A broad sell-off on Friday closed out a turbulent week for U.S. markets, with major indexes posting weekly losses between 2% and 3%. The S&P 500 and Nasdaq pulled back from record highs as investors digested a flurry of developments, including new tariffs, jobs data, GDP figures, corporate earnings, and signals from the Federal Reserve.
The S&P 500 and Nasdaq Composite hit record highs at the open yesterday but reversed course sharply following a weaker-than-expected Nonfarm Payrolls report and a wave of new tariff announcements.
August is already living up to its reputation as a seasonally weak month for equities.
Trade News
President Donald Trump made several significant policy moves this week. The U.S. reached a trade framework agreement with the European Union and held what were described as constructive talks with China. To date, seven such deals have been announced, with 62 countries now facing reciprocal tariffs. A 10% global baseline tariff is also currently in effect.
Trump further announced the elimination of the de minimis tariff exemption for international goods valued at $800 or less and signed a new 50% tariff on copper imports into law. While Mexico was granted a 90-day extension on higher tariffs to allow for continued negotiations, Canada’s tariff rate will rise from 25% to 35%, effective August 7. The overall economic impact of these sweeping tariff measures remains uncertain, signaling that trade and tariff developments will continue to dominate headlines in the months ahead.
Earning News
Corporate results remain solid. Of the 329 S&P 500 companies that have reported so far, 68% have exceeded revenue expectations, while 82% have topped earnings forecasts. Year-over-year revenue growth for Q2 stands at 5.88%, with EPS growth at 8.50%. Mega-cap tech names like Meta Platforms and Microsoft reported strong results, sending their stocks to fresh all-time highs. However, Amazon’s AWS growth fell short of expectations, and although Apple reported better-than-anticipated results, its shares declined due to growing concerns over tariffs and the durability of recent performance.
Crypto News
Earlier this week, JPMorgan Chase & Co. announced a strategic partnership with cryptocurrency exchange Coinbase, aiming to provide easier access to digital assets for its more than 80 million customers. Through the collaboration, Chase credit card holders will be able to fund purchases on Coinbase, and Chase Ultimate Rewards points can now be redeemed for USDC stablecoins.
Despite CEO Jamie Dimon’s past criticism of Bitcoin, JPMorgan continues to invest in blockchain technology. In May, the bank completed its first blockchain-based transaction, and just last month, it launched a deposit token for institutional clients on Coinbase’s blockchain platform—signaling a deeper move into the digital asset space.
Economic Data, Rates & the Fed
It was a busy week for economic data, capped by this morning’s disappointing jobs report. Nonfarm Payrolls rose by just 73,000, falling short of the 95,000 consensus, but the bigger surprise was a downward revision of 258,000 across the prior two months, pulling the three-month average below 40,000. Also adding to market concerns was a slightly hotter-than-expected annual gain in the Fed’s preferred inflation measure, the core Personal Consumption Expenditures (PCE) Price Index.
On the brighter side, the first estimate of Q2 GDP came in stronger than expected, and initial jobless claims remain contained. Here’s a summary of the week’s key data points:
- Nonfarm Payrolls: +73K vs. +95K expected, with a net downward revision of 258K to prior months.
- Unemployment Rate: Rose to 4.2% from 4.1% in June, in line with estimates.
- Average Hourly Earnings: Increased 0.3% month-over-month (vs. +0.2% expected), up 3.9% year-over-year.
- Average Workweek: 34.3 hours vs. 34.2 expected.
- ADP Employment Change: 104K vs. 50K expected, marking the lowest reading since March 2023.
- Chicago PMI: Improved to 47.1 from 40.4 (still in contraction below 50).
- PCE Prices: +0.3% month-over-month, matching expectations, with an annual gain of 2.6%.
- Core PCE: +0.3% month-over-month, bringing the annual rate to 2.8% — its largest monthly rise in four months and 0.10% above expectations.
- Construction Spending: Fell 0.4% vs. flat expectations, its sixth straight monthly decline.
- JOLTS Job Openings: Fell to 7.437 million in June from 7.712 million prior, below the 7.55 million estimate.
- GDP (Advance Q2): +3.0% vs. +2.7% expected.
- Initial Jobless Claims: Fell 4,000 to 217,000, below the 227,000 estimate; continuing claims rose by 4,000 to 1.955 million, suggesting hiring weakness.
- Atlanta Fed GDPNow: Revised Q2 GDP growth estimate down to +2.3% from +2.4% last week.
- Treasury yields fell sharply this week on the weaker jobs data.
Optimism Grows
The Federal Reserve is expected to begin rate cuts in September, provided inflation stays contained; earnings—particularly in the tech sector—have been strong; and long-term optimism remains around the AI growth story.
According to Bloomberg, the probability of a 25-basis-point rate cut at the September FOMC meeting jumped to 84% from 39% yesterday, while the market is now pricing in a total of 2.26 rate cuts in 2025, up from 1.36 previously.
Next week’s calendar is relatively light on economic data, so investor focus will shift to a busy slate of Q2 earnings across multiple sectors.
There is potential for a rebound either early or late in the week.
What to Watch:
Economic Calendar:
- Monday (Aug. 4): Factory Orders
- Tuesday (Aug. 5): ISM Services, Trade Balance
- Wednesday (Aug. 6): EIA Crude Oil Inventories, MBA Mortgage Applications Index
- Thursday (Aug. 7): Consumer Credit, Continuing Claims, EIA Natural Gas Inventories, Initial Claims, Productivity – Preliminary, Unit Labor Costs-Preliminary, Wholesale Inventories
- Friday (Aug. 8): -no reports-
Earnings Schedule:
- Monday (Aug. 4): Axon Enterprise Inc. (AXON), BioNTech SE (BNTX), IDEXX Laboratories Inc. (IDXX), MercadoLibre Inc. (MELI), ON Semiconductor Corp. (ON), Palantir Technologies Inc. (PLTR), Simon Property Group Inc. (SPG), Tyson Foods (TSN), Vertex Pharmaceuticals (VRTX), Wayfair Inc. (W)
- Tuesday (Aug. 5): Advanced Micro Devices (AMD), Apollo Global Management Inc. (APO), Arista Networks Inc. (ANET), Caterpillar Inc. (CAT), Coupang Inc. (CPNG), Eaton Corporation PLC (ETN), Duke Energy Corp. (DUK), Mariott International Inc. (MAR), Pfizer Inc. (PFE), Super Micro Computer (SMCI), Toast Inc. (TOST)
- Wednesday (Aug. 6): Airbnb Inc. (ABNB), AppLovin Corp. (APP), DoorDash Inc. (DASH), Energy Transfer LP (ET), McDonald’s Corp. (MCD), Novo Nordisk A/S (NVO), Uber Technologies Inc. (UBER), Walt Disney Co. (DIS)
- Thursday (Aug. 7): Atlassian Corp. (TEAM), Brookfield Corp. (BN), ConocoPhillips (COP), Constellation Energy Corp. (CEG), Eli Lilly & Co. (LLY), EOG Resources Inc. (EOG), Flutter Entertainment PLC (FLUT), Parker-Hannafin Corp. (PH), Sony Group (SONY)
- Friday (Aug. 8): Avidity Biosciences (RNA), CleanSpark Inc. (CLSK), Essent Group Ltd. (ESNT), Lamar Advertising Co. (LAMR), Plains All American Pipeline LP (PAA), Plains GP Holdings LP (PAGP), Tempus AI Inc. (TEM)
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