Closing Recap

Friday, August 01, 2025

What MSFT and META giveth, Trump (and payrolls) taketh away. Following a nice rally yesterday on better mega-cap earnings, US futures sagged this morning following more Trump tariff comments late yesterday and another set of attacks on Jerome Powell this morning, including saying the Federal Reserve board should assume control if Fed Chair Jerome Powell continues to refuse to lower interest rates. “Jerome ‘Too Late’ Powell, a stubborn MORON, must substantially lower interest rates, now. if he continues to refuse, the board should assume control and do what everyone knows has to be done!” Trump said in a post on Truth Social. The U.S. central bank held interest rates steady on Wednesday. Bluster? TACO trade opportunities? Time will tell. But for now, the early trade was about a 1% decline in S&P futures and just over 1% on Nasdaq futures. A pre-market post-earnings slide of about 8% in AMZN was only partially offset by about a 2% AAPL gain. Oil also faded early by just less than 1% and gold looked lower overnight but both recovered to small gains before payrolls data. 

Equity futures faded further following weaker payrolls data and significant negative revisions to both May and June payrolls. Following the data, futures implied traders now see a 75% chance of Fed easing 25 bps in September versus 45% before the payrolls report and have fully priced in two cuts by the end of 2025. Early session breadth was strongly in favor of decliners by 7:2 as small caps underperformed in a broad slide with IWM (-2.43%) versus SPY (-1.59%) and QQQ (-1.83%). On a sector basis, Consumer Staples (+0.56%), Real Estate (+0.10%) and Health Care (-0.04%) were early outperformers among S&P sector ETFs, while Technology (-2.02%), Financials (-2.10%) and Consumer Discretionary (-2.29%) led the underperformers with only two sectors gaining. For sentiment, today’s Fear and Greed Index stood at 49/100 (Neutral), compared to 73 (Greed) last week and 67 (Greed) last month. A year ago, the index was at 42 (Fear).

In data of interest today, S&P’s Williamson noted July saw the first deterioration of manufacturing operating conditions since last December as tariff worries continued to dominate the business environment. Meanwhile, on unemployment, @NickTimiraos highlighted the unrounded unemployment rate of 4.248% in July was the highest since October 2021 and up slightly from 4.244% in May. On rate cut potential, @bespokeinvest noted the odds of three cuts by December now stands at 43.9%, higher than any other scenario, and a significant shift from yesterday’s 17% implied probability of no cuts through year end. With more on the labor market, @KobeissiLetter brings a dose or reality, noting US job cut announcements climbed 140% yr/yr in July to $62,075 (more than double the July average between 2021 and 2024). Year-do-date cuts at US-based employers is now the highest total for the period since 2020. Lastly, while we are already heading into an historically volatile portion of the year, @RyanDetrick further notes stocks have never generated a positive return in August under a second-term president (tested six times), so just something else to consider.

Heading into the final hour of trading for the week, stocks were off the lows but remained significantly lower. Breadth continued to favor decliners by a little more than 5:2 as small caps split the large-cap indices with IWM (-1.90%) versus SPY (-1.66%) and QQQ (-1.99%). Health Care (+0.50%), Consumer Staples (+0.43%) and Utilities (+0.20%) took over leadership among S&P sector ETFs, while Financials (-1.90%), Technology (-2.14%) and Consumer Discretionary (-2.61%) paced the underperformers with three sectors gaining. Not a great start for the new month, but a long way to go.

