Market Snapshot
| Dow | 43588.58 | -542.40 | (-1.23%) | | Nasdaq | 20648.75 | -472.32 | (-2.24%) | | SP 500 | 6238.01 | -101.38 | (-1.60%) | | 10-yr Note |
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| | NYSE | Adv 836 | Dec 1913 | Vol 1.25 bln | | Nasdaq | Adv 1189 | Dec 3329 | Vol 9.70 bln |
Industry Watch
| Strong: Consumer Staples, Health Care, Utilities |
| | Weak: Consumer Discretionary, Financials, Industrials, Information Technology, Communication Services, Materials, Energy, Real Estate |
Moving the Market
Equity market moving lower after broad tariff announcements for key trading partners that will take effect August 7
Mixed reaction to earnings reports from Apple (AAPL) and Amazon (AMZN)
| Markedly lower finish to roller coaster week
01-Aug-25 16:35 ET
Dow -542.40 at 43588.58, Nasdaq -472.32 at 20648.75, S&P -101.38 at 6238.01
[BRIEFING.COM] The stock market ended the week on a decidedly negative tone after the announcement of elevated tariff rates, weakness in several mega-cap tech stocks following earnings, and soft economic data combined to prompt concerns about economic and earnings growth potential.
Global markets and equity futures were lower this morning after President Trump signed an executive order that increased tariff rates for several key partners, including increases to 50% for Brazil, 35% for Canada (up from 25%), 25% for India, 20% for Taiwan, and a 40% tariff on all transshipped goods, regardless of origin.
The pre-open negativity was compounded by a soft payrolls report for July that saw nonfarm payrolls rise by just 73,000. The major revisions to May and June figures were equally concerning, which showed the combined increase over the two previous months was 285,000 lower than previously reported, bringing the three-month average for nonfarm payroll increases to a scant 35,000.
This afternoon, President Trump fired the Commissioner of Labor Statistics, Dr. Erika McEntarfer, citing the revisions and alleged data manipulation in a post on Truth Social.
The market's economic outlook was not helped by a weaker-than-expected July ISM Manufacturing Index, which suggested that the manufacturing sector has not yet seen the benefits of onshoring in response to the tariff actions, which themselves have stoked a good bit of planning uncertainty.
A large batch of earnings reports between yesterday’s close and today’s open didn’t provide any reprieve either.
Amazon (AMZN 214.75, -19.36, -8.27%) and Apple (AAPL 202.38, -5.19, -2.50%) both beat EPS and revenue expectations, yet both traded lower. Amazon, in particular, got hit hard after its AWS growth and operating income guidance disappointed.
As a result, the consumer discretionary sector (-3.6%) finished as the worst-performing S&P 500 sector among the eight sectors that finished in negative territory.
Today's broad-based losses disproportionately impacted sectors with high growth potential and cyclical stocks. The information technology (-2.1%), financials (-1.8%), energy (-1.8%), and communication services (-1.7%) sectors all closed with sizable losses.
Stocks of all sizes were affected. The Vanguard Mega Cap Growth ETF (-2.3%) felt the pressure from Amazon's underperformance, while the Russell 2000 (-2.0%) and S&P Mid Cap 400 (-1.5%) were rolled back on the growth concerns.
There was a cohort of defensive stocks that benefitted from today's risk-off mindset that saw a pickup in hedging activity. The CBOE Volatility Index was up to 20.57 (+23.0%). The health care (+0.6%), consumer staples (+0.5%), and utilities (+0.1%) sectors all posted gains, reflecting a modest rotation into more defensive-oriented equities.
Ultimately it did little to alter the standings of the major averages, as the S&P 500 (-1.6%), Nasdaq Composite (-2.2%), and DJIA (-1.2%) all incurred losses that saw them finish the week in negative territory.
On the contrary, U.S. Treasuries began August on a firmly higher note, sending yields toward their lows from the start of July.
Today's disappointing economic data led to renewed expectations for a rate cut in September, with the Fed funds futures market now seeing an 86% implied likelihood of a September cut, up from yesterday's 37.7%.
