

• Death of Russia’s Former Transport Minister: Roman Staravoit was found dead under suspicious circumstances shortly after being dismissed by President Vladimir Putin. Authorities suspect suicide, but the incident highlights the volatility within Russian high-level politics.

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6. Beer Industry Trends: Michelob Ultra’s Rise Amidst Declines

In a lighter yet impactful segment, WSJ reporter Hayley Zimmerman analyzes the beer industry's current landscape. Despite overall sales declines for major brands like Modelo, Bud Light, Coors Light, and Miller Lite, Michelob Ultra is experiencing growth.

Key factors contributing to Michelob Ultra's success include:

• Consistent Branding: Since its launch in 2002, Michelob Ultra has targeted health-conscious consumers with a focus on sports and fitness (11:28).
• Product Alignment: As younger demographics shift towards canned cocktails and non-alcoholic options, Michelob Ultra's low calorie, low carb, and low alcohol by volume profile aligns well with current consumer preferences.
• Competitor Challenges: Issues such as Bud Light's enduring impact from a previous boycott and Modelo's recent struggles due to decreased Hispanic consumer spending have opened pathways for Michelob Ultra to capture greater market share.

Zimmerman remarks:

"Michelob Ultra, which is this low calorie, low carb, low alcohol by volume light beer, is suddenly meeting the moment" (11:28).

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Conclusion

This episode of WSJ What’s News provides a comprehensive overview of pressing issues ranging from natural disasters and international trade tensions to significant real estate investments and geopolitical diplomacy. Additionally, it offers insightful analysis into industry-specific trends, reflecting the diverse scope of news that influences global and financial markets.

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Produced by Pierre Bienname with supervising producer Michael Cosmides. For more updates, tune in to WSJ What’s News daily.

Transcript

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[Alex Osola]

Texas braces for more flash floods as rescuers search for survivors Plus President Trump renews trade tensions while extending the reciprocal tariff deadline. And Trump and Netanyahu meet to discuss the recent shifts in the Middle East.

[Michael Gordon]

The big prize that they're seeking is Israeli Saudi normalization. And there are a number of preconditions for that. And the question is, are we gonna get some little steps in isolation or building blocks in service of a larger vision for the region?

[Alex Osola]

It's Monday, July 7th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move. We begin this evening with the latest on the flash floods in Texas, which have so far killed at least 90 people. Camp Mystic, a summer camp on the banks of the Guadalupe river in the state's Hill country, said today that it was grieving the loss of 27 girls and counselors. Its longtime director was also feared dead. Search and rescue operations have continued across the region today, with an unknown number of people still missing. But bad weather has impeded some of those efforts over the past few days, and today residents are bracing for even more heavy rains. Forecasters have extended flood warnings through this evening, and the National Weather Service said that some areas could expect as much as 10 inches of rain today. White House Press Secretary Caroline Levitt said President Trump will visit Texas later this week, likely on Friday, to review the damage. At the White House briefing today, Levitt disputed suggestions that deep Trump administration cuts to federal services may have affected authorities response to the flooding.

[Caroline Levitt]

Blaming President Trump for these floods is a depraved lie and it serves no purpose during this time of national mourning. Here are the facts. In the lead up to this tragic natural disaster, the National Weather Service did its job. Despite unprecedented rainfall, the National Weather Service executed timely and precise forecasts and warnings.

[Alex Osola]

Levitt wouldn't say whether Trump will be rethinking phasing out the Federal Emergency Management Agency or FEMA after the deadly flooding in Texas. Also at today's White House briefing, Press Secretary Caroline Levitt said that President Trump plans to issue an executive order to extend the pause on his steep so called reciprocal tariffs to August 1. The pause had been set to expire Wednesday. Earlier on his Truth Social platform, the president had published letters to a number of countries, including Japan and South Korea, threatening them with the reimposition of tariffs ranging anywhere from 25 to 40%. Levitt said about 12 more nations would receive similar notifications, which would also be posted on Truth Social. US Stocks fell today after President Trump's tariff announcements reignited trade tensions. The S&P 500 was down about 0.8%, while the Dow and the Nasdaq both dropped about 0.9%. We're exclusively reporting that Saudi Arabia's government fund is taking a two thirds stake in a site for a planned Manhatt skyscraper. According to people familiar with the matter, the overall cost for the site, which is one block from Central park, along with the building's development, is expected to be more than $1 billion. The Saudi fund's final contribution is still being determined, but these people said that the kingdom's public investment fund has already invested about $200 million. WSJ reporter Peter Grant joins me now. Peter, what do we know about this building and what it could potentially be used for?

[Peter Grant]

The developer involved is a developer named Related, the megadeveloper that redeveloped the Hudson Yard site on Manhattan's west side. But Related is a global developer. They have projects all over the world and they also have a close relationship with the Saudis. Related purchased this site a couple years ago and at the time they thought the site would be used for hotel, residential, retail. But since Related purchase of site, the office market has come back strong in Manhattan. So now Related hasn't made up its mind. It's trying to determine whether to stick with the original plan or to turn it into an office building.

[Alex Osola]

What's in this for the Saudis? Why are they interested in doing this in New York?

[Peter Grant]

In particular, Saudis in recent years have been trying to diversify as much as possible in their types of investments, and real estate has been one of the big areas of diversification. This is globally. New York is one of the most attractive markets in the US So naturally the Saudis will be interested in New York.

[Alex Osola]

What does this show us about the state of the real estate market in New York, especially after it was hit so hard during the pandemic?

