Stocks Climb on Strength in Magnificent Seven Stocks and Chip Makers

The S&P 500 Index ($SPX) (SPY) today is up +1.22%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +1.10%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.48%.  September E-mini S&P futures (ESU25) are up +1.15%, and September E-mini Nasdaq futures (NQU25) are up +1.40%.

Stock indexes are moving sharply higher today as they recover from some of last Friday’s steep losses.  Strength in the Magnificent Seven technology stocks and semiconductor chip makers is supporting the broader market.  Additionally, the expectation that last Friday’s dismal payroll and ISM manufacturing reports will prompt the Fed to lower interest rates is underpinning equity prices. The chances of a Fed rate cut at the September FOMC meeting rose to 90% from 40% before the reports were released.

Today’s US economic news was mixed for stocks.  US June factory orders fell -4.8% m/m, right on expectations and the biggest decline in more than 5 years.  However, June factory orders ex-transportation rose +0.4% m/m, stronger than the expectations of +0.3% m/m and the largest increase in 7 months.

In the latest tariff news, President Trump last Thursday raised tariffs on some Canadian goods to 35% from 25% and announced a 10% global minimum, along with tariffs of 15% or higher for countries with trade surpluses with the US, effective after midnight on August 7.  According to Bloomberg Economics, the average US tariff will rise to 15.2% if rates are implemented as announced, up from 13.3% earlier, and significantly higher than the 2.3% in 2024 before the tariffs were announced. 

The markets this week will focus on earnings reports and any fresh tariff or trade news. On Tuesday, the June trade deficit is expected to narrow to -$61.1 billion from -$71.5 billion in May.  Also on Tuesday, the July ISM services index is expected to climb by +0.7 to 51.5.  On Thursday, weekly initial unemployment claims are expected to increase by +3,000 to 221,000.  Also on Thursday, Q2 nonfarm productivity is expected to be +2.0% with unit labor costs rising +1.5%.

Federal funds futures prices are discounting the chances for a -25 bp rate cut at 90% at the September 16-17 FOMC meeting and 76% at the following meeting on October 28-29.

Q2 earnings reports released thus far suggest 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 over 66% of S&P 500 firms having reported Q2 earnings, around 82% exceeded profit estimates. 

Overseas stock markets today are mixed.  The Euro Stoxx 50 is up sharply by +1.30%.  China’s Shanghai Composite rebounded from a 2-week low and closed up +0.66%.  Japan’s Nikkei Stock 225 fell to a 1.5-week low and closed down -1.25%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +1 tick.  The 10-year T-note yield is down -0.4 bp to 4.212%.  Sep T-notes today recovered from overnight losses and rallied to a 3-month nearest-futures high, and the 10-year T-note yield fell to a 1-month low of 4.196%. 

T-notes have positive carryover support from last Friday’s weaker-than-expected payroll and ISM manufacturing reports, which boosted the chance of a Fed rate cut at next month’s FOMC meeting to 90% from 40% before the reports.  Also, today’s -1% drop in WTI crude oil prices has reduced inflation expectations, a bullish factor for T-notes.  In addition, today’s strength in European government bonds is providing carryover support to T-notes.

Gains in T-notes are limited by a rebound in equity markets, which curbs safe-haven demand for government securities.  Also, supply pressures are weighing on T-notes as the Treasury will auction $125 billion of T-notes and T-bonds in this week’s August quarterly refunding, beginning with Tuesday’s $58 billion auction of 3-year T-notes.

European government bond yields today are moving lower.  The 10-year German bund yield fell to a 1.5-week low of 2.627% and is down -4.7 bp to 2.632%.  The 10-year UK gilt yield dropped to a 1-month low of 4.501% and is down -2.2 bp to 4.506%.

The Eurozone Aug Sentix investor confidence index unexpectedly fell -8.2 to -3.7, weaker than expectations of an increase to 6.9.

Swaps are discounting the chances at 16% for a -25 bp rate cut by the ECB at the September 11 policy meeting.

US Stock Movers

Strength in the Magnificent Seven technology stocks is supporting gains in the broader market.  Alphabet (GOOGL), Apple (AAPL), Nvidia (NVDA), and Microsoft (MSFT) are up more than +2%.

Also, Tesla (TSLA) and Meta Platforms (META) are up more than +1%. 

Chip stocks are moving higher today, a supportive factor for the overall market. Advanced Micro Devices (AMD) is up more than +3%.  Also, Marvell Technology (MRVL), KLA Corp (KLAC), and Broadcom (AVGO) are up more than +2%.  In addition, Micron Technology (MU), Lam Research (LRCX), and ASML Holding NV (ASML) are up more than +1%. 

Steelcase (SCS) is up more than +59% after being acquired by HNI for $2.2 billion or about $18.30 per share. 

Idexx Labs (IDXX) is up more than +25% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q2 revenue of $1.11 billion, better than the consensus of $1.07 billion, and raising its full-year EPS forecast to $12.40-$12.76 from a previous forecast of $11.93-$12.43, stronger than the consensus of $12.21. 

Wayfair (W) is up more than +8% after reporting Q2 adjusted EPS of 87 cents, well above the consensus of 33 cents. 

Spotify (SPOT) is up more than +6% after it said it will increase the monthly cost of premium subscriptions in Markets across South Asia, the Middle East, Africa, Europe, and Latin America. 

Martin Marietta Materials (MLM) is up more than +4% after raising its full-year adjusted Ebitda forecast to $2.30 billion from a previous forecast of $2.15 billion-$2.45 billion, stronger than the consensus of $2.27 billion.

Tyson Foods (TSN) is up more than +3% after reporting Q3 sales of $13.88 billion, above the consensus of $13.55 billion. 

ON Semiconductor (ON) is down more than -10% to lead losers in the S&P 500 and Nasdaq 100 after forecasting Q3 adjusted gross margin of 36.5% to 38.5%, the midpoint weaker than the consensus of 37.7%.

Bruker Corp (BRKR) is down more than -11% after reporting Q2 revenue of $797.4 million, below the consensus of $810.2 million. 

LyondellBasell Industries NV (LYB) is down more than -3% after reporting Q2 adjusted Ebitda of $715 million, weaker than the consensus of $743.9 million. 

Berkshire Hathaway (BRK.B) is down more than -2% after reporting Q2 operating earnings fell -3.8% y/y to $11.16 billion.

Waters (WAT) is down more than -1% after forecasting Q3 adjusted EPS of $3.15-$3.25, the midpoint below the consensus of $3.23.

Earnings Reports (8/4/2025)

Axon Enterprise Inc (AXON), Coterra Energy Inc (CTRA), Diamondback Energy Inc (FANG), Equity Residential (EQR), IDEXX Laboratories Inc (IDXX), Loews Corp (L), ON Semiconductor Corp (ON), ONEOK Inc (OKE), Palantir Technologies Inc (PLTR), SBA Communications Corp (SBAC), Simon Property Group Inc (SPG), Tyson Foods Inc (TSN), Vertex Pharmaceuticals Inc (VRTX), Waters Corp (WAT), Williams Cos Inc/The (WMB).