The 2-yr note yield settled 25 basis points lower at 3.70%, while the 10-yr note yield settled 14 basis points lower at 4.22%.
Separately, Fed Governor Adriana Kugler submitted a letter of resignation as a member of the Federal Reserve Board, effective August 8, 2025. President Trump will nominate her successor.
- Nasdaq Composite: +6.9% YTD
- S&P 500: +6.0% YTD
- DJIA: +2.5% YTD
- S&P 400: -0.5% YTD
- Russell 2000: -2.8% YTD
Reviewing today's data:
- July Nonfarm Payrolls 73K (Briefing.com consensus 102K); Prior was revised to 14K from 147K, July Nonfarm Private Payrolls 83K (Briefing.com consensus 110K); Prior was revised to 3K from 74K, July Unemployment Rate 4.2% (Briefing.com consensus 4.2%); Prior 4.1%, July Avg. Hourly Earnings 0.3% (Briefing.com consensus 0.3%); Prior 0.2%, July Average Workweek 34.3 (Briefing.com consensus 34.2); Prior 34.2
- The key takeaway from the report is the soft nonfarm payrolls situation, as that will stoke concerns that the Fed is behind the curve, which in turn could stoke concerns that economic and earnings growth prospects are not as bright as currently envisaged. That could pose problems for a richly valued stock market, unless it trades through that noise and focuses on the notion that rate cuts are sure to follow.
- June Construction Spending -0.4% (Briefing.com consensus 0.1%); Prior was revised to -0.4% from -0.3%
- The key takeaway from the report is the same as the prior month: a downturn in new single-family construction, which is being pressured by higher costs, was the driver behind the weakness in residential spending.
- July S&P Global U.S. Manufacturing PMI - Final 49.8; Prior 52.9
- July ISM Manufacturing Index 48.0% (Briefing.com consensus 49.5%); Prior 49.0%
- The key takeaway from the report is that 79% of the sector's GDP contracted in July. That is up from 46% in June and suggests the manufacturing sector has not yet seen the benefits of onshoring in response to the tariff actions, which themselves have stoked a good bit of planning uncertainty per the observations of survey respondents.
- July Univ. of Michigan Consumer Sentiment - Final 61.7 (Briefing.com consensus 61.8); Prior 61.8
- The key takeaway from the report is that consumer sentiment, while not strong, has improved in recent months along with inflation expectations.
Major averages poised for lower finish
01-Aug-25 15:25 ET
Dow -555.35 at 43575.63, Nasdaq -464.98 at 20656.09, S&P -100.46 at 6238.93
[BRIEFING.COM] As the market enters the final half hour of the session, the major averages have considerable ground to cover if there is any chance of finishing near their flatlines.
Only the defensive health care (+0.5%), consumer staples (+0.5%), and utilities (+0.1%) sectors are poised for a finish in positive territory.
The other eight S&P 500 sectors face broad-based losses, which in some instances are not so modest.
The consumer discretionary (-3.7%), information technology (-2.0%), financials (-1.8%), communication services (-1.8%), energy (-1.8%), and industrials (-1.5%) sectors all sport losses greater than 1.0%.
As it stands, the utilities sector is the only sector in positive territory for the week (+1.6% week-to-date).
In response to President Trump's firing of the Commissioner of Labor Statistics, Dr. Erika McEntarfer, Labor Secretary Lori Chavez-DeRemer stated via X "I support the President's decision to replace Biden's Commissioner and ensure the American People can trust the important and influential data coming from BLS. During the search for a replacement, Deputy Commissioner William Wiatrowski will serve as Acting Commissioner.
Just above session lows
01-Aug-25 15:00 ET
Dow -490.74 at 43640.24, Nasdaq -567.83 at 20553.24, S&P -108.31 at 6231.08
[BRIEFING.COM] The major averages trade in a relatively tight range just above their session lows, with the Nasdaq Composite (-2.3%) posting the largest loss, while the S&P 500 (-1.7%) and DJIA (-1.3%) hold more modest losses.
