Market Snapshot
| Dow | 44461.28 | -171.71 | (-0.38%) | | Nasdaq | 21128.30 | +31.38 | (0.15%) | | SP 500 | 6362.90 | -7.96 | (-0.12%) | | 10-yr Note |
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| | NYSE | Adv 823 | Dec 1899 | Vol 1.17 bln | | Nasdaq | Adv 1467 | Dec 3050 | Vol 9.40 bln |
Industry Watch
| Strong: Utilities, Information Technology, Communication Services |
| | Weak: Energy, Materials, Consumer Discretionary, Industrials, Real Estate, Consumer Staples, Financials, Health Care |
Moving the Market
FOMC keeps fed fund rate unchanged, though Governors Waller and Bowman voted in favor of a 25-basis point rate cut
Equity markets turn lower as September rate cut expectations decline
Fresh round of earnings report, with Meta Platforms (META) and Microsoft (MSFT) set to report after the close
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Reduce rate cut expectations sends stocks lower
30-Jul-25 16:30 ET
Dow -171.71 at 44461.28, Nasdaq +31.38 at 21128.30, S&P -7.96 at 6362.90
[BRIEFING.COM] An unsurprising decision by the FOMC to leave the fed funds rate unchanged did little to sway the stock market from its modest early gains, but comments from Fed Chair Powell during his press conference sent September rate cut expectations lower, with stocks and treasuries facing some impulse selling as a result.
The Fed opted to keep the fed funds rate range between 4.25% and 4.50%, though Fed Governors Waller and Bowman voted in favor of a 25-basis-point rate cut, representing the first dissent by two policymakers since 1993.
Fed Chair Powell said in his press conference that there is scope to reduce rates once conditions are met, but large cuts are unlikely unless the labor market weakens significantly and the economy is not showing signs of being held back by restrictive policy.
The comments sent the probability of a September rate cut tumbling, with the implied probability now 48.1%, down from 64.6% yesterday.
Selling pressure in the stock market ensued, sending the major averages into negative territory after spending the majority of trade with modest gains.
The Nasdaq Composite (+0.2%) was able to recapture a modest gain, while the S&P 500 (-0.1%) and DJIA (-0.4%) finished with losses.
This morning's early gains came on low volume and nearly even breadth figures, reflecting a wait-and-see approach in the market that left it vulnerable to volatility following the FOMC decision.
At the bottom of the afternoon slide, only the utilities sector (+0.7%) remained in positive territory for the day, though a late rally saw the information technology (+0.4%) and communication services (+0.2%) resurface with modest gains.
A modest outperformance in mega-cap stocks supported the latter two S&P 500 sectors, as the Vanguard Mega Cap Growth ETF finished the day with a 0.3% gain.
Elsewhere, losses were broad-based, with the materials (-2.0%), real estate (-1.4%), and energy (-1.4%) closing with the widest losses in the wake of the FOMC announcement.
U.S. treasuries also finished Wednesday on their lows, as the 10-year note settled up six basis points to its 200-day moving average at 4.38%. The July FOMC decision overshadowed the morning release of the U.S. Treasury's latest quarterly refunding statement, in which the Treasury said that the frequency of nominal buybacks of longer-dated Treasuries will be increased.
Today's data included a solid advance reading of Q2 GDP, which gives the central bank more room to delay the next cut. The market also received a stronger-than-expected ADP Employment Change report for July.
A sizable batch of earnings reports had little impact on the broader market this morning, but upcoming results from Microsoft (MSFT 513.24, +0.67, +0.1%) and Meta Platforms (META 695.21, -4.79, -0.7%) after today's close could help spark a rebound if the numbers impress.
- Nasdaq Composite: +9.4% YTD
- S&P 500: +8.2% YTD
- DJIA: +4.5% YTD
- S&P 400: +2.1% YTD
- Russell 2000: +0.1% YTD
Reviewing today's data:
- Weekly MBA Mortgage Applications Index -3.8%; Prior 0.8%
- July ADP Employment Change 104K (Briefing.com consensus 78K); Prior was revised to -23K from -33K
- The key takeaway is that, while the overall employment growth was modest, it was broad-based with gains for small, medium, and large establishments. In brief, it was not a report that signals any material weakness in the labor market.
