S&P 500 down -2.36% last week to 6,238.01 US yields collapsed on Friday: 2-year -26.5 bps to 3.963% Gold gained +2.21% last week to $3,362.51 an ounce DXY increased +1.04% last week to 98.69What to look out for today
Companies reporting on Monday, 4th August: Palantir, Vertex Pharmaceuticals, MercadoLibre, Vertex, Diamondback, BioNTech, Loews, Tyson Food, Coterra Energy
Key data to move markets today
EU: Eurozone Sentix Investor Confidence.
US: Factory Orders and Loan Officer Survey.
US Stock Indices
Dow Jones Industrial Average -1.23%.
Nasdaq 100 -1.96%.
S&P 500 -1.60%, with 8 of the 11 sectors of the S&P 500 down.
On Friday, all three major US stock indexes declined. The Nasdaq Composite saw a -2.24% drop, breaking a 19-day period without a 1% move in either direction—the longest such streak since July 2021. The S&P 500 fell by -1.60%, and the Dow Jones Industrial Average lost approximately 540 points, or -1.23%. This marked the Dow's worst week since the ‘Liberation Day’ tariffs in early April.
By the end of the week, all major indices were lower. The Dow Jones declined by -2.92%, the S&P 500 by -2.36%, and the Nasdaq Composite by -2.17%. This market pullback represents a significant reversal from the recent record highs, which were fuelled by robust economic growth, signs of easing inflation, and strong interest in AI-related stocks. With valuations currently high, investors are now facing a more challenging environment and renewed uncertainty regarding the Fed's timeline for cutting interest rates.
According to LSEG I/B/E/S data, y/o/y earnings growth for the S&P 500 in Q2 is projected to be +11.2%. This number jumps to 13.2% when excluding the Energy sector. Of the 330 companies in the S&P 500 that have reported earnings to date for Q2 2025, 80.6% have reported earnings above analyst estimates, with 78.5% of companies reporting revenues exceeding analyst expectations. The y/o/y revenue growth is projected to be 5.6% in Q2, increasing to 6.8% when excluding the Energy sector.
Information Technology, at 100.0%, is the sector with most companies reporting above estimates, while Financials, with a surprise factor of 10.5%, is the sector that’s beaten earnings expectations by the highest surprise factor. Within Materials, 38.9% of companies have reported above estimates, and Real Estate at -1.0% is the sector with the lowest surprise factor. The S&P 500 surprise factor is 8.3%. The forward four-quarter price-to-earnings ratio (P/E) for the S&P 500 sits at 22.5x.
In corporate news, Eli Lilly & Co saw gains following a report that certain Medicare and Medicaid drug plans might cover expensive weight-loss medications. This indicates a potential shift in the Trump administration's stance on expanding coverage for these treatments.
Kimberly-Clark reported strong Q2 earnings, beating expectations due to increased sales of its lower-priced household goods and a surge in consumer volume.
Reddit announced its most profitable quarter to date and projected Q3 sales well above analyst expectations, demonstrating the strength of its expanding advertising business.
S&P 500 Best performing sector
Health Care +0.58%, with Align Technology +11.25%, AbbVie +2.25%, and Biogen +0.62%.
S&P 500 Worst performing sector
Consumer Discretionary -3.59%, with Amazon -8.27%, Aptiv -4.36%, and Norwegian Cruise Line Holdings -4.15%.
Mega Caps
Alphabet -1.51%, Amazon -8.27%, Apple -2.50%, Meta Platforms -3.03%, Microsoft -1.76%, Nvidia -2.33%, and Tesla -1.83%.
Information Technology
Best performer: Monolithic Power Systems +10.46%.
Worst performer: Arista Networks -4.59%.
Materials and Mining
Best performer: Sherwin-Williams +3.79%.
Worst performer: Eastman Chemical -19.03%.
European Stock Indices
CAC 40 -2.91%.
DAX -2.66%.
FTSE 100 -0.70%.
Corporate Earnings Reports
Posted on Friday, 1st August
- Chevron quarterly revenue -12.4% to $44.822 bn vs. $43.865 bn estimate.
EPS at $1.77 vs. $1.73 estimate.
