Market Snapshot
| Dow | 44406.36 | -422.17 | (-0.94%) | | Nasdaq | 20412.52 | -188.59 | (-0.92%) | | SP 500 | 6229.98 | -49.37 | (-0.79%) | | 10-yr Note |
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| | NYSE | Adv 575 | Dec 2176 | Vol 1.15 bln | | Nasdaq | Adv 1221 | Dec 3285 | Vol 8.38 bln |
Industry Watch
| Strong: Utilities, Consumer Staples |
| | Weak: Consumer Discretionary, Financials, Health Care, Communication Services, Materials, Energy |
Moving the Market
President Trump announces tariff rates, effective August 1, for countries unable to work out a deal with the U.S., which includes Japan and South Korea
Congress passed and President Trump signed large reconciliation bill
Tesla shares fall amid reports Elon Musk intends to create a new political party
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Closing Stock Market Summary
07-Jul-25 16:20 ET
Dow -422.17 at 44406.36, Nasdaq -188.59 at 20412.52, S&P -49.37 at 6229.98
[BRIEFING.COM] The stock market went into the holiday weekend enjoying a fireworks show featuring better-than-expected employment conditions in June, some excitement about the passage of the "One Big, Beautiful Bill," and record highs for the S&P 500 and Nasdaq Composite. Today, however, those fireworks fizzled on some typical consolidation interest following a big run, as trade news offered a convenient excuse to do some selling.
Specifically, President Trump began sending out letters to a select group of countries that will face higher tariff rates, starting August 1, if better trade terms for the U.S. cannot be worked out before then. The EU was not part of that group. Japan and South Korea were the most prominent members in today's batch, and each will face a 25% tariff rate.
That should not have been construed as a shock, given the reporting leading up to today. Nevertheless, it served as an ostensible catalyst for today's losses, which were broad-based and unfolded in an orderly fashion.
The S&P 500 traded down to the 6,200 area before paring its losses over the last 90 minutes of trading. The Philadelphia Semiconductor Index (-1.9%) and Russell 2000 (-1.6%), which have been among the biggest gainers of late, were among today's biggest losers.
An advance-decline line that favored decliners over advancers by a nearly 4-to-1 margin at the NYSE and by a nearly 3-to-1 margin at the Nasdaq showed that there were plenty of losers to go around. Nine of the 11 S&P 500 sectors ended in negative territory.
The two exceptions were the defensive-oriented utilities (+0.2%) and consumer staples (+0.1%) sectors. The consumer discretionary sector (-1.3%) was today's weakest link, pressured by an outsized loss in Tesla (TSLA 294.11, -21.24, -6.74%). That loss was tied to concerns about Elon Musk getting distracted with his plan to start a new political party, the "America Party," and The Wall Street Journal's report that Tesla is facing increased competition in China.
Other sectors underperforming today included the materials (-1.0%), energy (-1.0%), financials (-1.0%), communication services (-0.9%), and health care (-0.9%) sectors. Energy stocks were dealing with some disappointing Q2 guidance from Shell plc (SHEL 69.84, -2.08, -2.89%) and an OPEC+ decision to raise its output in August by 548,000 barrels per day, up from 411,000 barrels per day in July. WTI crude futures, though, settled the day up 1.5% at $67.96 per barrel.
Separately, Treasuries settled their session with losses across the curve. Longer-dated maturities saw the biggest losses, resulting in a curve-steepening trade that some will attribute to worries about inflation sticking at higher levels and the Fed holding off on a rate cut. The 2-yr note yield was up one basis point to 3.89%, while the 10-yr note yield rose four basis points to 4.39%.
There was no U.S. economic data of note today.
- S&P 500: +5.9% YTD
- Nasdaq: +5.7% YTD
- DJIA: +4.5% YTD
- S&P 400: +1.2% YTD
- Russell 2000: -0.7% YTD
Major averages down on tariff news
07-Jul-25 15:30 ET
Dow -529.06 at 44299.47, Nasdaq -209.77 at 20391.34, S&P -60.27 at 6219.08
[BRIEFING.COM] The S&P 500 has rebounded off its session lows, with a current loss of 1.0% going into the final half hour of the session.