CNBC confirmed that the Commissioner of Labor Statistics, Dr. Erika McEntarfer, has been officially fired by President Trump, with the president citing large jobs report revisions and alleged data manipulation in a post on Truth Social.
The consumer discretionary sector (-3.6%) remains the worst-performing S&P 500 sector, as Amazon (AMZN 215.03, -19.08, -8.2%) trades lower in response to its earnings report.
SFGate reports that a Miami jury has ordered Tesla (TSLA 304.30, -3.97, -1.3%) to pay over $200 million in punitive damages as a result of a fatal 2019 autopilot crash, though there has not been a significant price movement in the stock following the announcement.
S&P 500 slumps nearly 2% as EMN, COIN, IR tumble on earnings; MPWR soars 11% on strong Q3 outlook
01-Aug-25 14:30 ET
Dow -625.36 at 43505.62, Nasdaq -524.05 at 20597.02, S&P -116.66 at 6222.73
[BRIEFING.COM] The S&P 500 (-1.84%) is in second place on Friday afternoon, trading currently just off session lows.
Briefly, S&P 500 constituents Eastman Chemical (EMN 57.88, -14.73, -20.29%), Coinbase Global (COIN 313.93, -63.83, -16.90%), and Ingersoll-Rand (IR 74.74, -9.89, -11.69%) dot the bottom of the average following earnings.
Meanwhile, Monolithic Power (MPWR 788.73, +77.49, +10.90%) is today's top performer after beating Q2 expectations and guiding well above consensus for Q3. Strong revenue growth and bullish commentary on its shift to a full-service solutions model fueled investor optimism.
Gold up 1.5% to $3,399.80 as dollar weakens, Fed outlook and trade tensions fuel safe-haven demand
01-Aug-25 14:00 ET
Dow -613.70 at 43517.28, Nasdaq -501.00 at 20620.07, S&P -109.99 at 6229.40
[BRIEFING.COM] With about two hours to go on Friday the tech-heavy Nasdaq Composite (-2.37%) is in last place on losses north of 500 points.
Gold futures settled $51.20 higher (+1.5%) at $3,399.80/oz, up more than +1.9% on the week; the move was supported by a weaker U.S. dollar, falling Treasury yields, and renewed demand for safe-haven assets as investors reassessed the Fed's policy path. Fresh U.S. tariffs on several countries fueled trade uncertainty, adding to gold's appeal. Tensions with the EU and Canada further dampened risk sentiment, while expectations for delayed rate cuts helped reinforce gold's strength despite muted inflation data.
Meanwhile, the U.S. Dollar Index is now down -0.9% to $99.13.
Amazon pulls back despite upside; AWS was a bit lackluster compared to Azure and Google Cloud (AMZN)
Amazon (AMZN -9%) is pulling back pretty sharply despite reporting strong upside with its Q2 report. AMZN reported its fifth consecutive $0.20+ EPS beat while revs jumped 13.3% yr/yr to $167.7 bln, its strongest yr/yr growth since 4Q23. AMZN also provided upside revenue guidance for Q3. Despite all of this, it seems investors are a bit letdown by its AWS segment. It is growing nicely, but not the gangbusters we are seeing from peers Azure and Google Cloud.
- Let's start with the Stores segment. AMZN saw growth of +11% CC in North America to $100.1 bln, an acceleration from +8% CC in Q1. International sales surged 16% yr/yr to $36.8 bln. However a lower dollar helped there. Growth was +11% CC, but still a nice improvement from +8% CC in Q1. AMZN says it has not yet seen diminishing demand surrounding tariff concerns, but a lot is still unknown.
- Amazon AWS segment sales rose 17.5% yr/yr to $30.87 bln with growth in both its generative AI business and non-generative AI offerings as companies turned their attention to newer initiatives, bring more workloads to the cloud etc. However, it sounds like analysts were a bit disappointed in the growth from AWS. Just this week, we saw +39% CC growth from Azure and Google Cloud reported +32% revenue growth last week.