• U.S. July unemployment rate 4.2%, in-line with consensus 4.2% while July labor force participation rate 62.2% – lowest number since 2022 (down from 62.3%). U.S. July average workweek all private workers 34.3 hours (est. 34.2 hours), July average hourly earnings +3.9% y/y (est. +3.8%) and average hourly earnings all private workers +0.3% from prior month (est. +0.3%).
• ISM U.S. manufacturing activity index 48.0 in July below consensus 49.5 and vs 49.0 in June; prices paid index 64.8 in July (consensus 70.0) vs 69.7 in June; new orders index 47.1 in July vs 46.4 in June; and the employment index 43.4 in July vs 45.0 in June.
• US June construction spending -0.4% (consensus unchanged) to $2.136 trln, vs May -0.4% (prev -0.3%); US June private construction spending -0.5%, public spending +0.1%.
• University of Michigan surveys of consumers sentiment final July 61.7 (consensus 62.0) vs preliminary July 61.8 and final June 60.7; current conditions index final July 68.0 vs prelim July 66.8 and final June 64.8 and expectations index final July 57.7 vs prelim July 58.6 and final June 58.1.
• University of Michigan surveys of consumers 1-year inflation outlook final July 4.5% vs prelim 4.4% and final June 5.0% while the 5-year inflation outlook final July 3.4% vs prelim 3.6% and final June 4.0%.

• Oil also trended lower overnight on the tariff commentary but rebounded briefly to green before the payrolls data hit. Following headlines indicating OPEC+ expects to approve another oil production hike on Sunday, with a final size of 548,000 bpd or lower, and the weak jobs data and revisions, oil rolled and continued lower into midday. The afternoon brought no bounce and September WTI crude futures settled lower by 1.93/bbl, or -2.79%, at $67.33. Brent similarly rolled today to settle down $2.03/bbl, or -2.83%, to $69.67.

• TSLA found partially liable for fatal crash involving driver-assistance technology per Washington Post; jury orders TSLA to pay $329Mm.
• RACE downgraded from Hold to Sell at CFRA and cut tgt to $350 from $475, based on a 2026 P/E of 30x, a justified discount to RACE’s 10-year average forward P/E multiple of 40x. CFRA lowers its adjusted EPS estimates to EUR8.80 from EUR8.90 for 2025 and to EUR10.15 from EUR10.45 for 2026.
• Ford (F) July US total electrified vehicle sales 27,042 units
• In Auto suppliers: MGA raised annual sales forecast and topped second-quarter estimates; expects 2025 sales to be between $40.4B and $42.0B, compared with its prior forecast of $40.0B and $41.6B. Total quarterly sales fell about 3% to $10.63B
• In EV China monthly sales data:
• BYDDF said July total production volume 317,892 units and July total sales volume 344,296 units; reported July sales of 344,296, down 10.1% vs. June. They did edge up 0.6% vs. a year earlier. Passenger BEV sales came in at 177,887, down 14% vs. June but up 36.8% vs. a year earlier. PHEV sales sank 4.45% vs. June and 22.6% vs. a year earlier to 163,143.
• NIO deliveries came in at 21,017, down 15.7% vs. June but +2.5% y/y. July’s total includes 12,675 from the premium Nio brand, 5,976 vehicles from the mainstream Onvo brand and 2,336 EVs for the lower-end Firefly brand. Nio began deliveries of its Onvo L90 SUV
• XPEV delivered a record 36,717 vehicles in July, up 6.1% vs. June and 229% vs. a year earlier.
• LI delivers 30,731 cars in Jul, down 40% year-on-year; the Company officially launched Li i8, a six-seat battery electric family SUV, on July 29, 2025, and expects to begin deliveries on August 20, 2025.
• Xiaomi delivered more than 30,000 vehicles in July, a new record. The handset maker, which entered the EV business last year, doesn’t give specific EV sales figures.