The market still awaits several tariff rate decisions this afternoon, with the earlier announcements largely occupying today's earnings and economic data-free headlines.
Tariff announcements have resulted in some selling interest, as the major averages have spent the entire session in the red following last week's record closing highs.
The consumer discretionary (-1.4%), energy (1.4%), financials (-1.2%) sectors are among the worst performers, though all sectors are currently in negative territory.
Market slides on tariff letters
07-Jul-25 15:05 ET
Dow -504.30 at 44324.23, Nasdaq -188.06 at 20413.05, S&P -53.81 at 6225.54
[BRIEFING.COM] The major averages fell to their lowest levels of the day following reports that President Trump sent several letters to countries announcing higher tariff rates effective August 1.
President Trump stated via Truth Social that he sent a letter to Malaysia, informing them of a 25% tariff effective August 1.
South Africa also received a letter from President Trump, informing the country of a 30% tariff effective August 1. Laos and Kazakhstan also received letters on top of letters sent earlier today to Japan and South Korea.
White House Press Secretary Karoline Leavitt says approximately 12 countries will get tariff letters from President Trump today and these letters will get posted to Truth Social. Leavitt also stated that President Trump will sign an executive order today officially delaying the July 9 deadline to August 1.
The markets briefly ticked upwards as it was reported that the E.U. would not be receiving a tariff letter from President Trump, but proceeded to dip to its session lows following the Malaysia and South Africa tariff rates. The indices are currently above their worst levels of the day.
S&P 500 tumbles as tariff tensions rise; LULU, FSLR, CMG lead losses, TSCO bucks trend
07-Jul-25 14:25 ET
Dow -657.86 at 44170.67, Nasdaq -260.76 at 20340.35, S&P -75.92 at 6203.43
[BRIEFING.COM] The broader market has slipped broadly lower over the last half hour as the White House has ramped up more tariff announcements for Asian countries. The S&P 500 (-1.21%) is now 75 points lower.
Briefly, S&P 500 constituents lululemon athletica (LULU 236.25, -11.43, -4.61%), First Solar (FSLR 176.78, -8.25, -4.46%), and Chipotle Mexican Grill (CMG 54.83, -2.24, -3.93%) pepper the bottom of the average. LULU is poised to break a six-session winning streak, while CMG sinks after a sell side downgrade.
Meanwhile, Tractor Supply (TSCO 56.57, +1.94, +3.55%) is today's top gain getter.
Gold holds steady as trade optimism offsets strong dollar and fading Fed cut hopes
07-Jul-25 14:00 ET
Dow -523.71 at 44304.82, Nasdaq -202.70 at 20398.41, S&P -58.13 at 6221.22
[BRIEFING.COM] The tech-heavy Nasdaq Composite (-0.98%) is in second place on Monday afternoon, down a bit more than 200 points.
Gold futures settled $0.10 lower (flat) at $3,342.80/oz; traders are digesting the extension of U.S. tariff deadlines from July 9 to August 1, alongside signals of pending trade agreements, which have eased safe-haven demand. Simultaneously, a firmer dollar -- buoyed by strong U.S. payroll data and diminishing expectations for near-term Federal Reserve rate cuts -- is weighing on the non-yielding metal. In short, improved trade sentiment countered by currency strength and less dovish Fed projections have largely offset each other, keeping gold snug around current levels.
Meanwhile, the U.S. Dollar Index is up about +0.4% to $97.56.
Amazon Prime Day is likely to set investor expectations heading into back-to-school season
Amazon (AMZN) is preparing to have its biggest sales event of the year as Prime Day kicks off this week. This year, the event is extended to last four days from July 8-11 and arrives a week earlier. Beyond the sales boost, Prime Day will serve as a critical measure for consumer demand, inventory trends, and digital retail, offering early reads on back-to-school shopping and the trajectory for Q3 retail.
- Last prime day was AMZN's largest and most successful, helping customers save over $5 bln across more than 50 mln deals. Additionally, AMZN saw paid membership growth accelerate yr/yr in Q3FY24 in both the US and internationally.