Mike Wirth, Chairman and CEO, said, “Second quarter results reflect continued strong execution, record production, and exceptional cash generation. Permian
Basin production increased to 1 million barrels of oil equivalent per day, and U.S. and worldwide production hit new company records. Cash flow from operations, at similar commodity prices, was one of the highest in company history. The completion of the Hess acquisition further strengthens our diversified portfolio and positions us to extend our production and free cash flow growth profile well into the next decade.” — see report.
- Regeneron Pharmaceuticals quarterly revenue +3.6% to $3.676 bn vs. $3.288 bn estimate.
EPS at $12.89 vs. $8.43 estimate.
Leonard S. Schleifer, Board co-Chair, President and CEO, said, “Regeneron had a strong quarter, marked by significant growth in U.S. sales of EYLEA HD and global sales of Dupixent and Libtayo along with multiple regulatory approvals. We have made significant progress in our oncology portfolio, including FDA approval for Lynozyfic for relapsed or refractory multiple myeloma, exciting emerging data from the lead-in cohorts of our pivotal programs in myeloma and lymphoma, as well as positive pivotal data supporting a potential upcoming FDA approval for Libtayo in adjuvant CSCC. Dupixent continues to be the world-leading treatment for diseases driven by type 2 inflammation, adding recent FDA approvals for bullous pemphigoid and chronic spontaneous urticaria, the seventh and eighth distinct indications for this important medicine. We are confident in the near- and long-term potential of our diverse pipeline and look forward to additional data and regulatory milestones later this year.” — see report.
- Liberty Global quarterly revenue -32.3% to $1.269 bn vs. $1.215 bn estimate.
Loss Per Share at -$0.44 vs. -$0.44 estimate.
Mike Fries, CEO, said, “In the second quarter, we continued to execute across our strategic pillars – Liberty Growth, Liberty Telecom and Liberty Services & Corporate, with an unwavering focus on creating and delivering value to shareholders. We are encouraged to see our strategy to unlock value succeeding, with Sunrise continuing to trade higher post-spin, particularly when factoring in its inaugural dividend payment which was paid in May.” — see report.
Commodities
Gold spot +2.21% to $3,362.51 an ounce.
Silver spot +0.96% to $37.02 an ounce.
West Texas Intermediate -2.87% to $67.26 a barrel.
Brent crude -4.16% to $69.53 a barrel.
Gold prices rose on Friday to a one-week high, driven by tariff announcements which heightened safe-haven demand among investors.
Spot gold reached its highest since 25th July, climbing +2.21% to settle at $3,362.51 per ounce. For the week, gold was +0.89%. Year-to-date, gold prices have risen +28.13%.
Oil prices dropped by more than $2 a barrel on Friday, due to concerns about a possible OPEC+ production increase and a weaker-than-expected US jobs report that sparked worries about demand.
Brent crude futures were down $3.02 or -4.16% to settle at $69.53 a barrel. WTI crude closed at $67.24 a barrel, down $2.01, or -2.90%. Despite Friday's losses, Brent crude still ended the week with a +1.68% gain, while WTI rose +3.33%.
The US Labor Department reported that only 73,000 nonfarm payroll jobs were added in July, well below general market forecast. This disappointing report caused the national unemployment rate to rise to 4.2% from 4.1%, raising concerns about the health of the economy and future oil demand.
Oil traders also focused on the potential impact of new US tariffs, which are set to take effect this Friday. The US President signed an executive order imposing tariffs ranging from 10% to 41% on US imports from dozens of countries and territories that failed to reach trade deals by his 1st August deadline. These included Canada, India, and Taiwan. Partners that secured trade agreements included the EU, South Korea, Japan, and Great Britain.
Oil prices were also supported last week by the US President’s threats to impose 100% secondary tariffs on buyers of Russian crude. This move is an effort to pressure Russia into halting its war in Ukraine. The threats have stoked concern over potential disruptions to oil trade flows and the removal of some oil from the market. Analysts said Trump’s threatened penalties on China and India over their purchases of Russian oil could put 2.75 million barrels per day (bpd) of Russian seaborne oil exports at risk. China and India are the world’s second and third-largest crude consumers, respectively.
Oil output rises as OPEC+ responds to Russia-linked disruptions. OPEC+ announced on Sunday an agreement to increase oil production by 547,000 bpd for September. This decision is the latest in a series of accelerated output hikes aimed at reclaiming market share amid growing concerns over potential supply disruptions related to Russia.