• In Retail: BOOT 1Q results above expectations; increased guidance for FY26 while consolidated comp sales growth came in at +9.4% (vs. consensus +6.9%), driven by an +8.5% increase in transactions. Management noted momentum rolling into 2Q, with SSS increasing ~12% in the first four weeks
• Consumer Staple/Products: CLX reported Q4 net sales and adjusted EPS that beat the average analyst estimate; CL and CHD also movers on earnings; KMB reported mixed Q2 as net sales $4.16B missed est. $4.61B on better EPS $1.92 (vs est. $1.67) and said outlook FY ADJ EPS to grow at a low-to-mid single digit rate on constant-currency basis and FY organic sales growth to outpace weighted average growth in categories it competes, which are currently growing at about 2%.
• In Food: KLG said it discovered an error while preparing financial statements that had caused it to miscalculate its inventory and cost of goods sold since it was spun off as a separate company. SFM was upgraded from Hold to Buy at Jefferies and raised to Overweight at Barclays as well after the company delivered a strong Q2, driven by DD% comp growth, new store strength, and alignment with consumer demand for quality, health-focused products and ’25 guidance raised across the board and management spoke to ’26 comp sales above algo.
• Convenience stores: MUSA was downgraded to Hold from Buy on softer outlook at Jefferies saying lower customer volumes and a cut to ’24-’28 EBITDA growth from 6–7% to below 5% reset expectations and limit upside to shares.

• In Leisure Products: THO was upgraded to Sector Weight from Underweight with $65 PT at Keybanc after recently hosted meetings with THO management. Said THO laid out several potentially incremental drivers of growth against a similar industry backdrop next year and notes investors are increasingly willing to look past heavier valuation. For MODG, the separation of Topgolf Callaway Brands Corp. will likely be delayed after the head of its Topgolf unit resigned.

• In Energy E&P and Equipment: SM delivered an oil production beat on budget and now expects more oil production this year. Offsetting this bullish update was the inclusion of non-operated capex to the budget, a $75M increase to spending that one could argue should have been in the budget all year
• In Solar/Alt Energy: FSLR reported 2Q results above our estimates, beating on sales and EPS while revised its FY25 guidance and bookings to reflect new tariffs from Malaysia, Vietnam, and India, noting that the guidance is based on its ability to pass the impacts of tariffs onto customers. Net bookings were down due to Series 6 international contract terminations, bringing backlog to 64 GW. BE reported strong 2Q results, beating consensus across the board and reiterated 2025 revenue guide despite new deal activity in 2Q. Management highlighted consistent data center demand and announced factory capacity expansion from 1 GW to 2 GW by the end of the year.

• In Financial Servies: RDDT shares rallied following a beat-and-raise quarter as revenue and EBITDA respectively came in $70M (16%) and $37M (28%) above the high end of guidance, while advertising revenue growth accelerated to +84% Y/Y and the company guided to 55% Y/Y revenue growth for Q325 on a 68% Y/Y growth comp and better guidance.
• In Insurance: CB was downgraded to Hold from Buy at HSBC saying unless the broader macro environment deteriorates materially, Chubb’s defensive attributes are unlikely to be a major draw for investors over the near-to-medium term.

• Yesterday, Pharma ad Biotech tumbled (BMY, LLY, NVO, GSK, AZN, SNY, PFE, AMGN, REGN, MRK) after President Trump wrote to 17 companies asking them to cut the costs of drugs for U.S. consumers to the lowest price offered in other developed nations. The move follows an executive order signed in May. Pharmaceuticals have also become a key focus in Trump’s trade negotiations.
• MRNA cuts 2025 sales forecast to $1.5B-$2.2B, cutting $300M from the top end as UK revenue deliveries shifted into early 2026 – followed Q2 revs of $142M, down -41% y/y but ahead of ests $112.9M; said it would cut around 10% of its global workforce, shrinking to under 5,000 employees by year’s end.

• In Hospitals (CYH, THC, HCA, UHS): Keybanc noted final IPPS rate update for FY26 looks better than the proposal (+4.3% vs +3.4% proposed) and includes a nice tailwind from higher Medicare DSH and Uncompensated Care payments. The increase to Medicare DSH and UCC represents an improvement compared to recent years and was a focus for industry advocacy. According to the impact table, payments to for-profit hospitals will also increase 4.4% (vs. 3.4% proposed) and payments to non-profit hospitals will increase by 3.8% (vs. 3.1% proposed).
• In Managed Care: UNH appointed Wayne DeVeydt to become its chief financial officer, replacing longtime finance chief John Rex.

