| | | Market Snapshot
| Dow | 44130.98 | -330.30 | (-0.74%) | | Nasdaq | 21121.07 | -7.23 | (-0.03%) | | SP 500 | 6339.39 | -23.51 | (-0.37%) | | 10-yr Note |
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| | NYSE | Adv 1106 | Dec 1640 | Vol 1.49 bln | | Nasdaq | Adv 152 | Dec 2959 | Vol 9.99 bln |
Industry Watch
| Strong: Communication Services, Utilities |
| | Weak: Health Care, Real Estate, Materials, Energy, Consumer Staples, Financials, Consumer Discretionary, Materials, Information Technology |
Moving the Market
Microsoft and Meta delivered impressive earnings, sparking strong AI-driven market enthusiasm.
Economic data shows resilient spending and moderating compensation pressures
Broader market struggling to maintain earlier gains
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Volatile session sees slide from record highs
31-Jul-25 16:30 ET
Dow -330.30 at 44130.98, Nasdaq -7.23 at 21121.07, S&P -23.51 at 6339.39
[BRIEFING.COM] The stock market was invigorated by impressive earnings reports from Meta Platforms (META 773.44, +78.23, +11.3%) and Microsoft (MSFT 533.50, +20.26, +4.0%) and quickly pushed the S&P 500 (-0.4%) and Nasdaq Composite (flat) to new record intraday highs, but the broader market struggled to keep pace, with broad-based losses keeping the indices from record closing highs.
At its peak, the S&P 500 set a new record of 6,427.02. The Nasdaq Composite set a new record around the same time at 21,457.48
The consumer discretionary sector (2.2%) was able to retain the bulk of its early gains thanks to Meta's stellar Q2 earnings report, which bolstered its stock to new record highs, as the company's robust beat-and-raise performance underscored its dominance in digital advertising and AI-driven innovation.
Microsoft also soared to new record levels after posting its largest EPS beat in the last seven quarters, with the early gains pushing the company past $4 trillion in market capitalization. The company's Azure AI services grew a notable 39%.
Early excitement in tech was further compounded with the IPO of the collaborative design software company Figma (FIG 115.50, +82.50, +250.0%). The 36.9 million share IPO was priced far above expectations ($33 vs. $25-$28 projected range), opened for trading with a staggering 158% gain at $85, and then rocketed as high as $116 before shares were immediately halted.
Despite all the buzz in the tech world, semiconductor stocks markedly underperformed out of the gate, hinting at volatility that would ultimately steer the major averages from their hot start.
Disappointing earnings and guidance from Qualcomm (QCOM 146.80, -12.26, -7.7%), Arm Holdings plc (ARM 141.38, -21.95, -13.4%), and Lam Research (LRCX 94.85, -4.24, -4.3%), along with weaker-than-expected results from Samsung Electronics, weighed heavily on chipmakers. The Philadelphia Semiconductor Index finished with a loss of 3.1%, narrowing its month-to-date gains to just 1.1%.
Though the technology sector was up as much as 1.3% in the early going, it closed with a loss of 0.3%. The communication services (+2.0%) and utilities (+0.6%) sectors were the only S&P 500 sectors to close with a gain, though eight sectors traded in positive territory this morning.
The health care sector (-2.8%) was the hardest hit, as pharmaceutical stocks faced pressure after President Trump declared that he sent letters to 17 pharmaceutical CEOs demanding an extension of most favored drug pricing by September 29, raising concerns about their earnings prospects.
The real estate (-1.7%) and materials (-1.0%) sectors round out the bottom three S&P 500 sectors.
While a trade deal with South Korea featuring a 15% tariff rate was struck, and Mexico was granted a 90-day extension on the 25% tariff rate, there were reminders today that tariffs for other countries are reverting to the onerous tariff rates announced on April 2.
Additionally, today's economic reports largely fell in line with the Fed's prevailing view that it can stand by to watch more incoming data before cutting rates since the economy remains on a growth track at the same time inflation continues to stick at higher levels amid higher tariff rates.
The retreat on "good news" today triggered selling activity that could be indicative of a looming correction in an overbought market. The CBOE Volatility Index was up 8.6% at 16.82.
U.S. Treasuries finished July on a subdued note despite a morning barrage of economic data. The quiet session capped a month that saw losses across the complex with relative weakness up front amid receding bets for near-term easing from the Fed. The 2-year note yield settled up one basis point at 3.95% (+23 basis points in July), and the 10-year note yield settled down two basis points at 4.36% (+13 basis points in July).