- During these dog days of summer, it has been a retail tradition to have these sale events that capitalize on the holidays, summer season, and back-to-school shopping. As to not miss out on the action, Walmart (WMT) will have its Walmart Deals event run from July 8-13, and Target (TGT) has its Circle Week from July 6-12.
- Last year, Circle Week generated the highest digital traffic of FY24 for Target, adding over 2 mln new Target Circle members. Additionally, comp sales were strongest in June and July, driven by the event. Investors will want to see a continuation of the event's success this year.
- In terms of how the consumer feels going into these events, the final University of Michigan Index of Consumer Sentiment edged up to 60.7 for June. This was an improvement in current sentiment, boosted by an improved view of personal finances, business conditions, and the inflation outlook.
- There has been attention on the July 9 expiration date for the pause on reciprocal tariffs, but recent reports suggest there is some discussion around that date, with August 1 now projected as the date countries need to make a deal with the U.S. With that said, these events will be important for shoppers as they try to beat the higher tariff rates.
Overall, these sale events rank among the largest of the year for these companies. The stocks have edged higher over the last couple of days, telling us that sentiment is running high going into these high-profile events. Beyond just the sales, these events will provide critical insights into consumer demand and set investor expectations for Q3 retail performance.
United Airlines and peers receive a lift from record-setting July 4 travel weekend (UAL)
The airline industry showcased strength and resilience during the July 4, 2025 travel weekend, with the Transportation Security Administration (TSA) reporting a record-breaking 18.5 mln travelers screened at U.S. airports from July 1 through July 7, peaking at approximately 2.9 mln on July 6. This robust demand has bolstered airline stocks today, with Delta Air Lines (DAL), United Airlines (UAL), American Airlines (AAL), and Southwest Airlines (LUV) all exhibiting relative strength in a down market today, reflecting investor optimism about the sector’s ability to capitalize on peak seasonal travel.
- The airline industry has faced challenges from weakening domestic travel demand, particularly among price-sensitive leisure travelers, prompting several major carriers -- DAL, AAL, LUV, and Alaska Air Group (ALK) -- to withdraw or lower their FY25 guidance earlier this year. Factors such as macroeconomic uncertainty, high interest rates, and consumer caution have softened demand.
- An important caveat tempers today's optimism: domestic airfares for the July 4 period averaged $265 per round-trip, down 3% from 2024 and the lowest in four years, according to Hopper. This pricing pressure has weighed on unit revenue, with DAL reporting a 1% decline in Total Revenue per Available Seat Mile (TRASM) in 1Q25, driven by overcapacity and competitive fare wars. To counter this, major carriers, including UAL, have announced plans to moderate capacity growth, with UAL targeting a four-percentage point reduction in domestic capacity, starting in 3Q25.
- Compounding these challenges, jet fuel prices have recently edged higher, with IATA’s Jet Fuel Price Monitor reporting a 7.4% week-over-week increase to $89.75 per barrel in mid-June 2025, driven by geopolitical tensions in the Middle East, particularly involving Israel and Iran. Lower fuel prices have generally been a tailwind for airlines in 2025, with IATA forecasting an average of $87 per barrel for the year, down nearly 5% from 2024. However, escalating Middle East conflicts threaten to disrupt this benefit, potentially increasing operating costs and squeezing margins if prices sustain their upward trajectory into Q3.
The record-setting July 4, 2025, travel weekend provides a bullish data point for a domestic air travel market grappling with soft demand and pricing pressures. Yet, with airfares at four-year lows and jet fuel prices showing signs of volatility, only time will reveal whether this holiday surge marks sustained momentum or remains an isolated peak-season event that fails to shift the industry’s broader trajectory.
Summer can add heat to your portfolio; companies to consider as hot weather beneficiaries
Summer 2025 has been a hot one thus far. The US has been experiencing hotter-than-average temperatures and is on track to be among the warmest years on record for both the US and the world thanks to a heat dome in parts of the country. The heat wave has been particularly harsh in the Northeast and Midwest with several cities having broken June temperature records.
With the July 4th weekend having wrapped up and with the Q2 earnings season just around the corner, we thought this would be a good opportunity to take a look at companies that might benefit from the hot weather.
