Market Performance Overview (Current Day)
- S&P 500: Declined 0.37% to 6,339.39, continuing a recent downward trend.
- Nasdaq: Slightly down 0.03% to 2122.45, with strong performance in some tech giants unable to lift the index.
- Dow Jones: Dropped 0.74% to 44,130.98, impacted by weakness in healthcare and other sectors.
- Gold: Down 0.27% to $3,343.60 per troy ounce.
- Oil (WTI): Ended a three-day rally, falling 0.81% to $69.43 per barrel.
- US 10-Year Treasury Yield: Remained stable, rising 0.2bp to 4.380%.
- Volatility Index (VIX): Surged 8% to 16.72, reflecting growing market uncertainty.
- Dollar Index: Continued to rise, up 0.26% to 100.07, surpassing the 100 mark.
- Russell 2000: Fell sharply by 0.98%, with small-cap stocks underperforming.
- Cryptocurrency Market: Showed a slight correction. Bitcoin was down 0.49% to the mid-$116,000 range. Ethereum was stable around $3,700, while Ripple and Solana were both down about 1%.
Overall, the market showed a broad-based decline, with strong after-hours earnings from tech giants failing to provide broad-based support. Many sectors, including healthcare and semiconductors, saw significant sell-offs.
Sectoral Performance & Key Stock Movements
- Big Tech: Microsoft rose 3.95% during the day, briefly crossing a $4 trillion market capitalization. Meta surged 11% today, extending its after-hours gains. Amazon was up over 1% intra-day but plunged in after-hours trading due to disappointing cloud revenue. Apple was also up in after-hours.
- Semiconductors: A rough day for the sector. Nvidia was down 0.78%, Broadcom fell 2.95%, and Texas Instruments and Qualcomm both dropped over 7%.
- Banking & Payments: Mastercard was an outlier, rising on strong earnings, but most other financial stocks were down.
- Healthcare: This sector was hit hard. Eli Lilly was down 2%, Johnson & Johnson down 1%, Merck down 4%, and Bristol Myers Squibb down nearly 3%. The sell-off was broad-based, affecting both pharmaceutical and medical device companies.
Key Market Drivers & News
1. Trump’s Tariff and Trade Actions:
- South Korea Agreement: The US and South Korea reached an agreement on tariffs, with Korea committing to a nearly ₩500 trillion (~$360 billion) investment in the US in exchange for a 15% tariff on its auto exports. Trump’s team noted this was an “unprecedented” high-level meeting. The final details are pending a summit.
- Mexico: After a phone call with Mexican President Claudia Sheinbaum, Trump delayed the implementation of tariffs on Mexico, agreeing to extend the negotiation period. Tariffs of 25% on autos and 50% on steel, aluminum, and copper are still on the table.
- Canada: The US and Canada are reportedly discussing adjustments to aluminum tariffs. Commerce Secretary Wilbur Ross hinted that tariffs on aluminum, not steel, were the primary issue for US automakers like Ford.
- Japan: Japan’s trade representative, Ryu Akazawa, stated that the 15% semiconductor tariff agreement with the US is similar to the EU deal. He also mentioned that Japan would leverage public financial support to achieve the promised $550 billion in investments, with the US reviewing progress quarterly.
- New Tariffs on India & Brazil: Trump announced new administrative orders for additional tariffs: 40% on Brazil (totaling 50%) and 25% on India, as punishment for their perceived hostile stances towards the US dollar and their association with BRICS. This led to a drop in the Indian Rupee.
- “De Minimis” Rule: Trump announced that tariffs on small packages (“de minimis”) would take effect at the end of August, directly targeting e-commerce from China.
- Copper: The new tariff on copper was narrowed to “semi-finished” products (50%), while raw and scrap copper imports remain exempt. This caused a near 20% drop in copper prices today but is expected to benefit US power grid and EV infrastructure development.
2. US Economic Data & Fed Decision (FOMC):
- Q2 GDP: The advanced estimate for Q2 GDP was 3.0% (annualized), rebounding from a Q1 decline. However, this was driven by a decrease in imports, while private consumption growth (1.2%) slowed, indicating weakening domestic demand.
- Core PCE Inflation: The Personal Consumption Expenditures (PCE) Price Index for June showed a 0.3% increase month-over-month (in line with expectations) and a 2.6% increase year-over-year. Core PCE (excluding food and energy) rose 0.3% month-over-month and 2.79% year-over-year, slightly higher than the 2.7% consensus, and the highest since January. This was driven by increases in durable goods and healthcare, which pushed back against hopes of a quick rate cut.