- Nasdaq Composite: +9.3% YTD
- S&P 500: +7.8% YTD
- DJIA: +3.7% YTD
- S&P 400: +1.0% YTD
- Russell 2000: -0.8% YTD
Reviewing today's data:
- June Personal Income 0.3% (Briefing.com consensus 0.3%); Prior -0.4%, June Personal Spending 0.3% (Briefing.com consensus 0.4%); Prior was revised to 0.0% from -0.1%, June PCE Prices 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.2% from 0.1%, June PCE Prices - Core 0.3% (Briefing.com consensus 0.3%); Prior 0.2%
- The key takeaway from the report is that real personal spending was up a modest 0.1% in June. That isn't much, although it does show that consumers continue to have the capacity to spend in the face of higher prices.
- Weekly Initial Claims 218K (Briefing.com consensus 220K); Prior 217K, Weekly Continuing Claims 1.946 mln; Prior was revised to 1.946 mln from 1.955 mln
- The key takeaway from the report is the recognition that employers still remain reluctant to lay off employees, but employees that do get laid off are facing a tougher time finding a new job.
- Q2 Employment Cost Index 0.9% (Briefing.com consensus 0.8%); Prior 0.9%
- The key takeaway from the report is that compensation costs have moderated, which could serve to lower some of the inflation temperature at the Fed.
- July Chicago PMI 47.1 (Briefing.com consensus 42.1); Prior 40.4
Afternoon slide from earlier highs
31-Jul-25 15:30 ET
Dow -214.81 at 44246.47, Nasdaq +19.78 at 21148.08, S&P -11.79 at 6351.11
[BRIEFING.COM] While the S&P 500 (-0.2%) and Nasdaq Composite (+0.1%) reached record intraday highs early in the session, both indices are currently lower than the levels needed to eclipse Monday's record closing highs.
The S&P 500 needs to add 0.5% before the close to reach a new record, while the Nasdaq Composite needs to add 0.1%.
Only the communication services sector (+2.3%) has preserved the bulk of its early gains, while the consumer staples (+0.3%) and energy (+0.2%) sectors post more modest advances.
The other eight sectors trade in negative territory in a session that has seen some roller coaster action, though it will take a notable upward swing to prevent a lower finish.
Decline in broader market weighs on major averages
31-Jul-25 15:05 ET
Dow -112.96 at 44348.32, Nasdaq +62.79 at 21191.09, S&P +2.79 at 6365.69
[BRIEFING.COM] While the major averages soared this morning in response to yesterday afternoon's mega-cap earnings reports, the broader market has struggled, leading to slimmer gains amongst the cohort.
Pharmaceutical stocks are being pressured by President Trump's declaration that he sent letters to 17 pharmaceutical CEOs demanding an extension of most favored drug pricing by September 29, raising concerns about their earnings prospects. The health care sector (-1.9%) is now the worst-performing S&P 500 sector today.
The technology sector (unch) is now flat for the day after being up 1.3% in response to Microsoft's (MSFT 534.83, +21.59, +4.2%) earnings reports. Chipmakers continue to underperform, sending the PHLX Semiconductor Index down 3.0%, which puts it into negative territory (-0.6%) for the week.
Decliners now outpace advacners by a 15-to-11 ratio on the NYSE and a 5-to-3 ratio on the Nasdaq.
The S&P 500 sits unchanged for the day, while the Nasdaq Composite (+0.3%) defends a modest gain and the DJIA (-0.3%) lags.
S&P 500 slips as Align Tech plunges 37% on weak outlook; CHRW, WDC, and Xylem surge on earnings
31-Jul-25 14:30 ET
Dow -186.83 at 44274.45, Nasdaq +23.23 at 21151.53, S&P -9.19 at 6353.71
[BRIEFING.COM] The S&P 500 (-0.14%) is in second place on Thursday afternoon.
Briefly, S&P 500 constituents C.H. Robinson (CHRW115.31, +17.66, +18.08%), Western Digital (WDC 78.27, +6.84, +9.58%), and Xylem (XYL142.76, +12.16, +9.31%) pepper the top of the standings following earnings.