This latest adjustment represents a full and early reversal of the group's largest tranche of output cuts, along with a separate production increase for the United Arab Emirates. The total increase amounts to approximately 2.5 million bpd, which is about 2.4% of global demand.
The decision was made during a brief virtual meeting of eight OPEC+ members. The meeting occurred as the US intensifies pressure on India to halt its purchases of Russian oil, part of a broader effort by Washington to bring Moscow to the negotiating table for a peace agreement with Ukraine by the US President’s target date of 8th August.
In a statement released after the meeting, OPEC+ cited a healthy global economy and low oil inventories as the rationale for its decision. The eight member countries are scheduled to reconvene on 7th September to potentially consider reinstating another round of output cuts, which currently total around 1.65 million bpd and are set to remain in place until the end of next year.
The group began its series of production increases in April with a modest hike of 138,000 bpd. This was followed by larger-than-planned increases of 411,000 bpd in May, June, and July, a 548,000 bpd increase in August, and now the 547,000 bpd increase for September.
Note: As of 5 pm EDT 1 August 2025
Currencies
EUR +1.51% to $1.1589.
GBP +0.57% to $1.3278.
Bitcoin -2.29% to $113,863.58.
Ethereum -5.27% to $3,534.22.
The US dollar declined on Friday for its largest daily loss against the euro and yen since April. This followed the release of US jobs data for July, which showed a smaller-than-expected increase in employment and a sharp downward revision of the previous month's gains.
The dollar index fell -1.36% on the day to 98.69, though it still posted a +1.04% gain for the week.
The euro strengthened against the dollar, +1.51% to $1.1589. Earlier in the day, the euro had reached its lowest point since 10th June, at $1.1389. For the week, the euro was -1.28%.
The British pound also rose on Friday, rebounding from its worst monthly performance against the dollar in three years, having lost nearly 4% of its value in July. The BoE is scheduled to meet this week and is widely expected to cut interest rates by a quarter point to 4.00%, which would be their lowest level in two-and-a-half years. The pound was +0.57% on the day at $1.3278, close to its lowest since mid-May, after having reached a near four-year high of $1.3787 just a month ago.
The dollar weakened against the yen by -2.32%, trading at ¥147.20. The dollar had earlier hit a high of ¥150.91, a level not seen since 28th March. Friday's gains contributed to the yen finishing the week +0.31% higher.
Fixed Income
US 10-year Treasury -15.0 basis points to 4.225%.
German 10-year bund -1.7 basis points to 2.679%.
UK 10-year gilt -4.3 basis points to 4.530%.
US Treasury yields plummeted on Friday, driven by data showing that the world's largest economy added fewer jobs than anticipated in July. This increased the probability that the Fed will resume cutting interest rates at its 17th September meeting.
The yield on the two-year Treasury note, which is highly sensitive to the Fed's monetary policy, was -26.5 bps to 3.698%. This marked its largest daily decline in two years and pushed the yield to its lowest point since 30th June. For the week, the two-year yield was -24.2 bps.
Similarly, the 10-year Treasury yield fell to a five-week low, closing down -15.0 bps at 4.225%. This was its most significant one-day decline since early April. It was -16.7 bps for the week.
The downturn in yields was primarily triggered by the US jobs report that pointed to a sharp moderation in the labour market. Nonfarm payrolls increased by just 73,000 jobs in July, well below the 110,000 jobs economists had forecast. Furthermore, June's job gains were revised sharply downward to 14,000 from a previously reported 147,000.
Adding to the concerns, other economic data released on Friday also indicated weakness. The Institute for Supply Management's manufacturing PMI dropped to 48.0 in July, down from 49.0 in June. This marked the fifth consecutive month of contraction in the manufacturing sector, which accounts for 10.2% of the US economy. Additionally, factory employment fell to a five-year low, a trend linked to tariffs that have raised the cost of imported raw materials.
Fed funds futures traders are now pricing in a 82.5% probability of a rate cut in September, up from 61.9% last week, according to CME Group's FedWatch Tool. Traders are currently anticipating 60.1 bps of cuts by year-end, higher than the 44.7 bps expected last week.
Across the Atlantic, euro area bond yields declined on Friday. Early in the session, long-dated euro zone government bonds faced selling pressure, which initially pushed yields higher due to renewed concerns about fiscal spending. However, this trend reversed following the release of US employment data.