• In Transports: XPO upgraded to Buy at Citigroup after results; reported Q2 adj. EPS of $1.05, down -6% y-y, but above Citi’s/Street ests. of $0.99; said XPO appears to be executing well despite the weak macro, driving 120bps of y-y LTL margin improvement. CAR was downgraded to Sell at Goldman Sachs as sees downside to consensus estimates and a pullback in valuation.
• In E&C: MTZ reported Q2 EPS of $1.49, ahead of consensus of $1.39 on revenue beat by ~150M, showing +19.7% y/y growth vs guidance suggesting 14.8% as beat was the most pronounced in Comms and Pipelines, while upside in PD was offset by lower revenue in CEI; MTZ raised 2025 revenue guidance by $300M, more than the Q2 beat. FLR shares tumbled after Q2 miss and cut Y25 adjusted EPS view to $1.95-$2.15 from $2.25-$2.75 and cuts FY adjusted EBITDA view to $475M-$525M from $575M-$675M. FLR also provided an update on its ownership of SMR Class B shares. In the next few weeks, NuScale will convert 15mm shares into Class A securities, sending those shares lower.
• In Heavy Duty Trucks/Machinery: Daimler Truck (DTRUY) warned of mounting headwinds in the second half of 2025 after cutting its full year outlook late on Thursday due to weakness in North America, sending its shares lower and weighing on likes of CMI, ALSN, PCAR. Daimler said that the indirect impact of U.S. trade tariffs would cost the company a figure in the low triple-digit million euros range in 2025; GWW cuts 2025 gross margin view to 38.6%-38.9% from 39.1%-39.4% after mixed Q2 results as EPS missed on better revs (cuts year EPS view and raises rev view).

• EMN reported Q2 EPS of $1.60, compared to consensus of $1.73 and EBITDA of $402M vs. consensus of $417M as the Company beat in Additives & Functional Products (A&FP) while missing in Chemical Intermediates (CI). Weaker demand in consumer durable and auto markets is leading to a deliberate inventory reduction.
• HUN reported Q225 EBITDA of $74M, compared to consensus of $76M as the Company beat in Advanced Materials (AM) while missing in Polyurethanes (PU) and Performance Products (PP). In addition to weaker than expected volumes in PU, earnings were weighed down by a $20M y/y reduction in equity earnings from the PO/MTBE JV
• MEOH was upgraded to Outperform (from Sector Perform) at RBC Capital because there is now better visibility after the completion of the acquisition of OCI’s methanol assets, the passage of the OBBB in the U.S., and progress on U.S. tariff negotiations.

• In Media: ROKU reported Q2 revenue coming in 4% above consensus and EBITDA 9% ahead of expectations while the company raised its 2025 revenue guidance by ~2%, gross profit guidance by ~3%, and EBITDA guidance by ~7% ($25M). Excluding political revenue, platform revenue grew ~18% Y/Y in 2Q25—an acceleration of ~1 point from 1Q25.
• DIS NFL deals red zone, NFL media assets to ESPN in blockbuster billion-dollar agreement per The Athletic.

• APPF shares rise on results; was upgraded from Neutral to Overweight at Piper (tgt to $350 from $240) saying Q2 results punctuated by top-line growth reacceleration to 19% (vs. 16% last quarter) reflected the culmination of various GTM and product investments – notes appointment of CFO Tim Eaton removes a layer of uncertainty for the business.
• DV was upgraded to overweight at JP Morgan saying continues to believe DoubleVerify is a category leader with a solid reputation, diversified business model and benefits from low churn among its largest customers.
• NET posted strong Q2 results highlighted by 28% rev growth, 39% RPO growth, and raised guidance.

• MPWR reported strong Q2 results and Q3 guidance, which solidly beat as Q2 upside was driven by Computing & Storage (C&S) and Communications. Regarding Enterprise Data rev growth, 2025 is now expected to be -10% at the midpoint vs flat prior with Q3 expected to grow +20-30% q/q and Q4 also expected to grow q/q.