Meanwhile, Align Tech (ALGN 129.15, -74.42, -36.56%) is today's top laggard after the company missed Q2 expectations and issued weak Q3 guidance, citing lower-than-expected Clear Aligner volumes and uneven patient case conversions. Adding to the pressure, Align forecasted flat to slightly higher Clear Aligner revenue in 2025, with lower ASPs driven by a shift to less comprehensive, lower-priced products and emerging market growth.
Gold futures dip as strong U.S. data tempers Fed cut hopes; trade tensions offer limited support
31-Jul-25 14:00 ET
Dow -165.46 at 44295.82, Nasdaq +32.96 at 21161.26, S&P -7.15 at 6355.75
[BRIEFING.COM] The tech-heavy Nasdaq Composite (+0.16%) is the only major average in positive territory this afternoon, up about 33 points.
Gold futures settled $4.70 lower (-0.1%) at $3,348.10/oz, mildly lower after yesterday's decision by the Fed to hold rates steady at 4.25% to 4.50% without signaling a clear path for cuts. Resilient U.S. economic data, including strong private payrolls, tempered rate-cut expectations and added mild pressure on bullion. A meagre dollar and lower Treasury yields offered limited support, while renewed U.S. trade tensions, including fresh tariffs on copper-related imports, helped lift spot gold, though futures remained slightly weaker amid cautious positioning.
Meanwhile, the U.S. Dollar Index is now less than +0.1% higher to $100.01.
Qualcomm's Q3 EPS beat fades as slower growth and sluggish Q4 guidance weigh on shares (QCOM)
QCOM’s Q3 earnings report delivered a modest beat on EPS, yet the stock is experiencing a sharp sell-off as revenue growth decelerated to 10%, a notable slowdown from the high-teen growth rates observed in recent quarters, signaling potential headwinds in key markets. Furthermore, the company’s in-line Q4 guidance failed to inspire confidence, falling short of investor expectations for a stronger forward outlook amid a competitive semiconductor landscape.
- The Handset business posted a 7% revenue increase to $6.3 bln, a step down from the 12% growth in Q2, reflecting a cooling demand environment. Despite the Snapdragon 8 Elite platform securing 124 designs shipped or announced for AI-enabled smartphones, this traction did not translate into robust top-line growth, likely due to market saturation in premium tiers and softening demand from major clients amid global trade uncertainties. The muted impact of these design wins suggests that execution challenges or delayed rollouts may have capped the upside.
- In contrast, the IoT business delivered standout performance with a 24% revenue jump to $1.68 bln, marking it as QCOM’s strongest-growing segment. This surge is largely driven by the company’s strategic expansion into the PC and laptop markets through Snapdragon chips, which are gaining significant traction, particularly against Intel (INTC). Snapdragon-based PCs now account for approximately 9% of Windows laptops sold above the $600 price tier in the U.S., reflecting a meaningful market share gain as the platform’s efficiency and AI capabilities resonate with consumers and OEMs alike.
- The Auto business recorded solid 21% growth to $984 mln, though this represents a sharp deceleration from the 59% surge in Q2. Growth continues to be fueled by the Snapdragon Digital Chassis, which is securing design wins in connected and autonomous vehicles, particularly with European and Asian OEMs. However, the slowdown may be attributed to a high comparison base from Q2, supply chain constraints affecting production ramps, and a potential softening in global automotive demand, suggesting that while the segment remains a growth engine, its trajectory may face near-term hurdles.
- QCOM’s revenue diversification efforts have proven largely effective, with strong growth in IoT and Auto segments reducing reliance on its traditional Handset business, yet Handsets still constitute a substantial 60% of total revenue, dragging down Q3 results amid slowing demand. This heavy exposure to the handset market poses considerable risk, particularly as Apple (AAPL) is expected to transition away from QCOM chips in the next couple of years with its in-house modem development, potentially eroding a key revenue stream.
QCOM’s slowing revenue growth and underwhelming Q4 guidance have triggered a significant stock price decline, reflecting investor concerns over the company’s ability to sustain its prior momentum. While pockets of strength in IoT and Auto provide some optimism, the lack of a robust forward outlook underscores the need for vigilance as competitive and macroeconomic pressures mount.
Western Digital higher after Q2 results; agentic AI boosting demand; new CEO off to a good start
Western Digital (WDC +8%) is making a nice move higher today after reporting its Q4 (Jun) results last night. The data storage giant reported nice EPS upside, marking its second consecutive quarter of a double-digit EPS beat under its new look and leadership. Recall that WDC recently hired Irving Tan as new CEO. Revenue grew 30% yr/yr to $2.61 bln, which was also well above expectations. Just as encouraging, the midpoint of Q1 (Sep) EPS guidance was above analyst estimates, with revenue also a good bit above expectations. On a final note, management noted that demand continues to strengthen, thanks to the emergence of agentic AI.