- Q2 GDP-Adv. 3.0% (Briefing.com consensus 2.5%); Prior -0.5%, Q2 GDP Deflator-Adv. 2.0% (Briefing.com consensus 2.6%); Prior 3.8%
- The key takeaway from the report is the recognition that the stronger growth was fueled by the decrease in imports (-30.3%), which are a subtraction in the calculation of GDP. The net exports component contributed 4.99 percentage points to Q2 GDP growth.
- June Pending Home Sales -0.8% (Briefing.com consensus 0.4%); Prior 1.8%
Major averages at session lows
30-Jul-25 15:30 ET
Dow -338.01 at 44294.98, Nasdaq -54.07 at 21042.85, S&P -32.51 at 6338.35
[BRIEFING.COM] The major averages trade just above their session lows heading into the final half hour of trading.
Equity markets reversed after comments from Fed Chair Powell that the economy is not showing signs of being held back by restrictive policy sent expectations for a September rate cut lower.
Only the utilities sector (+0.6%) remains in positive territory, as the major averages are set to significantly widen their week-to-date losses.
Equity markets reverse on declining rate cut expectations
30-Jul-25 15:05 ET
Dow -318.09 at 44314.90, S&P -26.85 at 6344.01
[BRIEFING.COM] The major averages have dipped since the FOMC announced that the fed funds rate will remain unchanged, with the Nasdaq Composite down 0.3%, the S&P 500 down 0.4%, and the DJIA down 0.7%.
In the press conference section of the meeting, Fed Chair Powell said the two dissenters (Waller and Bowman) gave clear, thoughtful arguments, but the majority still favored keeping policy modestly restrictive.
Powell added that there is scope to reduce rates once conditions are met, but large cuts are unlikely unless the labor market weakens significantly.
The probability for a 25-basis point rate cut at the September meeting has fallen to 52.5%, nearly an 11% decline since yesterday, sending equity markets into a sell-off.
Selling activity has picked up recently, sending the financials (-0.3%) and health care (-0.1%) sectors into negative territory after spending most of the session in positive territory.
Breadth figures have declined, with decliners outpacing advancers by a nearly 2-to-1 ratio on the NYSE, though it is a slim margin of just a few dozen names on the Nasdaq.
Stocks hold steady after Fed holds; Trump imposes sweeping tariffs on copper, Brazil
30-Jul-25 14:30 ET
Dow +13.76 at 44646.75, Nasdaq +94.67 at 21191.59, S&P +13.96 at 6384.82
[BRIEFING.COM] The major averages are seem little phased following the release of the Fed's July Policy Statement wherein the FOMC voted to keep the federal funds rate steady at 4.25% to 4.50%, citing moderate economic growth, a solid labor market, and still-elevated inflation. Currently, the S&P 500 (+0.22%) is in second place, up about 14 points.
While the Committee remains committed to achieving its 2% inflation goal and maximum employment, it acknowledged heightened uncertainty in the economic outlook. Two members dissented, favoring a quarter-point rate cut. The Fed reiterated that future policy decisions will depend on incoming data and evolving risks.
We'd also mention that President Trump signed two major trade-related directives aimed at strengthening U.S. national security and protecting domestic industries. First, he imposed a 50% tariff on a broad range of semi-finished copper products and copper-based components, effective August 1, while exempting raw copper inputs and scrap. He also invoked the Defense Production Act to ensure a portion of domestically produced copper and scrap remains in the U.S. to support domestic refiners.
Second, President Trump suspended the de minimis duty-free threshold for low-value imports, citing national security concerns over misuse of the system. He also declared a national emergency under IEEPA and imposed a 40% tariff on Brazilian imports in response to what he described as human rights abuses and anti-democratic actions by Brazil's government against former President Jair Bolsonaro and his supporters.
Gold falls to 3-week low as trade hopes and stronger dollar erode safe-haven demand
30-Jul-25 13:55 ET
Dow +21.36 at 44654.35, Nasdaq +86.73 at 21183.65, S&P +14.30 at 6385.16
[BRIEFING.COM] With about two hours to go the tech-heavy Nasdaq Composite (+0.41%) is in first place ahead of the Fed's July FOMC Statement, which is due at the top of the hour, followed by Fed Chairman Powell's press conference at 14:30 ET.
