S&P 500 and Nasdaq notch record closes, lifted by Alphabet
Alphabet (GOOGL.O), opens new tab rose as the search giant's results boosted confidence that heavy investment in a race to dominate AI technology is paying off.
Shares of Microsoft (MSFT.O), opens new tab, Nvidia (NVDA.O), opens new tab and Amazon (AMZN.O), opens new tab also climbed.
The U.S.-Japan trade deal and recent signs of progress in talks with the European Union also fueled Wall Street's gains.
"Investors are feeling optimistic about trade negotiations, about the economy, the trend in inflation, as well as the better-than-expected Q2 earnings reports," said Sam Stovall, chief investment strategist at CFRA Research.
Tesla (TSLA.O), opens new tab tumbled after CEO Elon Musk warned of a "few rough quarters" as the U.S. government cuts support for electric vehicle makers. The stock has fallen around 25% so far in 2025.
UnitedHealth fell after the insurer revealed it was cooperating with a Department of Justice probe into its Medicare practices, following reports of both criminal and civil investigations.
IBM dropped after its second-quarter results fell flat with investors, hampered by disappointing sales in its core software division.
Honeywell fell despite topping Wall Street's expectations and raising its annual outlook.
According to preliminary data, the S&P 500 (.SPX), opens new tab gained 5.53 points, or 0.08%, to end at 6,363.87 points, while the Nasdaq Composite (.IXIC), opens new tab gained 38.85 points, or 0.19%, to 21,057.96. The Dow Jones Industrial Average (.DJI), opens new tab fell 312.08 points, or 0.69%, to 44,698.21.
American Airlines (AAL.O), opens new tab tumbled after the carrier forecast a big third-quarter loss, hurt by sluggish domestic travel demand.
U.S. President Donald Trump's global trade war has created the biggest uncertainty for the airline industry since the COVID-19 pandemic.
Markets were also monitoring Trump's planned visit to the Federal Reserve's headquarters on Thursday, following months of the president criticizing Fed Chair Jerome Powell for interest rates Trump views as too high.
With the Fed widely expected to hold rates steady at next week's meeting, traders see a 60% chance of a September rate cut, according to CME's FedWatch tool.
A U.S. Labor Department report showed jobless claims last week fell to 217,000 - well below estimates - signaling continued resilience in the job market.
U.S. business activity gained momentum in July, but companies hiked prices on goods and services, fueling economists' predictions of faster inflation in the months ahead, largely driven by rising import tariffs.
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The Herald Scotland
an hour ago
- The Herald Scotland
Fed governor Kugler to resign, offering Trump early vacancy to fill
Kugler's resignation gives Trump an opportunity to at least partially shape the Fed's makeup to his liking ahead of her original departure date. Kugler, a Biden-appointed governor, joined the seven-member board in 2023 and was set to serve through January 2026. Kugler didn't offer a reason for her Aug. 8 departure. A statement from the Fed said she would return to Georgetown University as a professor this fall. In a letter to President Donald Trump, Kugler said it has been the "honor of a lifetime" to serve on the Fed's board of governors. "I am especially honored to have served during a critical time in achieving our dual mandate of bringing down prices and keeping a strong and resilient labor market," Kugler said. "The Federal Reserve does important work to help foster a healthy economy and it has been a privilege to work towards that goal on behalf of all Americans for nearly two years." In a July 30 note, Bill Adams, chief economist for Comerica Bank, noted that Trump may use Kugler's opening to appoint his pick for Fed Chair Jerome Powell's replacement. Powell, who was appointed by Trump in 2017, will have his term as Fed chair end in May 2026. The president, who has recently backed away from threats to fire Powell, has made clear that he's unhappy with the Fed's decision to hold off on rate cuts. In June, Trump said he's hunting for a new Fed chair and has narrowed his search to "three or four people." Adams said Trump's next pick for chair could be a current Federal Open Market Committee member or an external hire. "Perhaps the next Chair will have a different approach to monetary policy than Powell, but it's hard to say--recall that Powell himself is a Trump appointee," Adams wrote on July 30, before Kugler announced her resignation. "In any case, the Fed seems likely to cut interest rates between now and when Powell's term ends, which would make the transition feel less fraught."
