Stocks experienced a decline on Thursday, concluding a month that nonetheless saw notable gains, particularly as the deadline for President Trump’s tariffs approached. Wall Street is also anticipating significant earnings reports from major technology companies following strong financial results from Meta and Microsoft, which have enhanced confidence in large investments in artificial intelligence.
The Nasdaq Composite dropped below the flatline, reversing earlier gains that exceeded 1%, while the S&P 500 fell by 0.4%. The Dow Jones Industrial Average lagged further, declining approximately 0.7%. Despite Thursday’s downturn, both the S&P 500 and Nasdaq concluded July with gains of approximately 2.3% and 3.7%, respectively. This marks the S&P 500’s third consecutive month of gains and the Nasdaq’s fourth. In contrast, the Dow finished the month relatively unchanged.
As investors reassessed following a week filled with earnings reports and economic data, President Trump’s tariffs are scheduled to take effect on Friday. He announced a 90-day extension of current tariff rates with Mexico, allowing time for negotiations on a broader agreement, given that Mexico is the largest trading partner of the US.
Adding to the economic landscape, the Federal Reserve’s favored inflation measure, the Personal Consumption Expenditures (PCE), released on Thursday, revealed that price increases accelerated in June, keeping inflation above the Fed’s 2% target. Following a recent policy meeting in which the Fed maintained interest rates, Chair Jerome Powell noted that no decisions regarding a potential rate cut in September had been finalized, with market expectations for a cut dropping below 40%.
Friday’s job report represents another critical indicator of the US economy’s vitality. This backdrop of economic concerns contrasts sharply with the impressive earnings reported by Big Tech. Meta’s stock surged over 11%, buoyed by strong results and optimistic future guidance despite increased AI expenditures. Microsoft also saw its stock jump as much as 8% before settling back after reporting positive earnings that raised its market capitalization above $4 trillion.
As markets keenly await after-hours earnings results from other tech giants, including Apple and Amazon, there remains a cautious yet optimistic outlook as investors adjust to these fluctuating economic conditions.