Market Recap - Tuesday, August 5, 2025

A Mixed Day for US Equities, Tariff Concerns Linger

Stocks closed mostly lower today, with the S&P 500 and Nasdaq giving back some of the gains seen in the previous session. The Russell 2000 managed to stay positive, but big tech stocks were mostly in the red. Amazon, despite a slight gain, showed some signs of pressure following its earnings report, and several other sectors faced headwinds, including semiconductors, software, and biotech. On the positive side, industries like managed care, insurers, oil services, and homebuilders stood out, helping to offset some of the broader market weakness.

In the macroeconomic landscape, the July ISM services report was a notable drag on sentiment, showing weaker-than-expected new orders and employment components. This was coupled with concerns around ongoing tariff impacts. However, there was some good news on the trade front with an improved US trade balance and positive earnings results from companies like Palantir Technologies, which saw strong growth driven by AI. Additionally, the US dollar took a slight dip, and gold continued to show modest gains.

The market continues to digest the fallout from last week’s weak jobs report, the potential for tariff hikes, and comments from the Fed that hint at possible rate cuts. The ongoing tariff developments with India and expectations for more Fed action continue to add uncertainty.

Here’s Our Take

Despite some volatility today, strong earnings and the continued AI growth narrative remain positive factors for the market. The weaker-than-expected ISM services report and ongoing tariff issues are notable risks, but they also offer potential for trade negotiations to ease some of the pressures. As we approach the next Fed meeting in September, the market is pricing in a high probability of a rate cut, which could further support risk assets. We continue to focus on individual sector performances and remain cautious of macro headwinds that could weigh on sentiment in the near term.

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