August 6th, 2025
Stocks Rise as Earnings Strength Offsets Global Headwinds
Markets opened higher on Wednesday as upbeat quarterly results from Walt Disney Company and McDonald’s lifted investor sentiment. Both companies beat analyst expectations, fueling early gains in the consumer discretionary and consumer staples sectors. In contrast, health care and industrials stocks are underperforming.
Overseas, Asian markets mostly advanced, led by India, after the Reserve Bank of India held its benchmark interest rate steady at 5.5%, in line with expectations. European stocks are slightly lower, despite a stronger-than-expected 3.1% rise in eurozone retail sales for June—surpassing forecasts of 2.0% growth. Key contributors to the increase included auto fuel and nonfood items, both up more than 4% year-over-year.
Economic Takeaways:
- The U.S. dollar is weakening against major global currencies.
- WTI crude oil is trading higher after a recent pullback, driven by supply concerns as the U.S. considers new tariffs on buyers of Russian oil.
- Bond yields tick higher ahead of key auction. The 10-year Treasury yield has climbed to 4.22%, rising ahead of a $42 billion auction of 10-year notes later today. The benchmark yield remains below its July high near 4.50%, with bond markets adjusting expectations following last week’s softer jobs report.
- Investors are now anticipating two to three rate cuts in 2025, with an additional two in 2026—more than the Federal Reserve’s own forecast of three cuts through 2026.
- Corporate earnings continue to outperform. With 80% of S&P 500 companies having reported, 82% have exceeded forecasts, delivering an average earnings surprise of 7.6%.
- Yesterday’s July ISM Services PMI®fell to 50.1% from June’s 50.8%. Anything above 50% indicates expansion, and analysts had expected 51.5%.
- The CME FedWatch Tool now shows 87.2% odds of a September rate cut, with futures pricing in two to three cuts by year-end.
Apple Shifts Strategy with New $100 Billion U.S. Investment Amid Tariff Show Down
Apple (AAPL) is preparing to unveil a new $100 billion investment in U.S. manufacturing, with the announcement expected during a scheduled White House press conference alongside President Trump at 4:30 p.m. ET on Wednesday.
This latest move adds to Apple’s previous $500 billion U.S. investment package, which includes collaboration with partners to construct an AI server facility in Texas—part of the company’s broader strategy to deepen its domestic footprint.
The announcement comes on the heels of escalating pressure from the Trump administration, which has called on Apple to relocate iPhone production to the U.S. The White House recently threatened to slap a 25% tariff on imported iPhones unless the tech giant begins building them domestically.
Adding to the tension, Apple is also bracing for another 25% tariff on imports from India, a key iPhone manufacturing hub for U.S.-bound devices. The company had shifted significant production to India post-COVID to diversify away from China, where it still manufactures iPhones for non-U.S. markets.
Trump Targets India with New 25% Tariff Over Russian Oil Ties, Pressures Putin on Ukraine Truce
The White House on Wednesday unveiled a new 25% tariff on Indian imports, escalating trade tensions as President Trump moves to penalize India for its continued purchases of Russian oil. The action fulfills a recent pledge to raise duties on the world’s fourth-largest economy and signals a broader strategy to pressure Russian President Vladimir Putin into agreeing to a ceasefire in Ukraine.
The new tariffs are part of an executive order focused solely on India and invoked under the 1977 International Emergency Economic Powers Act (IEEPA)—a legal authority currently facing court challenges. Trump’s order states: “I determine that it is necessary and appropriate to impose an additional ad valorem duty on imports of articles of India, which is directly or indirectly importing Russian Federation oil.”
The order specifies that these new duties will be “in addition to any other duties,” opening the door to potential total tariffs of 50% on certain Indian goods when combined with reciprocal tariffs set to begin at 12:01 a.m. ET on Thursday.
However, the rollout is not immediate. The 25% India-focused duties are delayed by 21 days, likely to allow for last-minute negotiations. Additionally, as with recent trade measures, there is a grace period for goods already in transit, meaning the full tariffs won’t take effect until 12:01 a.m. ET on September 17 at U.S. ports.
On the Move
- Advanced Micro Devices (AMD) dropped 5.7% in premarket trading despite reporting earnings of $0.48 per share, matching FactSet estimates. Revenue came in at $7.69 billion, topping consensus expectations. The company offered a bullish outlook, guiding for Q3 revenue between $8.4 billion and $9 billion, slightly above the $8.32 billion consensus. However, AMD’s closely watched data center segment grew just 14% year over year, meeting estimates but falling far short of Nvidia’s (NVDA) 73% surge last quarter. Nvidia shares dipped 0.8% in early trading.
- McDonald’s (MCD) shares rose more than 3.4% after posting better-than-expected quarterly results, boosted by stronger U.S. growth. Same-store sales in the U.S. rose 2.5%, a rebound from a prior quarter decline. Promotions helped increase customer check sizes, supporting the turnaround.
- Walt Disney (DIS) slipped 1.5% despite beating earnings expectations and raising guidance. A slight revenue miss weighed on shares, with TV networks and sports programming remaining soft, according to Bloomberg. However, Disney’s experiences division, which includes theme parks and cruises, posted strong results, and the company raised its streaming subscriber guidance.
- Arista Networks (ANET) surged 12% premarket after reporting better-than-expected earnings and issuing strong guidance, with notable optimism in its cloud networking solutions business, as reported by Barron’s.
- Apple (AAPL) gained 1.8% early after White House economic adviser Kevin Hassett hinted at an investment announcement expected later in the day, according to com.
- Lucid (LCID) tumbled 7.4% after missing earnings estimates and cutting its full-year production forecast. Fellow EV maker Rivian (RIVN) also fell, down 6%, after revising earnings guidance downward.
- Super Micro Computer (SMCI) plunged 17% after an earnings miss and guidance that disappointed investors.
- Snap (SNAP) dropped 17% premarket after a slowdown in advertising revenue growth, partially due to a technical issue affecting its ad platform, per Bloomberg.
- Amgen (AMGN) slipped 0.5% despite beating both earnings and revenue expectations and raising its guidance.
- Uber (UBER) rose 2.5% after meeting EPS expectations and exceeding revenue forecasts. Gross bookings grew 17% year-over-year, and CEO Dara Khosrowshahi said on CNBC that the company is not seeing weakness in consumer demand.
- Opendoor Technologies (OPEN) plunged 22% premarket following a disappointing outlook, citing ongoing macroeconomic challenges, CNBC
- Retail and housing stocks were broadly higher Tuesday. Amazon (AMZN), Lowe’s (LOW), and Home Depot (HD) all rose 1% or more. Homebuilders like Lennar (LEN) and KB Home (KBH) rallied as falling Treasury yields suggest lower mortgage rates, boosting demand. Homebuilder stocks hit their highest levels since January, noted Schwab’s Kevin Gordon.
What’s Ahead
Tomorrow will be preliminary Q2 productivity and expected earnings from Eli Lilly (LLY), ConocoPhillips (COP), Constellation Energy (CEG), Becton Dickinson (BDX), Kenvue (KVUE), Warner Bros Discovery (WBD), Gilead Sciences (GILD), Block (XYZ), Expedia (EXPE), and Wynn Resorts (WYNN).
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