Stocks Retreat Ahead of Results from Wednesday's FOMC Meeting

The S&P 500 Index ($SPX) (SPY) Tuesday closed down -0.30%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.46%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.21%.  September E-mini S&P futures (ESU25) fell -0.30%, and September E-mini Nasdaq futures (NQU25) fell -0.22%.

Stock indexes gave up early gains on Tuesday and settled lower.  Long liquidation pressures weighed on stocks Tuesday ahead of several market-moving events this week, including the conclusion of the 2-day FOMC meeting on Wednesday and post-meeting comments from Fed Chair Powell, earnings results from four megacap tech companies on Wednesday and Thursday, and Friday's monthly US jobs report. 

Stock indexes on Tuesday initially moved higher, with the S&P 500 and Nasdaq 100 posting new record highs.  Better-than-expected quarterly corporate earnings results and positive trade news are supporting gains in stocks.  Commerce Secretary Lutnick said a 90-day extension of a trade truce with China was a likely outcome with negotiations between the two countries underway in Stockholm.  Stocks also found some support from Tuesday's US economic news that showed the Jun advance goods trade deficit unexpectedly shrank to -$86.0 billion versus expectations of a widening to -$98.0 billion, a positive factor for Q2 GDP.

However, stocks fell back on other mixed US economic news that showed Jun JOLTS job openings fell more than expected, but the Jul consumer confidence index rose more than expected.  Also, a -7% fall in UnitedHealth Group weighed on the Dow Jones Industrial Average after it reported weaker-than-expected Q2 adjusted EPS and forecasted full-year adjusted EPS below consensus.

M&A activity was also supportive of stocks after Union Pacific agreed to acquire Norfolk Southern for about $85 billion, or around $320 a share.  Also, Baker Hughes acquired Chart Industries for $9.6 billion, or about $210 a share.

The US May S&P CoreLogic composite-20 home price index rose +2.79% y/y, weaker than expectations of +2.91% and the smallest pace of increase in 1.75 years.

US Jun JOLTS job openings fell -275,000 to 7.437 million, weaker than expectations of 7.500 million.

The Conference Board US Jul consumer confidence index rose +2.0 to 97.2, stronger than expectations of 96.0.

The markets this week will focus on any news of new trade deals before Friday's deadline. The 2-day FOMC meeting began on Tuesday, and the Fed is expected to keep the fed funds target range unchanged at 4.25% to 4.50% when the meeting ends on Wednesday.  Also on Wednesday, the Jul ADP employment change is expected to climb by +80,000.  Finally, on Wednesday, Q2 GDP is expected to expand by +2.4% (q/q annualized) and the Q2 core PCE price index is expected to ease to +2.3% from +3.5% in Q1.  On Thursday, initial weekly unemployment claims are expected to rise by 6,000 to 223,000, and the Q2 employment cost index is expected to increase by 0.8%.  Also, Jun personal spending is expected to climb +0.4% m/m and Jun personal income is expected to rise +0.3% m/m.  In addition, the Jun core PCE price index, the Fed's preferred inflation gauge, is expected to climb +0.3% m/m and +2.7% y/y.  Finally, on Thursday, the Jul MNI Chicago PMI is expected to increase by +1.6 to 42.0.  On Friday, Jul nonfarm payrolls are expected to increase by +109,000 and the Jul unemployment rate is expected to rise by +0.1 to 4.2%.  Also, Jul average hourly earnings are expected +0.3% m/m and +3.8% y/y. In addition, the Jul ISM manufacturing index is expected to increase by +0.2 to 49.5.  Finally, the University of Michigan Jul consumer sentiment index is expected to be unrevised at 61.8. 

The markets are awaiting President Trump's August 1 deadline for trade deals to avoid high tariffs.  On July 16, Mr. Trump announced that he intends to send a tariff letter to more than 150 countries, notifying them that their tariff rates could be 10% or 15%, effective August 1.  As an update, Mr. Trump last Wednesday said, "We'll have a straight, simple tariff of anywhere between 15% and 50%," an indication that the floor for tariffs is rising and suggesting that he would not go below 15%. 

Federal funds futures prices are discounting the chances for a -25 bp rate cut at 2% at the Tue/Wed FOMC meeting and 66% at the following meeting on September 16-17.

This week kicks off the earnings season's busiest week, with 38% of the stocks in the S&P 500 reporting quarterly earnings, double the amount reported last week. The earnings results of Magnificent Seven members will be front and center, with Microsoft and Meta Platforms reporting on Wednesday and Apple and Amazon.com reporting on Thursday.  Early results show that S&P 500 earnings are on track to rise +4.5% for the second quarter, better than the pre-season expectations of +2.8% y/y, according to Bloomberg Intelligence.  With about a third of S&P 500 firms having reported, around 82% exceeded profit estimates. 

Overseas stock markets on Tuesday settled mixed.  The Euro Stoxx 50 closed up +0.78%.  China's Shanghai Composite closed up +0.33%.  Japan's Nikkei Stock 225 closed down -0.79%.

Interest Rates

September 10-year T-notes (ZNU25) on Tuesday closed up +19 ticks.  The 10-year T-note yield fell -7.8 bp to 4.332%.  Sep T-notes rallied to a 1-week high Tuesday, and the 10-year T-note yield fell to a 2.5-week low of 4.322%.  T-notes moved higher on Tuesday after the Jun JOLTS job openings fell more than expected, a dovish factor for Fed policy.  T-notes extended their gains Tuesday afternoon on strong demand for the Treasury's $44 billion auction of 7-year T-notes that had a bid-to-cover ratio of 2.79, well above the 10-auction average of 2.64 and the highest in more than 12 years. 