Gold futures settled $28.40 lower (-0.8%) at $3,352.80/oz, as easing trade war anxiety and a firmer U.S. dollar weighed on bullion's appeal. Gold hovers near a three-week low after more than five hours of U.S./China talks in Stockholm and a framework trade agreement reached with the EU, including a 15% tariff instead of higher threatened rates, reduced safe-haven demand.
Meanwhile, the U.S. Dollar Index is up about +0.5% to $99.44.
Teradyne sharply higher after surprisingly bullish commentary on Q2 call
Teradyne (TER +20%) is trading sharply higher today after reporting its Q2 results last night. This manufacturer of test equipment and robotic systems for chip companies reported EPS and revenue upside. That said, the EPS beat was its most narrow in a 5-year span, and revenue declined yr/yr for the first time in 4 quarters. Investors are likely responding more to the bullish commentary from management on this morning's Q2 call, with management noting a strengthening 2H25 extending into FY26.
- TER generates revenue through three main segments: Semiconductor Test, Robotics, and Product Test. Its ST group was the star of the show, contributing 75% of total revenue. System-on-a-Chip (SOC) was particularly strong for AI applications, driving results above management's expectations.
- In addition, TER noted that demand is strengthening for AI compute and is seeing a broadening of opportunities where it is getting consideration in areas where it has not historically had "a seat at the table."
- Importantly, management noted that visibility is starting to improve in terms of capacity utilization, as utilization rates have improved considerably. This resulted in an increase to its UltraFLEXplus system orders, and management believes they have turned a corner towards more new system sales rather than selling upgrades of existing idle mobile capacity.
- Its Robotics segment, which was recently restructured, delivered 9% sequential growth despite persistent challenges in the market. It secured a plan-of-record decision from a large customer in Q2. While it is not expected to have a material impact on Robotics revenue in FY25, it is anticipated to be a significant growth driver in FY26. As a result, TER plans to open a manufacturing operation in the US to support this opportunity and others.
While the results this quarter were solid, we believe the stock's outsized move today is being driven more by the particularly bullish tone on the call as well as willingness to be bullish a few quarters out. The increase in AI compute demand and the shift toward new system sales over upgrades suggest a willingness by customers to spend more. While its larger ST segment is positioned for a strong Q3, investors are also pleased to see its Robotics segment, which has not yet turned a profit, gain traction from large customers.
Seagate's cautious guidance sparks profit-taking, but HAMR keeps outlook bright (STX)
Seagate Technology (STX) reported 4Q25 results that showcased solid earnings and margin performance, driven by strong demand for high-capacity drives and record gross margins of 36.2%, but the company's cautious 1Q26 guidance is tempering enthusiasm. Following last quarter’s upbeat Q4 EPS and revenue guidance, which exceeded estimates, STX’s 1Q26 outlook disappointed with revenue guidance coming in below expectations at the midpoint of the $2.35-$2.65 bln range, while EPS guidance of $2.10-$2.50 was also slightly below the FactSet consensus estimate of $2.36 at the midpoint.
With shares soaring nearly 130% since early April, propelled by optimism around AI-driven storage and HAMR technology, STX faced elevated investor expectations, creating a challenging setup that's contributing to a pullback in the stock as the market digested the conservative outlook.
- STX’s performance reflects a mixed demand environment, with softness in the PC market weighing on hard disk drive sales amid macroeconomic headwinds. Despite optimism surrounding AI-enabled features and the anticipated Windows 11 refresh cycle, which were expected to bolster PC demand, growth remains uncertain due to oversupply and shifting consumer behavior in the sector. This murkiness likely prompted STX’s conservative 1Q26 guidance, as management cited “weak demand for storage devices” and ongoing global trade policy uncertainties, signaling a cautious approach to navigating near-term volatility.
- A key bright spot in STX’s report is the continued progress of its Heat-Assisted Magnetic Recording (HAMR) technology, which is gaining traction with multiple cloud and enterprise customer qualifications underway. HAMR, enabling high-capacity drives up to 36TB, is well-positioned to capitalize on rising demand for mass storage in cloud and edge computing, driven by AI and data-intensive applications.