- HVAC companies are a clear beneficiary in this environment. During a heatwave, air conditioning systems work harder, leading to potential strain on the units. This can result in breakdowns or reduced efficiency, which could lead residential and commercial customers to replace their HVAC systems. However, a potential headwind is the still sluggish housing market and the recent decline in consumer confidence, which may slow HVAC replacement purchases. Key names include Carrier Global (CARR), Trane Technologies (TT) and Lennox Intl (LII).
- Electric Utilities are another clear beneficiary as the surge in air conditioning usage during heat waves drives up electricity consumption and wholesale prices. At the same time, the rapid build out of power-hungry data centers is also straining supply. We have noticed a number of electric utility companies have been petitioning public utility commissions to allow them to increase rates. While utilities do not offer a lot of growth, a great thing about them is that they provide steady and predictable income streams, steady share price performance and a solid dividend.
- A utility name we like is Entergy (ETR), which covers 3 mln customers in Arkansas, Louisiana, Mississippi and Texas. A key reason we like it are long term migration patterns to the southern US. And it's not just people, Entergy said businesses are establishing and expanding industrial operations in the Gulf South region, which ETR describes as a very attractive option. Also, Entergy's data center pipeline remains robust. Other names to consider include NEE, D, SO, DUK, PEG, FE, EXC, AEP.
- Other industries to benefit include pool-related companies like POOL, HAYW, LESL, SWIM. TREX is a big supplier of decking materials. Six Flags (FUN) should benefit as well as the amusement park company has focused more on water parks in recent years. Beverage companies are another area to watch as companies like KO, PEP may report an uptick in sales. Even solar companies like FSLR, ENPH, RUN, SPWR could benefit as homeowners seek to offset higher electricity bills during hot months.
While the hot weather can be uncomfortable, if investors can benefit from heating up their portfolios this summer, that would make it all worth it. It will be interesting to listen to the Q2 earnings calls to get management's perspectives on how the summer heat is impacting their bottom lines.
Molina Healthcare's guidance cut less severe than feared after Centene withdrew its outlook (MOH)
Molina Healthcare (MOH) issued downside 2Q25 EPS guidance and lowered its FY25 EPS outlook to $21.50-$22.50 versus its prior forecast of $24.50, aligning with broader industry challenges and following Centene’s (CNC) July 1 announcement in which it withdrew its FY25 EPS guidance after a review of 2025 Health Insurance Marketplace data from Wakely. That data highlighted slower market growth and higher morbidity in key states. Despite the reduced EPS outlook, MOH shares are trading higher today, suggesting the market had priced in expectations of a more severe cut, reflecting a sentiment that the revision, while significant, was not as dire as feared.
- The primary driver behind MOH’s guidance reduction is escalating medical cost pressures across all three of its business lines—Medicaid, Medicare, and Marketplace. Like CNC and others in the industry, MOH is experiencing a higher-than-expected Medical Loss Ratio (MLR), with costs rising due to inflationary pressures in healthcare services and pharmaceuticals, increased utilization in behavioral health, home health, and high-cost specialty drugs, particularly in states like New York and Florida.
- MOH’s announcement also referenced “off-cycle disclosures from others in the managed healthcare sector,” indicating that CNC’s guidance withdrawal and similar sector-wide challenges informed its downbeat outlook. These cost pressures are expected to persist into 2H25, driven by structural issues such as higher morbidity in Marketplace plans and inadequate Medicaid rate adjustments to offset rising expenses.
- Despite the near-term headwinds, MOH’s long-term outlook remains intact, with management emphasizing that the guidance cut does not alter its strategic growth trajectory. The company continues to project healthy revenue growth, driven by its diversified portfolio across Medicaid, Medicare, and Marketplace segments, with expected premium revenue of $42 bln in 2025, a 9% increase from 2024.
- Key long-term growth drivers include successful contract wins in states like Nevada and Illinois, which are expected to bolster membership and revenue, and embedded earnings from recent Medicaid and Medicare Duals contracts, projected to contribute $7.75 per diluted share.