- FOMC Decision: As widely expected, the Fed held its key interest rate at 4.25%-4.50%. The statement noted a slowdown in economic activity. A notable development was the dissent from two governors, Christopher Waller and Michelle Bowman, who voted for a rate cut. This is the first time in 30 years that multiple members have dissented against a rate hold, highlighting growing internal pressure.
- Powell’s Comments: Powell maintained a cautious stance, stating that future rate decisions are not set in stone. He stressed that the Fed will continue to monitor upcoming employment and inflation data, and that recent inflation trends, especially in goods, require careful evaluation.
Company-Specific News & Earnings Highlights
- Amazon (AMZN): Down in after-hours trading despite decent headline numbers. Q2 Revenue grew 13% to $166.7 billion (beating estimates), and EPS rose 33%. However, the key issue was that AWS cloud revenue growth of 17.5% disappointed investors, falling short of Microsoft’s Azure (39%) and Google’s Cloud (32%). This raised concerns about market share loss. Free cash flow also decreased by 66% due to high capital expenditures.
- Apple (AAPL): Up in after-hours trading, surprising the market with strong results. Q2 Revenue grew 10% to $94.04 billion (beating estimates by $5 billion). EPS was up 57% to $1.57. iPhone revenue surged 13% YoY, and Mac sales were up 15%. Service revenue also reached a record high, and sales in the Greater China region rebounded with 4% growth. Apple announced it is also expanding its AI investments.
- Microsoft (MSFT): Continued its strong day, gaining 3.95%. After-hours comments from CEO Satya Nadella revealed that Microsoft 365 Copilot users had surpassed 800 million. The company’s impressive 39% Azure growth and record-high free cash flow are key drivers.
- Meta Platforms (META): Soared 11%. Mark Zuckerberg’s successful bet on AI advertising is driving strong revenue and margin growth. Analysts from HSBC, BofA, and Guggenheim have raised price targets, with some approaching $900.
- Figma (FIGMA): The software company made a spectacular market debut, surging over 250% from its initial public offering price in its first day of trading, giving it a market capitalization of over $50 billion. Figma’s success after not being acquired by Adobe is a major story, with its strong user base and 40% Q2 revenue growth.
- US Healthcare Policy: The Biden administration announced that 17 pharmaceutical companies, including Eli Lilly, Sanofi, Merck, and Pfizer, are being targeted for “abusive pricing policies.” The administration is demanding they lower drug prices for Medicare to align with “most favored nation” status and pass on foreign profits to US patients and taxpayers. This puts pressure on the sector, and companies have until September 29th to respond or face administrative action.
- Alphabet (GOOGL): Down 2.3% after losing an appeal against Epic Games, forcing it to open up the Google Play Store to third-party app stores.
- Reddit (REDDIT): Surged over 7% after an impressive earnings report. Q2 Revenue grew 78% to $490 million, and diluted EPS of $0.45 beat consensus by a wide margin. Daily active users grew 21%, and ad revenue was up 84%, cementing its position as a key AI data source.
- Roblox (RBLX): Rose 10% after Q2 bookings increased 51% YoY and daily active users grew 41%, demonstrating strong user engagement and monetization.
- Mastercard (MA): Rose after reporting Q2 revenue of $8.13 billion (up 14% YoY) and adjusted EPS that both beat expectations. Cross-border transaction volume surged 18%, driven by a rebound in global travel.
- Coinbase (COIN): Showed disappointing Q2 results, with revenue down 26% to $1.5 billion and EPS around $5.00, but the stock price reacted positively, possibly due to broader market sentiment.
- SoFi Technologies (SOFI): Down over 2% after announcing a $1.5 billion secondary stock offering.
Upcoming Events (Tomorrow – August 2nd)
- Key Economic Data:
- US: July Employment Report (Nonfarm Payrolls, Unemployment Rate)
- Global: Manufacturing PMI data.
- Key Earnings:
- Before Market Open: Exxon Mobil, CVS Health.
- Important Notice: Tomorrow is the end of the trading week.
Important Notice:
This content is for informational purposes only and does not constitute financial advice. Stock market investing carries significant risks. Past performance is not indicative of future results. Conduct your own research and consult a qualified advisor.