[Peter Grant]

New York is sort of the envy of cities throughout the country. It's coming back on numerous different levels. Tourism is strong, apartment rents are strong, and now we're seeing the New York office market recover more so than most other cities. The office market in New York is very responsive to the financial services industry. And the financial services industry is leading the way when it comes to requiring, requiring workers to come back to offices in the sense of residential. It's once again become a preferred place for young people as well as empty nesters to live. So in all senses, the city is bouncing back strong from the pandemic that.

[Alex Osola]

Was WSJ reporter Peter Grant. Thanks, Peter.

[Peter Grant]

My pleasure.

[Alex Osola]

Coming up, the big prize that President Trump is seeking from his meeting with Israel's prime minister. That's after the break.

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[Alex Osola]

The Middle east, which was recently awash in conflict, may now be ripe for diplomacy. And that could be an opportunity for President Trump's brand of deal making. He's meeting today with Israeli Prime Minister Benjamin Netanyahu at the White House. The Journal's national security correspondent, Michael Gordon joins me now with more. Michael, what are some of the things that Trump and Netanyahu are going to be talking about at their meeting this evening?

[Michael Gordon]

It's an important time for a stock taking because it follows the Israeli and US Military strikes in Iran. And the weakened status of Iran as a military power certainly has affected the entire region and opened up some opportunities for diplomacy. The big prize that both Israel and the US Are seeking is normalization of relations between Israel and Saudi Arabia. During President Trump's first term, there were the Abraham Accords, which led to normalization between the UAE and Israel, Bahrain and Israel. But the Saudi Kingdom is really the big prize that everyone is seeking. And that's not going to come easy. But the first order of business is going to be Gaza and trying to seal a temporary ceasefire there that could potentially become a permanent one.

[Alex Osola]

Trump and Netanyahu have really traded a lot of words, both positive and somewhat critical of each other. Where does their relationship stand going into this meeting?

[Michael Gordon]

They probably have a pretty good constructive relationship, but there are some points of difference. Trump wants what he calls a settlement, really with Iran. The Israelis are suspicious of diplomacy toward Iran. The big prize that they're seeking at the end of the day is Israeli Saudi normalization. And there are a number of preconditions for that. One is a resolution of the fighting in Gaza. It's hard to imagine the Saudis agreeing to such a step while that's going on. And another is some sort of gesture or pathway for the Palestinians to pursue their political aspirations potentially with a state of their own. And that's an enormous lift and very difficult for the Israelis to agree to. So the big question here is, are we just going to have another temporary ceasefire in Gaza that will be followed by more fighting, some talks with Iran that are not likely to be productive, or is there going to be a more sweeping architecture put into place that would transform the region with a permanent settlement in Gaza, some sort of understanding with Iran, a movement toward Israeli Saudi normalization, and something for the Palestinians? And the question is, are we going to get some little steps in isolation, or are these going to be building blocks in service of a larger vision for the region?

[Alex Osola]

That was WSJ national security correspondent Michael Gordon. Thank you, Michael.

[Michael Gordon]

Thank you.

[Alex Osola]

In other news, a crew in the Red Sea was forced to abandon ship after it was hit by Yemen's Houthi rebels yesterday. It's the first such attack since President Trump announced a truce in May after he said the group promised to stop attacking Middle Eastern waterways. The Houthis say their attacks are in support of Palestinians in Gaza because the carrier belonged to a company that, quote, violated the entry ban to the ports of occupied Palestine. Earlier today, Israel's military said it carried out airstrikes on Yemen following several ballistic missile attacks by the Houthis in recent days. An Israeli military official said the attack was planned days in advance. And Russia's former transport minister was found dead in what authorities called a suspected suicide. Russia's investigative committee said Roman Staravoit was found in his car in a suburb west of Moscow with a gunshot wound, hours after he was dismissed from his post by President Vladimir Putin. While the precise circumstances of his death remain under investigation, the incident underscores the intensely volatile and often perilous nature of high level Russian politics. And finally, even if you cracked open a cold beer to have with your burger over the weekend, overall, the beer industry is having a bad year. But there's one bright spot. Even as sales tumble for other big beer brands, Michelob Ultra is growing, according to an analysis of NIQ data by Goldman Sachs US store sales of Michelob Ultra grew by about 3% in the 12 weeks ended June 14, compared with the same period a year earlier. Over the same time frame, sales fell for Modelo, Especial, Bud Light, Coors Light and Miller Lite. So what's Michelob doing differently? WSJ reporter Hayley Zimmerman says the brand is needing the moment. For drinkers.

[Hayley Zimmerman]

The funny thing about Michelob Ultra is that it's been the same beer more or less since it was launched in 2002. They've always advertised themselves to health conscious consumers. The ads have always been about sports and fitness. Younger adults are moving to canned cocktails or non alcoholic beer. And so Michelub Ultra, which is this low calorie, low carb, low alcohol by volume light beer, is suddenly meeting the moment. The other big factor in its rise is that its two biggest competitors at the top of the beer sales leaderboard, if you will, are Bud Light and Medelo Especial. And those both have sort of unique challenges in the past couple of years. Mickle and Moltre and Bud Light are actually both owned by an Azerbush. Bud Light's sales were really dented by a boycott two years ago and it's never really recovered. And then Modelo has been hurt in recent months by the pullback in Hispanic consumer spending.

[Alex Osola]

And that's what's news for this Monday afternoon. Today's show is produced by Pierre Bienname with supervising producer Michael Cosmides. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

[Peter Grant]

Sam.