- Furthermore, the recently passed budget bill, which includes Medicaid cuts, has not materially impacted MOH’s long-term outlook, as the company anticipates retaining 40% of its Medicaid membership post-redeterminations and sees opportunities in its Medicare Advantage segment, where proposed 2025 rates are expected to increase its benchmark by 0.5%.
MOH faces significant medical cost pressures across its business lines, mirroring challenges seen across the managed healthcare sector, as evidenced by CNC’s recent guidance withdrawal. However, the market’s positive reaction to MOH’s announcement suggests that the guidance cut was widely anticipated and potentially less severe than expected.
TripAdvisor soars as Starboard Value's 9% investment signals potential shake-up (TRIP)
TripAdvisor (TRIP) is surging higher following a Wall Street Journal report that activist investor Starboard Value LP has acquired a 9% stake in the online travel company, valued at approximately $160 mln. This stake, disclosed in a regulatory filing with the SEC on July 3, positions Starboard as one of TRIP’s largest shareholders and signals potential for significant strategic and operational changes. The market’s enthusiastic response reflects investor confidence in Starboard’s track record of unlocking value at underperforming companies, particularly given TRIP’s lackluster stock performance, which has seen a 15% decline over the past 12 months (not including today's gains).
The company’s inclusion in the consumer discretionary sector, coupled with its recent exploration of strategic alternatives, including a possible sale in early 2024, further amplifies the significance of Starboard’s involvement as a catalyst for change.
- Starboard’s investment is fueling TRIP’s rally due to the hedge fund’s reputation for driving transformative changes at undervalued companies, as well as the market’s belief that the stock, trading at a market cap of approximately $2.0 bln, is significantly underpriced relative to its potential. Starboard’s SEC filing explicitly states that it views TRIP’s shares as “undervalued and an attractive investment opportunity,” and the firm intends to engage with management and the board to explore “opportunities for value creation.”
- Potential actions, based on Starboard’s history with companies like Darden Restaurants (DRI), Kenvue (KVUE), Pfizer (PFE), and Autodesk (ADSK), include pushing for operational efficiencies, cost reductions, management shake-ups, or strategic divestitures. Given TRIP’s rejection of multiple takeover offers in the past year, Starboard may advocate for revisiting a sale, restructuring the company’s capital allocation, or enhancing the monetization of its high-growth subsidiaries, Viator and TheFork, which have outperformed the core TripAdvisor platform.
- The activist’s involvement could also lead to board composition changes or a push for a new CEO to address the stock’s underperformance, which has lagged the Dow Jones U.S. Travel & Leisure Index’s 10.5% gain in 2025.
- TRIP’s stock has been weighed down by several structural and competitive challenges, most notably the slowing growth of its namesake travel review platform, which has struggled to maintain relevance in a highly competitive online travel market. The company’s share price has significantly underperformed competitors like Booking Holdings (BKNG), which gained 9% over the past three weeks, and Expedia Group (EXPE), which has benefited from stronger growth in its B2B segment.
- TRIP’s Q1 earnings, reported on May 7, 2025, showed revenue of $398 mln, up 1% yr/yr, with this modest growth driven by its Viator (experiences marketplace) and TheFork (restaurant booking) segments, which posted strong double-digit gains, while the core TripAdvisor brand saw revenue decline by 8%. The company’s EBITDA margin of 11% trails competitors like BKNG, which reported a 30% EBITDA margin in its latest quarter, highlighting TRIP’s operational inefficiencies.
- Additionally, TRIP faces intense competition from Google’s (GOOG) travel search tools, Airbnb’s (ABNB) experiences platform, and emerging AI-driven travel planning tools, which have eroded its market share. The formation of a special committee in early 2024 to explore strategic options, including a potential sale, underscores the board’s acknowledgment of these challenges, yet the rejection of takeover offers has frustrated investors, contributing to the stock’s depressed valuation.
TRIP’s stock is surging today due to Starboard Value’s 9% stake and its intent to drive value creation, signaling potential operational, strategic, or leadership changes that could unlock the company’s undervalued potential. With a proven activist track record and TRIP's underperforming stock, Starboard’s involvement is a powerful catalyst.
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