- With qualifications expected to broaden by mid-2025, HAMR’s growth potential mitigates concerns over the cautious 1Q26 outlook, reinforcing STX’s strategic pivot toward high-margin, AI-ready storage solutions. The company has indicated that HAMR is on track for a production ramp-up by mid-2025, with CEO Dave Mosley noting during the Q4 earnings call that HAMR qualifications with cloud and enterprise customers are expected to contribute meaningfully to revenue growth in FY26 and beyond.
STX’s stock, having surged dramatically since April, was primed for profit-taking, and the cautious 1Q26 guidance provided the catalyst for investors to lock in gains. Despite this near-term pullback, the long-term outlook remains compelling, as HAMR technology positions STX to lead in the rapidly expanding mass storage market for cloud and AI applications. The company’s focus on innovation and margin discipline continues to underpin its growth narrative.
Booking Holdings trading flat despite another strong earnings beat; US travel demand muted
Booking Holdings (BKNG) is trading flat despite the online travel reservation giant reporting big upside with its Q2 report last night. Both EPS and revenue were well ahead of analyst expectations. BKNG also guided Q3 in-line and guided FY25 revs to growing low double digits, which was better than expected. This was an important quarter because the reciprocal tariffs went into effect in early April, which hurt travel demand, so we did not really know what to expect. However, room nights, gross bookings and revs all exceeded prior expectations.
- In terms of Q2 metrics, room nights grew 8% yr/yr to 309 mln, up from +7% yr/yr growth in Q1. Q2 was driven by strong performance across Europe and especially Asia which was up low double digits. BKNG remains optimistic on Asia, which is currently BKNG's highest growth region. BKNG has now posted back-to-back 300+ mln for the first time ever. This metric is expected to slow in Q3 with guidance of +3.5-5.5%.
- The US continued to be its slowest growing region, but growth in Q2 improved slightly from Q1 and likely outpaced the broader US accommodations industry. However, in the US, BKNG observed lower ADRs as well as a shorter length of stay and booking window. The company believes this may suggest that US consumers are being more careful with spending in the current economic environment.
- BKNG noted that inbound travel to the US was down yr/yr, particularly from bookers in Canada and to a lesser extent from bookers in Europe. However, it did see strong growth in other travel corridors, including Canada to Mexico and Europe to Asia, contributing to accelerating room night growth overall. Also, BKNG continues to expand its alternative accommodations (think AirBNB), with listings reaching 8.4 mln in Q2, up 8% yr/yr.
- Looking ahead to Q3, BKNG has seen steady travel demand trends at the global level thus far in Q3. However, BKNG will be lapping tough compares in Aug/Sep and remains mindful of geopolitical dynamics and uncertainty. This is why BKNG's Q3 room nights guidance was lower than Q2, as mentioned earlier. However, gross bookings in Q3 are expected to increase 8-10%, reflecting higher flight ticket growth.
So why is the stock lower despite the nice beat? We think it is partly because BKNG has been reporting huge beats for several quarters. Investors have grown accustomed to it. Also, the room nights guidance for Q3 was a noticeable step down from the growth we have seen in Q1-Q2. Also, while Asia is doing very well, BKNG was a bit cautious on inbound US travel. And that seems to be pressuring hotels with the lower ADR rates. Finally, the stock has made a big run, up more than 20% from early April, so investors are booking profits a bit.
Starbucks' green shoots in U.S. business outweigh Q3 EPS miss (SBUX)
Starbucks (SBUX) delivered mixed 3Q25 results, with EPS of $0.50 missing expectations, while revenue of $9.5 bln surpassed the FactSet consensus forecast of $9.29 bln. Despite the EPS shortfall, the stock is trading sharply higher, reflecting investor relief that results were better-than-feared and optimism sparked by CEO Brian Niccol’s upbeat commentary on the U.S. turnaround. Niccol’s emphasis on early progress in the “Back to Starbucks” initiative, coupled with stabilizing demand, overshadowed the earnings miss and fueled positive sentiment among investors.