- WDC stated that the emergence of agentic AI at scale in multiple industries is creating an increasing need for data storage. Within its own engineering organization, it is already realizing tangible benefits of agentic AI to help accelerate its product development cycle.
- In addition, the rise of AI is accelerating its platforms business, as it is gaining traction with infrastructure providers as well as the growing number of native AI companies that don't have their own storage infrastructure.
- With that as a backdrop, demand for its products continues to strengthen. Shipments of its ePMR drives and UltraSMR more than doubled sequentially, exceeding 1.7 mln units. This marks one of the shortest qualifications and ramp cycles in WDC's history.
- There was also positive commentary regarding its next generation HAMR drives. Its next and final generation of ePMR drives will complete qualification in 1HCY26, which paves the way for a smooth transition to HAMR. Feedback on HAMR from two of its hyperscale customers continues to be encouraging and will transition from testing to qualification stage, staying ahead of internal milestones and on track for a ramp in 1HCY27.
- Recall that WDC previously mentioned some potential uncertainty on enterprise demand due to tariffs. Throughout the quarter, WDC did not see any of the risks materialize. Furthermore, the potential softness in enterprise would be picked up in the cloud, as enterprises move from cap-ex to consumption-based models. Cloud, again, was another bright spot, representing 90% of total revenue and growing 36% yr/yr.
Overall, it was another strong quarter for WDC, the new CEO seems to have found his footing. Investors are pleased to see continued strength with upside Q1 guidance and the bullish commentary regarding demand for its data products. Another welcome sight to investors was the progress on its HAMR drives, with WDC ahead of internal milestones. On a final note, these results have pushed the stock to a new 5-year high and continues to extend its gains, more than doubling its price since early April.
Meta Platforms' Q2 earnings soar on AI-Driven ad growth as it also tightens capex guidance (META)
Meta Platforms (META) delivered a stellar Q2 earnings report, propelling its stock to new record highs, as the company’s robust beat-and-raise performance underscored its dominance in digital advertising and AI-driven innovation. . User engagement also remained strong, with daily active users across its Family of Apps reaching 3.48 bln, up 6% yr/yr. Notably, META tightened its FY25 capex guidance to $66-$72 bln from the prior $64-$72 bln range, a move that contrasted with expectations of a significant upward revision following Alphabet’s (GOOG) $10 billion capex hike. This relatively more disciplined approach to capex, combined with strong financials, reassured investors that META is balancing aggressive AI investments with fiscal prudence.
- The advertising business, META’s primary revenue driver, posted robust growth of nearly 22%, fueled by a 9% yr/yr increase in average price per ad and an 11% rise in ad impressions across its Family of Apps. Key to this performance were META’s AI-driven innovations, including Advantage+, Andromeda, and GEM (Global Engagement Model), which have significantly enhanced ad targeting precision and return on ad spend for advertisers.
- Advantage+ leverages machine learning to optimize ad placements in real time, while Andromeda improves content relevance, driving higher engagement. GEM’s ability to predict user behavior has further refined ad delivery, ensuring advertisers achieve better outcomes. These advancements, coupled with the rapid growth of Threads (320 mln monthly active users as of 1Q25) and early monetization efforts, position META’s advertising engine to sustain its momentum.
- Expenses and capex remain a focal point, with META projecting significant increases in both 2025 and 2026. Total costs and expenses rose 12% yr/yr to $27.08 bln in Q2, with full-year 2025 expense guidance raised to $114-$118 bln from $113-$118 bln. The company reiterated that 2026 expense growth will outpace 2025, driven primarily by infrastructure costs -- particularly depreciation from new assets and higher operating expenses for scaling data centers -- and compensation for technical talent, especially AI hires.
- Capital expenditures reached $17 bln in Q2 (+101% yr/yr), with the updated 2025 capex range reflecting investments in servers, data centers, and network infrastructure to support META’s AI ambitions. Looking ahead, META anticipates “another year of similarly significant capital expenditures dollar growth in 2026” to sustain its AI and infrastructure scaling.