- When asked why the #2 and #3 players were growing more, AMZN noted it has a meaningfully larger business with its AWS segment. AMZN also said it varies by quarter, sometimes AWS is growing faster. These are all really just moments in time. AWS also said it has better operational performance, in terms of availability, durability, latency etc. AMZN explained that AWS has more demand than capacity right now, so it could be doing more revenue. AMZN also says its AWS segment currently has a $123 bln annual run rate, yet it's still early in this industry and AMZN remains very bullish.
- Turning to Advertising Services, segment revenue grew +22% CC to $15.69 bln, an acceleration from +19% CC in Q1, +18% CC in Q4, +19% CC in Q3. Growth was driven by sponsored products as it saw strong traffic in its Stores. AMZN also recently announced a momentous partnership with Roku, giving advertisers access to 80 mln connected TV households. It also announced an integration between Disney's Real-Time Ad Exchange and Amazon DSP.
Overall, the headline numbers were very good, but investors are getting hung up on the somewhat lackluster AWS growth. We just saw a report this week from Microsoft (MSFT) and last week from Alphabet (GOOG). Their Azure and Google Cloud units were just rocking the top line growth. In fairness, AWS is larger so it's tougher to grow at same amounts, but still. Investors were not as impressed with AWS as its peers and this is weighing on shares.
Boot Barn Holdings takes strong first step into FY26 with upside JunQ, SepQ off to a good start
Boot Barn Holdings (BOOT) is trading higher today after reporting its Q1 (Jun) results last night. This western apparel and boot company bounced back nicely following a miss in Q4 (Mar) to report its largest EPS over the last year. Revenue increased a healthy 19.1% to $504 mln, which was above analyst expectations. Additionally, the company issued upside revenue guidance for Q2 (Sep). What tells us management is confident going forward is it raised its FY26 revenue guidance to $2.10-2.18 bln, following downside guidance last quarter at $2.07-2.15 bln.
- From a merchandising perspective, BOOT saw broad-based growth across all categories, led by its ladies' Western boots and apparel businesses, which comped in the positive mid-teens. Its men's Western boots and apparel business comped in the positive high single digits. On a consolidated level, same store sales grew a healthy +9.4%, a nice acceleration from +6.0% in Q4.
- Its denim business was particularly strong in the quarter, with comps in the positive high teens. Despite the strong comps in many of its merchandising categories, management felt that denim was worth calling out, as it is a standout category for the company and states that the company is "going to be a denim destination."
- We saw similar denim strength from peer Levi Strauss (LEVI) when it reported its Q2 (May) results earlier in July. LEVI reported high single digit comps and upside results for Q2. Importantly, the two companies share a higher price point, so the robust comp growth is an encouraging sign to investors despite lower consumer confidence.
- In terms of tariffs, its pricing strategy remains consistent with the previous quarter. It has seen price increases from vendors, which is reflected in the new MSRP of its apparel. For its exclusive brands, BOOT is holding off on price increases to gauge price elasticity. With that said, it provided some nice color for the start of Q2, noting that it continues to see strength across its categories. Same store sales increased +11.7% in the month of July.
Overall, BOOT's start to FY26 was encouraging with nice upside results and raised FY26 revenue guidance. While its results were driven by strength in all its merchandising categories, its denim category was a particular standout. Given its higher price point, it is nice to see the robust growth in comp sales, which is similar to what we saw with LEVI. The company deserves credit for performing well despite the lower consumer confidence.
Roku's Q2 upside overshadowed by slower Q3 Platform growth guidance and margin concerns (ROKU)
Roku’s (ROKU) Q2 earnings report showcased a solid beat on EPS and revenue expectations while the streaming company also guided Q3 revenue to $1.2 bln, slightly above consensus estimates. However, the stock is facing sharp selling pressure post-earnings, driven by a combination of lower Platform segment gross margins, a modest slowdown in anticipated Q3 growth, and persistent concerns over profitability and elevated valuation multiples. These factors overshadowed the upside results, reflecting investor skepticism about ROKU’s ability to sustain growth while addressing margin compression and achieving consistent profitability.