The yield on Germany's 10-year bond fell by -1.7 bps to 2.679%, ending the week -4.3 bps. Similarly, the two-year German yield was -4.0 bps to 1.89%, after briefly reaching 1.931% earlier in the day. It finished the week down -1.1 bps. Conversely, on the long end of the maturity spectrum, the 30-year yield saw a modest increase of +0.9 bps to 3.180% but ended the week -3.1 bps lower.
Italy's 10-year yield, a key indicator for the eurozone’s periphery, was +1.1 bps on Friday but ultimately closed the week -4.8 bps lower at 3.518%. The spread between the Italian and German 10-year yields stood at 83.9 bps, a 0.5 bps reduction from the previous week.
Money markets have increased their bets on future ECB rate cuts. The probability of an easing move by the end of the year has risen to approximately 69% from 50% before the US data was released. Expectations for a similar move by March 2026 have also increased, from 65% to 90%. This shift in sentiment occurred as euro zone inflation data for July held steady at the ECB's 2% target.
Note: As of 5 pm EDT 1 August 2025
Global Macro Updates
Jobs growth hits 2020 low amid sharp revisions. Nonfarm payrolls in July increased by only 73,000, falling short of the market's expectation of approximately 110,000. Significant downward revisions to May and June payrolls, totaling 258,000, drew considerable attention, bringing the three-month average payroll growth down to 35,000—the lowest since 2020. The unemployment rate, at an unrounded 4.248%, rose from the previous 4.117%, narrowly avoiding an increase to 4.3%. Average hourly earnings rose 0.3% m/o/m, aligning with forecasts. Following the news, President Trump ordered officials to fire Bureau of Labor Statistics commissioner Erika McEntarfer, who was appointed by his predecessor Joe Biden. President Trump said on his Truth Social media platform that “the data had been RIGGED in order to make the Republicans, and ME, look bad”. The move has raised questions about the integrity of the US statistical system.
The downward revisions to payrolls not only erased June's increase in government jobs but also affected private-sector jobs. Some analysts suggest that the upcoming Bureau of Labor Statistics's Quarterly Census of Employment and Wages data, due on 9th September, could lead to even further downward adjustments. Risks to the unemployment rate are seen as skewed to the upside, particularly since the July reading was tempered by a decrease in labour-force participation.
This jobs report is particularly significant as Fed Chair Jerome Powell stated after Wednesday's FOMC meeting that this was the ‘main number’ to watch. The report has led to a difference of opinion among analysts regarding the FOMC’s next move. While some see a rising urgency for the Fed to cut interest rates sooner, others suggest that inflation risks remain. Following the report's release, Fedwatch odds for a 25 bps rate cut in September jumped to 82.5% from a previous level of 39.2%.
Following the jobs report, Federal Reserve governor Adriana Kugler said she would step down, months before the end of her term in January.
July ISM Manufacturing below consensus, consumer sentiment improves with lower year-ahead inflation expectations. Economic data released on Friday presented a mixed but cautious outlook for the US economy, with manufacturing contracting and consumer sentiment improving slightly.
The ISM Manufacturing Index for July registered at 48.0, falling below both the consensus forecast of 49.5 and June's reading of 49.0. A reading below 50 indicates a contraction in the sector. While the New Orders Index and Production Index saw modest increases, rising to 47.1 and 51.4, respectively, the Employment Index declined to 43.4 from 45.0. The Prices Index also fell to 64.8 from 69.7.
Survey respondents expressed widespread concern about the unpredictability and rising costs associated with recent tariffs. This uncertainty is causing difficulties in forecasting, sourcing materials, and delaying investment decisions across multiple sectors.
The final S&P Global Manufacturing PMI for July was in line with expectations at 49.8, a drop from June's 52.9. This report also indicated that input costs continued to rise due to tariffs, although the rate of inflation softened. Employment within the sector was fractionally lower.
Final consumer sentiment for July came in at 61.7, slightly missing the consensus of 62.0 but marking the second consecutive month of improvement from June's final reading of 60.7. The Current Economic Conditions Index rose to 68.0 from 64.8, while the Index of Consumer Expectations fell slightly to 57.7 from 58.1.
Inflation expectations also showed signs of easing. The final July reading for one-year inflation expectations was 4.5%, down from June's final of 5.0%. Similarly, five-year inflation expectations dropped to a final reading of 3.4%, compared to June's final reading of 4.0%.
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