S&P 500 Wipes Out 1% Gain in Final Stretch of July: Markets Wrap

(Bloomberg) — A rally in stocks sputtered ahead of Donald Trump’s tariff deadline, with the White House asking drugmakers to cut US prices. Bonds wavered in the run-up to jobs data. The dollar saw its best month in 2025.

The S&P 500 erased a 1% gain for the first time since April. Trump sent letters to 17 of the largest pharmaceutical companies. A gauge of the “Magnificent Seven” hit all-time highs as Microsoft Corp. briefly topped $4 trillion while Meta Platforms Inc. jumped 11%. In late hours, Apple Inc. reported sales that beat estimates. Amazon.com Inc.’s outlook underwhelmed traders.

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“While we expect equities to advance over the next 12 months, investors should be mindful of potential market swings in the coming weeks,” said Mark Haefele at UBS Global Wealth Management. “We think capital preservation or phasing-in strategies can be effective in navigating near-term volatility.”

Trump will sign an executive order imposing new tariff rates on trading partners that take effect Friday. He has struck deals with the European Union, the UK, Japan and South Korea, and unilaterally set rates on India and Brazil. The US extended Mexico’s current tariff rates for 90 days to allow more time for talks.

In addition, Trump is bringing in bank leaders to meet with him one by one at the White House. He’s asking chief executive officers for their pitches on monetizing mortgage giants Fannie Mae and Freddie Mac, including a major public offering of stock, according to people familiar with the matter.

The yield on 10-year Treasuries was little changed at 4.36%. The dollar rose for a sixth straight day. The yen slid as comments from Bank of Japan Governor Kazuo Ueda were seen as less hawkish than expected.

In the run-up to jobs data, the Fed’s preferred measure of underlying inflation accelerated in June to one of the fastest paces this year while consumer spending barely rose, underscoring the dueling forces dividing policymakers over the path of rates.

The core personal consumption expenditures price index rose 0.3% from May. It advanced 2.8% on an annual basis, a pickup from June 2024 that underscores limited progress on taming inflation in the past year. The data also showed inflation-adjusted consumer spending edged up last month.

“Inflation remains sticky and justifies the Fed’s decision to keep rates unchanged at Wednesday’s meeting,” said Clark Bellin at Bellwether Wealth. “The stock market doesn’t need rate cuts in order to move higher and has already posted strong gains so far this year without any rate cuts.”

As with so many things in the economy, the situation is very fluid and we have yet to see the full impact of tariffs flowing through to inflation, according to Chris Zaccarelli at Northlight Asset Management.

“We are priced for perfection as they say, and that is a risk, but one that will likely be ignored by the market as long as corporate profits are still growing,” he said.

Separate data Thursday showed initial applications for unemployment insurance were little changed last week. Another report showed labor cost growth rose 3.6% from a year ago, matching the lowest since 2021, reassuring Fed officials that the job market isn’t a source of inflationary pressure.

The market’s attention will soon turn to Friday’s jobs report for July, which is forecast to show companies are becoming more deliberate in their hiring. Employment likely moderated after a June increase, while the unemployment rate is seen ticking up to 4.2%.

President Trump resumed his criticism of Fed Chair Jerome Powell after the central bank declined to cut interest rates, ending a short-lived détente.

Trump’s comments came after Fed officials left interest rates unchanged on Wednesday but downgraded their view of the US economy, signaling that policymakers could be edging closer to lowering borrowing costs.

Corporate Highlights:

Alphabet Inc.’s Google lost its appeal of a judge’s order requiring an overhaul of the technology giant’s app store policies in an antitrust case filed by Fortnite-maker Epic Games Inc. The Swedish telecom equipment maker Ericsson AB is in talks to invest hundreds of millions of dollars in Intel Corp.’s networking infrastructure business, according to people familiar with the matter. Boeing Co. has offered a new contract to the union representing some 3,200 factory workers in the St. Louis area, including the same 20% raise that members resoundingly rejected in an earlier deal while voting to strike. Figma Inc. shares jumped 250% in their public debut after the design software maker and some of its shareholders raised $1.2 billion in an IPO, with the trading valuing the company far above the $20 billion mark it would have reached in a now-scrapped merger with Adobe Inc. Days before a new ownership team takes control of the company, Paramount Global reported second-quarter earnings that beat analysts’ estimates, crediting lower costs and growth in streaming profit. Coinbase Global Inc., the largest US crypto exchange, reported lower-than-forecast second-quarter revenue amid a drop in digital-asset market volatility. Illumina Inc. raised its financial guidance for the year, driven by faster growth from labs and medical centers that use its DNA sequencing machines to diagnose diseases. A judge in California ordered Phillips 66 to pay an additional $195 million in punitive damages on top of an earlier $604.9 million trade secret theft verdict for what he called “reprehensible” conduct that nearly destroyed a much smaller fuel company. Mastercard Inc. reported earnings that topped analysts’ estimates and gave a more optimistic forecast for this year’s revenue on continued momentum in consumer spending. Moderna Inc. is cutting about 10% of its workforce, part of an effort by the struggling biotech company to reduce spending as sales of its Covid vaccine decline. Bristol Myers Squibb Co. slid as investors questioned whether the drugmaker has done enough to spur future sales growth in the face of an aging drug portfolio, even after lifting its full-year guidance and beating Wall Street’s quarterly sales and profit estimates. A trial of Eli Lilly & Co.’s blockbuster diabetes drug Mounjaro fell short of expectations that it would do a better job of preventing heart attacks and strokes than its older medicine Trulicity. Biogen Inc. raised its full-year financial guidance as growing sales of its Alzheimer’s drug helped the biotech company beat Wall Street’s expectations. CVS Health Corp. raised its 2025 profit guidance on strong results in its health insurance and pharmacy businesses, an encouraging sign after a spate of missteps by rival insurers. Some of the main moves in markets:

Stocks

The S&P 500 fell 0.4% as of 4 p.m. New York time The Nasdaq 100 fell 0.5% The Dow Jones Industrial Average fell 0.7% The MSCI World Index fell 0.5% Bloomberg Magnificent 7 Total Return Index rose 1.5% The Russell 2000 Index fell 0.9% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro was little changed at $1.1413 The British pound fell 0.2% to $1.3206 The Japanese yen fell 0.9% to 150.80 per dollar The Mexican peso was little changed at 18.8631 Cryptocurrencies

Bitcoin fell 0.3% to $116,780 Ether fell 0.9% to $3,737.04 Bonds

The yield on 10-year Treasuries was little changed at 4.36% Germany’s 10-year yield declined one basis point to 2.69% Britain’s 10-year yield declined three basis points to 4.57% The yield on 2-year Treasuries was little changed at 3.94% The yield on 30-year Treasuries was little changed at 4.89% Commodities

West Texas Intermediate crude fell 1.2% to $69.18 a barrel Spot gold rose 0.5% to $3,291.21 an ounce –With assistance from Lu Wang.

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