- The Platform segment, ROKU’s primary growth engine, delivered a solid performance with revenue climbing 18% yr/yr to $975 mln, fueled by strength in video advertising and the strategic acquisition of Frndly, which bolstered subscription revenue. Key growth drivers included ROKU’s efforts to diversify ad demand through deeper integrations with third-party demand-side platforms (DSPs) and enhanced programmatic advertising capabilities, leveraging first-party data to improve advertiser ROI.
- However, Platform gross margin declined 2.3 percentage points to 51.0%, primarily due to higher content distribution costs and investments in ad tech infrastructure. This margin compression raised concerns about the scalability of ROKU’s high-growth strategy, particularly as competitive pressures in the streaming ad market intensify.
- For Q3, ROKU guided Platform revenue growth to 16%, a step-down from Q2’s 18%, signaling a slight deceleration that tempered investor enthusiasm. The company also projected FY25 Platform gross margin at approximately 52%, down from 53.5% in FY24, reflecting ongoing investments in content and ad technology alongside competitive pricing pressures. This guidance disappointed investors expecting stronger margin expansion.
- ROKU remains unprofitable on a GAAP operating income basis, posting an operating loss of $23.3 mln in Q2, though this marked a significant improvement from the $71.2 mln loss in 4Q24. Despite positive free cash flow of $392 mln (TTM basis) and better expense control, ongoing operating losses continue to weigh on investor sentiment. The persistent gap between revenue growth and bottom-line improvement underscores the challenges of scaling a platform business in a competitive and cost-intensive market.
ROKU capitalized on a healthy advertising market in Q2, a tailwind likely to persist into Q3, supporting its platform-driven growth. However, concerns over declining Platform margins, a modest growth slowdown, and ongoing profitability challenges are overshadowing the upside results, driving the sharp post-earnings sell-off.
Apple trades slightly lower despite robust iPhone sales and less-than-expected tariff impact (AAPL)
Apple (AAPL -2%) is trading slightly lower after reporting Q3 (Jun) results last night. Not only did it provide strong upside for Q3, partly due to tariff-related pull ahead in demand, but Apple provided bullish Q4 (Sep) revenue guidance. Specifically, Apple sees Q4 revs being up mid-to-high single digits, which was notably better than expected. Apple also reported less-than-expected tariff costs and we think the SepQ guidance was better-than-feared.
- Revenue rose 9.6% yr/yr to $94.04 bln, its strongest yr/yr growth in the past 14 quarters, fueled by double-digit growth across iPhone, Mac and Services. Apple saw an acceleration of growth in the vast majority of markets, including Greater China and many emerging markets. Apple also posted JunQ revenue records in more than two dozen countries and regions, including the US, Canada, Latin America.
- iPhone sales came in well above street estimates in Q3, its second quarter in a row of upside following a miss in Q1. iPhone revenue rose 13.5% yr/yr to a JunQ record of $44.58 bln vs $40.3 bln street ests. Tariff pull-forward demand had an impact. Apple saw iPhone growth in every geographic segment and double-digit growth in many emerging markets. The iPhone active installed base grew to an all-time high in total and in every geographic segment.
- Mac sales were another bright spot with revs up 14.8% yr/yr to $8.05 bln, driven by continued strength across the portfolio, including MacBook Air, Mac mini and MacBook Pro. Mac sales grew in every geographic segment and saw double-digit growth in Europe, Greater China and the rest of Asia Pacific. The Mac installed base reached an all-time high, and Apple hit a JunQ record for upgraders.
- Services were robust as well with sales up 13.3% yr/yr to $27.4 bln, a bit above street estimates of $26.9 bln. Quality programming was a key driver. Apple TV+ scored 81 Emmy nominations, a record for the platform, with Severance leading all Emmy nominees with 27 nominations and The Studio followed close behind with 23 nominations.