European government bond yields on Tuesday were mixed.  The 10-year German bund yield rose +1.9 bp to 2.708%. The 10-year UK gilt yield fell from a 1-week high of 4.681% and finished down -1.4 bp to 4.633%.

The ECB's Jun 1-year inflation expectations eased to +2.6% from 2.8% in May.  The ECB's Jun 3-year inflation expectations were unchanged from May at +2.4%.

Swaps are discounting the chances at 14% for a -25 bp rate cut by the ECB at the September 11 policy meeting.

US Stock Movers

Whirlpool (WHR) closed down more than -13% after reporting Q2 net sales of $3.77 billion, below the consensus of $3.85 billion, and cutting its full-year EPS forecast to $6.00-$8.00 from a previous estimate of about $10, well below the consensus of $8.78. 

Carrier Global (CARR) closed down more than -10% to lead losers in the S&P 500 after forecasting full-year free cash flow of $2.4 billion to $2.6 billion, the midpoint below the consensus of $2.55 billion. 

United Parcel Service (UPS) closed down more than -10% after it pulled guidance for the year, citing "current macro-economic uncertainty."

Brown & Brown (BRO) closed down more than -10% after reporting Q2 organic revenue rose +3.60%, weaker than the consensus of +5.63%.

PayPal Holdings (PYPL) closed down more than -8% to lead losers in the Nasdaq 100 after reporting Q2 checkout volumes rose 5% q/q, down from a 6% increase in Q1, with company executives saying they were seeing softer retail spending as a result of the US tariff wars. 

UnitedHealth Group (UNH) closed down more than -7% to lead losers in the Dow Jones Industrials after reporting Q2 adjusted EPS of $4.08, weaker than the consensus of $4.59, and forecasting full-year adjusted EPS of at least $16, well below the consensus of $20.40.

Stanley Black & Decker (SWK) closed down more than -7% after reporting Q2 net sales of $3.95 billion, weaker than the consensus of $4.00 billion. 

Royal Caribbean Cruises Ltd (RCL) closed down more than -5% after forecasting Q3 adjusted EPS of $5.55-$5.65, weaker than the consensus of $5.84. 

Amkor Technology (AMKR) closed up more than +18% after reporting Q2 net sales of $1.51 billion, better than the consensus of $1.42 billion, and forecast Q3 net sales of $1.88 billion-$1.98 billion, well above the consensus of $1.76 billion. 

Chart Industries (GTLS) closed up more than +16% after Baker Hughes acquired the company for $13.6 billion, or about $210 a share.

Sarepta Therapeutics (SRPT) closed up more than +14% after US regulators recommended that patients who can walk be allowed to take the company's gene therapy Elevidys again.

Corning (GLW) closed up more than +11% to lead gainers in the S&P 500 after reporting Q2 core EPS of 60 cents, above the consensus of 57 cents, and forecasting Q3 core EPS of 63 cents-67 cents, better than the consensus of 62 cents. 

Cadence Design Systems (CDNS) closed up more than +9% to lead gainers in the Nasdaq 100 after reporting Q2 revenue of $1.28 billion, above the consensus of $1.25 billion, and raised its full-year revenue forecast to $5.21 billion-$5.27 billion from a previous estimate of $5.15 billion-$5.23 billion, stronger than the consensus of $5.20 billion.

CBRE Group (CBRE) closed up more than +7% after reporting Q2 revenue of $9.75 billion, stronger than the consensus of $9.43 billion, and raising its full-year core EPS estimate to $6.10-$6.20 from a previous estimate of $5.80-$6.10. 

Universal Health Services (UHS) closed up more than +5% after reporting Q2 net revenue of $4.28 billion, better than the consensus of $4.23 billion, and raising its full-year net revenue estimate to $17.10 billion-$17.31 billion from a previous estimate of $17.02 billion-$17.36 billion.

Earnings Reports (7/30/2025)

Albemarle Corp (ALB), Align Technology Inc (ALGN), Allstate Corp/The (ALL), Altria Group Inc (MO), American Electric Power Co Inc (AEP), American Water Works Co Inc (AWK), Automatic Data Processing Inc (ADP), AvalonBay Communities Inc (AVB), Bunge Global SA (BG), CH Robinson Worldwide Inc (CHRW), Cognizant Technology Solutions (CTSH), Dexcom Inc (DXCM), eBay Inc (EBAY), Entergy Corp (ETR), Equinix Inc (EQIX), Everest Group Ltd (EG), Extra Space Storage Inc (EXR), F5 Inc (FFIV), Fair Isaac Corp (FICO), FirstEnergy Corp (FE), Ford Motor Co (F), Fortive Corp (FTV), Garmin Ltd (GRMN), GE HealthCare Technologies Inc (GEHC), Generac Holdings Inc (GNRC), Hershey Co/The (HSY), Hologic Inc (HOLX), Host Hotels & Resorts Inc (HST), Humana Inc (HUM), IDEX Corp (IEX), Illinois Tool Works Inc (ITW), Invitation Homes Inc (INVH), Kraft Heinz Co/The (KHC), Lam Research Corp (LRCX), Meta Platforms Inc (META), MGM Resorts International (MGM), Microsoft Corp (MSFT), Mid-America Apartment Communities (MAA), Old Dominion Freight Line Inc (ODFL), Prudential Financial Inc (PRU), PTC Inc (PTC), Public Storage (PSA), QUALCOMM Inc (QCOM), Smurfit WestRock PLC (SW), Trane Technologies PLC (TT), Tyler Technologies Inc (TYL), UDR Inc (UDR), Ventas Inc (VTR), Verisk Analytics Inc (VRSK), VICI Properties Inc (VICI), WEC Energy Group Inc (WEC), Western Digital Corp (WDC).