July 24th, 2025
Investors start the day processing mixed quarterly results from Alphabet (GOOGL) and Tesla (TSLA). Major indexes reflected the varied earnings, with additional focus on reports from Chipotle (CMG), Dow (DOW), and IBM (IBM), while Intel (INTC) is set to report later.
Wednesday’s trade agreement with Japan boosted market sentiment, and the European Central Bank (ECB) held interest rates steady today as anticipated. Optimism grew over a potential tariff deal with the European Union, with news outlets suggesting it could be imminent.
The NASDAQ led with a 0.3% gain so far, boosted by strong AI demand signals in Alphabet’s Q2 results, although Tesla’s weak numbers tempered enthusiasm in the tech sector. Other major U.S. indexes lagged, with the S&P 500 rising 0.1% while the Dow Jones fell 0.7%.
International markets were generally positive overnight.
Economic Takeaways:
- Government bonds are selling off, with 10-year Treasury yields up 5 basis points.
- The dollar has softened slightly against a trade-weighted basket of currencies.
- The U.S.-Japan trade pact is the sixth deal announced since “liberation day,” with reports indicating that similar agreements may soon be finalized for the EU and Korea.
- S. initial unemployment claims edged slightly lower last week, signaling that tariff uncertainty has not yet pushed firms to cut jobs.
- The Nasdaq Composite ($COMP) closed above 21,000 for the first time Wednesday while the Dow Jones Industrial Average ($DJI) clawed above 45,000.
- So far, 88% of S&P 500 companies that have reported earnings have beaten consensus EPS estimates, while 67% surpassed revenue forecasts.
- The CME FedWatch Tool showed less than a 3% chance of a Fed rate cut next week as of early Thursday, with a 64% chance of at least one cut by September.
- President Trump is scheduled to visit the Fed today—the first presidential visit since George W. Bush in 2006.
European Central Bank Maintains Interest Rates Amid Ongoing Tariff Uncertainty
The European Central Bank held interest rates steady on Thursday, amid significant economic uncertainty as the European Union rushes to finalize a trade deal with the U.S. before the month’s end. So far this year, the ECB has lowered interest rates at four consecutive meetings, reducing its key deposit rate from 3% in January to 2% in June. Last year, rates were cut from a record high of 4%.
The euro was down 0.2% against the U.S. dollar after the European Central Bank held interest rates steady on Thursday.
“The environment remains exceptionally uncertain, especially because of trade disputes,” the ECB said in a statement.
What’s Going on with These Meme Stocks?
Meme stocks are making moves reminiscent of 2021, but caution is advised: Shares of small or lesser-known companies surged by double digits this week without clear fundamental reasons, bringing back memories of the 2021 “meme” stock frenzy. During that period, names like GameStop (GME) and AMC Entertainment (AMC) saw massive rallies driven partly by historically low Treasury yields and renewed consumer spending as the pandemic eased. Today, Treasury yields are significantly higher, and most Covid stimulus funds have long been spent, yet stocks such as Kohl’s (KSS), Krispy Kreme (DNUT), Opendoor (OPEN), 1-800-FLOWERS (FLWS), and GoPro (GPRO) saw notable gains this week. These rallies likely reflect the strong influence of social media communities on heavily shorted shares.
“This type of behavior can crop up when stocks are near highs and sentiment is heavily bullish,” said Schwab’s Peterson. “It’s tough to say for certain that this suggests we’re near a market top,” he added, noting that the broader fundamental picture remains positive, especially given momentum in secular growth areas like AI, power demand, and robotics.
“Traders should approach these highly volatile names with caution,” Peterson warned. “They often move up on no fundamental news, and can reverse just as swiftly without warning, so a high level of risk tolerance is needed for these ‘meme’ stocks.”
On the Move
- Shares of French software giant Dassault Systèmes dropped 9.4% by 12:05 p.m. in London (7:05 a.m. ET) following the release of the company’s second-quarter earnings.
- On Thursday, Deutsche Bank exceeded profit expectations and affirmed it remains on track to achieve its full-year targets, despite mixed performance in its core investment banking division and gains in the euro against the U.S. dollar.
- Alphabet shares rose 3.4% ahead of the open after reporting strong second-quarter results, with earnings of $2.31 per share and revenue of $96.43 billion, both beating FactSet consensus estimates of $2.18 and $93.96 billion. YouTube ad revenue and Google Cloud revenue also exceeded expectations. Alphabet raised its capital expenditures forecast to $85 billion from $75 billion, a move that could boost semiconductor stocks, especially AI-focused names like Nvidia (NVDA), Broadcom (AVGO), and Advanced Micro Devices (AMD), all up more than 1% this morning.
- Tesla shares dropped 6% despite meeting earnings and revenue forecasts of $0.40 per share and $22.5 billion, respectively. Vehicle deliveries declined 13% year-over-year, a known factor for investors. The market reacted to CEO Elon Musk’s caution during the earnings call, when he said, “we probably could have a few rough quarters,” citing tariffs and the expiration of federal EV tax credits.
- IBM fell over 6% despite beating revenue and earnings estimates and reaffirming its 2025 revenue growth outlook of at least 5% on a constant-currency basis. Its key software revenue grew 10% but slightly missed dollar expectations.
- Chipotle shares slid 12% pre-market after the company lowered its same-store sales forecast, and revenue narrowly missed analyst estimates.
- Dow shares plunged 8.6% pre-market following worse-than-expected quarterly losses, a halving of its quarterly dividend, and third-quarter guidance that missed estimates. Weakness in its packaging and specialty plastics divisions, combined with ongoing trade uncertainties, weighed on results.
- American Airlines (AAL) declined more than 5% in pre-market trading after reporting earnings that beat forecasts but matching revenue estimates, while issuing weaker third-quarter guidance amid slower capacity growth and consumer uncertainty.
- UnitedHealth Group (UNH) dropped nearly 4% after revealing it is under a Justice Department criminal and civil investigation regarding its Medicare billing practices.
- Honeywell (HON) slipped 2% ahead of the open despite beating earnings and revenue expectations and raising guidance.
- Southwest Airlines (LUV) fell more than 3% pre-market after missing earnings estimates.
- ServiceNow (NOW) surged 7% pre-market, beating quarterly estimates and raising guidance on strength driven by AI-related demand.
- Las Vegas Sands (LVS) rose 5% following a solid earnings report.
- Nuclear start-up Oklo (OKLO) and data center infrastructure provider Vertiv Holdings (VRT) each gained 1%, building on yesterday’s surge after announcing a partnership to develop advanced power and thermal management solutions for hyperscale and colocation data centers, powered by Oklo’s nuclear plants.
- Large industrial companies like Boeing (BA), Lockheed Martin (LMT), General Motors (GM), and Whirlpool (WHR) posted solid gains yesterday following strong earnings and guidance from GE Vernova (GEV), whose shares jumped double digits and were up 0.8% early today. The recent strength in energy and healthcare—sectors that lagged earlier this year—may signal continuing sector rotation in 2025.
What’s Ahead
Major earnings expected after the bell on Thursday include Intel Corporation (INTC), Newmont Corporation (NEM), and Digital Realty Trust (DLR).
Tomorrow investors can look forward to June durable orders and expected earnings from Aon (AON) and HCA Healthcare (HCA).
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