- It was not all good news as iPad sales fell 8% yr/yr to $6.58 bln. However, this was expected given that it was lapping a difficult compare against the launch of the iPad Air and iPad Pro in the year ago quarter. Wearables revenue was also down 8.5% yr/yr to $7.4 bln. This was also driven by a difficult compare on accessories due to the prior year's iPad launches.
- Turning to the tariff impact in JunQ, Apple incurred approximately $800 mln of tariff-related costs, below $900 bln prior guidance, and expects SepQ to add about $1.1 bln in costs. With the new iPhone 17 likely to be announced around the week of Sept 8, we think investors are pleased the tariff impact was not worse. However, lots of iPhone sales will happen in DecQ, so we look forward to tariff guidance on the next call.
Overall, the JunQ results were quite good with nice upside and robust guidance. Results were fueled by strong iPhone and Mac sales and perhaps some tariff-fueled pull forward demand. However, most product categories did well. Even the categories that were down, that was mostly due to lapping tough compares. Tariffs are a chief concern, but they turned out to be a bit less impactful than prior guidance and the SepQ tariff guidance could have been worse.
Reddit rockets past Q2 expectations with 78% revenue surge, fueled by AI-driven ad innovation (RDDT)
Reddit’s (RDDT) 2Q25 earnings report underscores that Meta Platforms (META) isn’t the only social media company reaping rewards from AI investments. The company delivered a stellar performance, crushing EPS and revenue estimates with yr/yr revenue growth accelerating to 78% -- its strongest as a public company. This surge was propelled by robust ad revenue growth of 84% to $465 mln, fueled by RDDT’s focus on AI-driven features that enhance ad personalization and user engagement, positioning it as a formidable player in the digital advertising space.
Looking ahead, RDDT issued robust Q3 guidance, projecting revenue of $535-$545 mln, well above consensus estimates, and adjusted EBITDA of $185-$195 mln, which also easily surpassed expectations. This optimistic outlook reflects confidence in sustained AI-ad synergy and user growth, with the guidance implying 54-56% yr/yr revenue growth and a 35% adjusted EBITDA margin at the midpoint.
- Historically, RDDT’s reliance on Google (GOOG) search referrals has been a double-edged sword, with changes to GOOG’s search algorithm earlier this year creating a headwind for traffic. CEO Steve Huffman noted that GOOG’s generative AI features, like AI Overview, impacted the ecosystem, yet RDDT’s brand strength and AI advancements mitigated these effects.
- Innovations such as Reddit Answers and Reddit Insights have driven users directly to the platform, bypassing search engine intermediaries. This strategic shift contributed to a 21% yr/yr increase in Daily Active Uniques to 110.4 mln, exceeding analyst expectation and highlighting RDDT’s ability to foster organic growth.
- RDDT’s AI-powered tools -- Reddit Insights, Conversation Summary Add-ons, and Reddit Answers -- are pivotal in bolstering ad revenue. Reddit Insights leverages AI to provide advertisers with granular data on user behavior and community trends, enabling highly targeted campaigns. Conversation Summary Add-ons enhance user engagement by distilling complex threads into digestible insights, keeping users on the platform longer and increasing ad impressions. Reddit Answers, a native search feature, capitalizes on the platform’s authentic user-generated content to deliver relevant results, reducing reliance on external search engines and creating new monetizable surfaces like conversation ads and dynamic shopping ads.
- Profitability strides were equally impressive, with EPS improving to $0.45 from a $(0.26) loss in 2Q24. Gross margin expanded 130-bps yr/yr to 90.8%, marking RDDT’s fourth consecutive quarter above 90%. Margin expansion was driven by efficient cost management, scalable infrastructure, and higher ad pricing, with Average Revenue Per User rising 47% to $4.53. Adjusted EBITDA reached $167 mln, a 33% margin, reflecting low capital expenditures and strong operating leverage.
RDDT’s Q2 results highlight its robust ad revenue growth, with AI investments yielding significant dividends, much like META’s. The stellar beat-and-raise performance alleviates concerns over its prior dependence on GOOG for traffic, cementing RDDT’s position as a resilient, AI-driven advertising powerhouse.
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