- A significant portion of META’s capex is allocated to establishing Meta Superintelligence Labs, a new initiative co-led by high-profile hires like Scale AI’s Alexandr Wang, aimed at advancing personal superintelligence technologies. This lab focuses on developing next-generation AI models, potentially integrating META’s Llama framework with cutting-edge innovations to create highly personalized, intelligent user experiences across its platforms. By prioritizing superintelligence, META aims to enhance its ecosystem -- spanning social media, advertising, and emerging products like AI glasses -- potentially unlocking new revenue streams and reinforcing its leadership in AI-driven consumer tech.
- Reality Labs, META’s hardware and virtual reality division, reported modest revenue growth of 5% to $370 mln, driven by strong sales of Ray-Ban Meta glasses, though tempered by weaker Quest headset sales. However, the segment continues to be a financial drag, posting a substantial operating loss of $4.5 bln in Q2, consistent with its historical trend of over $50 bln in cumulative losses since 2020.
Meta’s Q2 2025 results mark another quarter of exceptional performance, driven by its advertising prowess and leadership in AI innovation. As the company ramps up investments in AI infrastructure and Meta Superintelligence Labs, it is well-positioned to strengthen its competitive moat and drive sustained growth in 2025 and beyond.
Microsoft surprises investors with another big upside quarter, Azure was the star of the show (MSFT)
Microsoft (MSFT +5%) wrapped up FY25 with an impressive Q4 (Jun) report last night. The software giant posted it largest EPS beat in the last seven quarters. Revenue rose a robust 18.1% yr/yr to $76.44 bln, which was much better than expected and was a milestone by topping $75 bln for the first time ever. It was also its highest growth since 2QFY22. All three segments performed better than expected, but Azure was the star of the show. MSFT also guided Q1 (Sep) revs above expectations.
- Let's start with Azure, which grew +39% CC (constant currency), well above prior guidance of +34-35% CC. Azure has now posted big upside in back-to-back quarters after coming in at the low end of guidance in Q2. Azure growth was driven by accelerated growth in its core infrastructure business, primarily from its largest customers. Revenue from Azure AI services was generally in-line. And while MSFT brought additional data center capacity online in Q4, demand remains higher than supply.
- Not only did Azure outperform in Q4, but Azure's Q1 (Sep) guidance of +37% CC was also impressive. Even as it continues bringing more data center capacity online, MSFT expects to remain capacity-constrained through the first half of its fiscal year. MSFT continues to lead the AI infrastructure wave and took share every quarter this fiscal year. In its on-premises server business, MSFT expects revenue to decline in the low to mid-single digits as customers shift to the cloud.
- Its two other segments, Productivity and Business Processes and More Personal Computing also came in ahead of prior guidance. PBP was driven by M365 Commercial products and cloud services and M365 Consumer products and cloud services. MSFT noted LinkedIn is home to 1.2 bln members with four consecutive years of double-digit member growth. MSFT continues to bring AI to every part of the LinkedIn experience, introducing agents across hiring as well as sales.
- Its MPC segment also exceeded expectations, primarily due to Windows OEM as well as Xbox content and services. Search was a standout with revenue ex-TAC up 20% CC. In Gaming, revenue increased 10% CC with Xbox content and services revenue up 12% CC. Speaking of gaming, MSFT noted it has 500 mln monthly active users across platforms and devices. It's now the top publisher on both Xbox and PlayStation with successful launches of Forza Horizon 5 and Oblivion Remastered.
- In terms of the guidance, MSFT expects to deliver another year of double-digit revenue growth in FY26. MSFT also reminded investors that cap-ex will moderate in FY26 as compared to FY25 with a greater mix of short-lived assets. Due to the timing of delivery of additional capacity, cap-ex is expected to be higher in 1H and lower in 2H. In Q1, management expects cap-ex to be over $30 bln, driven by strong demand signals we see.
Overall, this was a great quarter for MSFT. The company is huge and yet it still is able to accelerate revenue growth at a good clip, which is quite remarkable. The Azure result and guidance were the real standout metrics. As a quick side note, MSFT always reports Azure growth, but not the dollar amount. However, it broke with that pattern and we got a little glimpse. It said Azure surpassed $75 bln in FY25 revs, up 34%. That is still less than Amazon's AWS which has posted $112 bln in the last 12 months. However, AWS is growing in the high-teens while Azure is growing at 34%. Nevertheless, the Azure numbers are great news for Amazon (AMZN) and its AWS segment, which reports tonight.
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. |
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