Market Recap - Monday, August 4, 2025

US Equities Close Higher, Strong Start to August

Stocks rallied today, bouncing back from last week's selloff. The S&P 500 and Nasdaq saw significant gains, with technology stocks like Nvidia and Meta helping lead the charge. Small-caps, most-shorted names, and retail favorites also performed well, though there were a few laggards in energy, commodities, and food sectors. The market breadth was solidly positive, reflecting strength across several sectors including software, semiconductors, homebuilders, and biotech.

Despite limited news flow, there was a notable push higher from big tech earnings, including strong results from Nvidia and Meta, both benefiting from AI growth. Trade headlines also played a role, with some tension around Trump's tariffs on India, but optimism about AI and earnings revisions continued to support the market.

On the data front, June factory orders declined by 4.8%, a better-than-expected result. Looking ahead, this week’s macro data remains light, with the ISM services and initial claims reports coming out on Tuesday and Thursday.

The bond market showed some resilience as well, with Treasury yields declining, especially at the short end. Oil prices dipped slightly, following OPEC+'s decision to unwind voluntary output cuts.

Here’s Our Take

The market is navigating through a mix of corporate earnings, trade uncertainties, and macro data. The strong AI growth theme continues to underpin the market, with tech stocks leading the way. However, concerns around tariffs, inflation, and a potential slowdown in the labor market may pose risks in the coming weeks. While there’s optimism from earnings and sector rotations, especially in small-cap stocks, the market could face some headwinds if macro data or trade tensions worsen. We remain cautious as we await more economic updates and trade developments, particularly as we move closer to the September FOMC meeting.

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