The Herald Scotland
an hour ago
- The Herald Scotland
July jobs report takeaways: Weakening labor market, recession fears
By late afternoon Aug. 1, Trump announced he ordered the firing of Erika McEntarfer, the U.S. commissioner of Labor Statistics. The president in a social media post accused McEntarfer of manipulating figures for "political purposes," though he did not provide any evidence. In early afternoon trading, the Dow Jones Industrial Average was down about 607 points and the benchmark S&P 500 index was off 1.5% Over the past three months, the economy has averaged just 35,000 employment gains. Here are a few takeaways: This was no blip The poor showing likely wasn't an outlier that will be followed by a resumption of healthy job gains in the months ahead, economists said. Consumers have reined in their spending somewhat, amid worries about Trump's tariffs pushing up prices, and are pulling back on travel and recreational activities. As more of the import charges hit store shelves, Americans will likely restrain their outlays further, Pantheon Macroeconomics wrote in a note to clients. That should translate into weaker job gains, especially in sectors such as manufacturing, retail, trucking and warehousing, the research firm said. And on July 31, Trump escalated his global trade fight with a sweeping new round of import levies. Meanwhile, executives' confidence in the business outlook has been shaken in recent months by the tariffs - which are squeezing profit margins - and that's expected to spell a more pronounced decline in business investment, Pantheon said. "Sadly, employment appears set for a further summer slowdown as firms, facing renewed cost volatility from escalating trade tensions, remain focused on managing labor costs through reduced hiring, performance-based layoffs, restrained wage growth, and lower entry-level wages," Gregory Daco, chief economist of EY-Parthenon, wrote to clients. Also, after the Supreme Court recently lifted a stay on mass federal layoffs, "the decline in federal employment likely will gather more momentum over the coming months," Pantheon said. The Labor Department has tracked 84,000 federal job losses this year, but the number of buyouts and job cuts announced was much larger. Hiring across the economy hit a 12-month low in June, Labor Department figures show. Will there be a recession in 2025? The dreaded word has slipped back into the conversation after fading the past couple of months as Trump delayed many tariffs and reached deals with several countries. "To me, today's jobs report is what entering a recession looks like," Josh Bivens, chief economist of the left-leaning Economic Policy Institute, said in a statement. "Could we pull up? Sure. But if we look back and end up dating an official recession that starts 3-6 months from now, this is what it would look like today - rapid softening/deterioration in the labor market." A recession now appears "very, very likely" unless Trump lowers the tariffs by Labor Day, said Mark Zandi, chief economist of Moody's Analytics. Could a skidding economy and stock market lead Trump to reverse course? A darkening economic outlook and tumbling stock market could well prompt Trump to try to soften the import fees, Zandi said. "He's going to try to pull it back," he said. But if he doesn't act before Labor Day, "It will be too late," Zandi said, adding the duties will start to ripple too dramatically into retail prices and consumer and business sentiment for the effects to be undone. A September fed rate cut likely At a July 30 news conference following the Fed's decision to hold rates steady for a fifth straight meeting, Fed Chair Jerome Powell described the labor market as solid and balanced. He also said officials would focus primarily on the unemployment rate as they decide whether to lower rates in September. The jobless rate edged up to 4.2% in July. It's still historically low even as Trump's immigration constraints, particularly deportations, shrank the labor force - the pool of people working or looking for jobs. Still, employer demand for employees has waned. But Morgan Stanley suggested the feeble job gains of the past three months would spur the Fed to act in September despite stable unemployment. "The slower payroll pace keeps downside risks elevated and a September cut on the table," Morgan Stanley said in a research note. Fed fund futures markets are now putting the chances of a September rate decrease at 85%, up from 45% after Powell's July 30 remarks. AI is starting to crimp job gains Professional and business services shed 14,000 jobs in July and payroll gains in the sprawling white-collar sector have been stagnant for more than two years. July's showing included job losses in computer and technical roles. Staffing executives say companies are replacing many entry-level information technology workers with artificial intelligence. "It is happening," Goldman Sachs chief economist Jan Hatzius said on CNBC after the release of the July jobs report. "This is not the main thing driving the labor market... But we're seeing early signs." (This story was updated to add new information)
The Herald Scotland
an hour ago
- The Herald Scotland
Trump's stunning 39% tariff give Swiss watches hard time
The Swiss government said it viewed the White House's new tariffs with "great regret." The Swiss Federal Council said it remained in contact with U.S. authorities about the tariffs and "continues to strive for a negotiated solution." Guitars, bagels and booze: How Canadians became reluctant warriors in Trump tariff fight Only Laos and Myanmar (also known as Burma), at 40%, and Syria, at 41%, fared worse than Switzerland in terms of Trump's fresh tariffs on their goods. The Alpine country now has until Aug. 7 to work out a trade deal with the United States or chocolate, jewellery and, yes, watches, will be subject to levies more than double the 15% rate for most European Union imports into the United States. Switzerland's pharmaceuticals sector was not included in the tariffs. Switzerland shipped about $63 billion of goods to the United States in 2024, according to the office of the United States Trade Representative. That's about one-sixth of its total exports. Going the other way, goods exported from the United States to Switzerland totaled an estimated $25 billion last year, a trade deficit of $38 billion. The U.S. was Switzerland's top market in 2024 for perhaps its most famous good: timepieces. They accounted for about 17% of exports, or about $5.4 billion, according to Federation of the Swiss Watch Industry. July jobs report: employers added 73,000 jobs; unemployment rises Still, for the Swiss watch, Trump's 39% tariffs may amount to bad timing. The industry has struggled with weak demand from China, the Federation of the Swiss Watch Industry says. The trade uncertainty unleashed by Trump's tariffs over the last few months has meanwhile boosted the value of the Swiss franc currency, making the nation's watches more expensive for tourists who buy them while on vacation. Over the last decade, some brands of Swiss watch have also lost out on market share to the Apple Watch. Overall, Swiss watch exports have been falling. They were down as much as 10% in May. More: Trump's new tariffs slam trading partners, U.S. stock market: Live updates Financial markets in Switzerland were closed for a national holiday on Aug. 1, giving respite to the shares prices of producers such as Richemont and Swatch Group. But Watches of Switzerland Group, a retailer that sells Rolex and other timepieces in the United Kingdom and the United States, saw its U.K.-listed share prices fall nearly 8%. Critics of tariffs argue that the additional costs of goods are typically passed to the consumer. Analysts at Jefferies Global Research and Strategy told Bloomberg that if the 39% tariff goes ahead for Switzerland, it could require price increases in the United States for Swiss watches of more than 20%.