- The EPS miss was primarily driven by a significant 660-bps contraction in the non-GAAP operating margin to 10.1%, largely due to strategic investments tied to the “Back to Starbucks” turnaround plan. These costs included a substantial $500 mln commitment to additional labor hours for U.S. stores, set to begin with the Green Apron service rollout in mid-August, and expenses from the Leadership Experience 2025 conference, which alone accounted for an 11-cent hit to EPS.
- Investors appear willing to overlook these temporary pressures, as the margin decline reflects deliberate efforts to reposition the U.S. business, which is showing signs of stabilization and improved customer engagement.
- In the U.S., SBUX reported a 2% decline in comparable store sales, consistent with the prior quarter but slightly better than analysts’ expectations. Foot traffic remained a challenge, with transactions down 4%, though this was partially offset by a 2% increase in average ticket, signaling resilience in customer spending per visit.
- Adding to the positive sentiment, CEO Brian Niccol, who successfully revitalized Chipotle (CMG) during his tenure there as CEO, noted that SBUX’s turnaround is progressing ahead of schedule, leveraging his proven expertise in operational transformation to bolster investor confidence.
- In China, SBUX demonstrated notable improvement, with comparable store sales rising 2%, driven by a robust 6% increase in transactions. This marks a significant rebound from prior quarters of decline, reflecting the company’s strategic price adjustments, such as a 5-yuan reduction on select iced drinks to counter competition from local rivals like Luckin Coffee. SBUX is also exploring a strategic partnership for its China business which could further strengthen its market position and drive sustained growth in this critical region.
SBUX's Q3 results reveal encouraging green shoots in the U.S. business, with the “Back to Starbucks” plan gaining traction through improved customer engagement and operational enhancements. While challenges remain, the stabilization in U.S. comparable sales and strong recovery in China suggest that Niccol’s strategic vision is beginning to deliver, providing the critical momentum investors are seeking for long-term value creation.
Whirlpool in a spin after Q2 report; likely dividend cut and another guidance cut weighing on shares
Whirlpool (WHR -12%) is under pressure today after reporting its Q2 results last night. Simply put, the appliance market remains in a tough operating environment, with elevated interest rates and evolving trade policies continuing to weigh on consumer sentiment. As such, Q2 was expected to be a challenging quarter, and it was as WHR reported its first and largest EPS miss in 10 quarters.
Compounding the disappointing results, WHR announced a likely dividend cut, issued a substantial downward revision to its FY25 EPS guidance, and pointed to persistent near-term headwinds.
- For the overall appliance market, WHR noted that consumer sentiment not only suppressed demand, but consumers are also opting for lower end appliances. Furthermore, Asian competitors continue to ramp up imports ahead of tariffs.
- We think a big thing weighing on the stock is not just the Q2 results but WHR expecting weakness to persist well into Q3. Investors had been hoping for a recovery in 2H25, however these comments certainly put that in doubt.
- WHR also provided some insight into its outlook on the U.S. housing market, a key driver of appliance demand. While the industry is experiencing multi-decade lows in existing home sales, WHR continues to see strong underlying fundamentals that point to a likely multi-year recovery. Management feels there is no company better positioned to benefit from an eventual recovery, which is also the case for when the full effects of tariffs kick in.
- Despite WHR's struggles, one of the best things about the stock has been its substantial dividend with a yield above 7%. We think WHR's decision to cut the dividend is taking investors by surprise because they defended the dividend as recently as the Q1 call in April. That clearly seems to be weighing on the stock today, however it still sports a respectable 4.1% yield.
- WHR sharply lowered its FY25 EPS guidance to $6-8 from $10. This marks the second consecutive quarter WHR has issued downside guidance, and this time it was a significant reduction.
We think investors were expecting a challenging Q2 heading into this report. However, we think they were not expecting a huge dividend cut and another substantial guidance cut, given that WHR cut guidance just last quarter. Management was bullish on the dividend as recently as April, so this caught investors by surprise.
The dividend yield was getting pretty frothy above 7%, so it makes sense to cut it as WHR looks to free up cash. Even after the proposed reduction, the new yield still stands around 4% which is still quite robust. Today's selloff may attract value investors to the name who might be willing to wait for a turnaround in the housing market. And still collect a healthy 4% yield while they wait. |
