By Alex Financials

1. Stagflation Signals Shake Markets

Weakness in the US services sector rattled investors. The ISM Services PMI dropped to 50.1 in July, with the employment subindex sinking into contraction (46.4) and prices climbing to nearly 70–levels not seen in almost three years. This mix of stagnant growth and rising costs revived stagflation fears, pushing Treasury yields higher and causing broad market declines.

The Dow slid ~0.1%, the S&P‑500 fell 0.4%, and the Nasdaq dropped 0.7% after the disappointing report.

2. Tariff Escalations Are Mounting

President Trump announced a fresh wave of tariffs targeting semiconductors, pharmaceuticals and Indian exports. Plans include raising drug tariffs as high as 250%. His moves extended to imposing at least a 25% tariff on Indian goods, creating pressure on Indian equities (e.g. India ETF “INDA” down over 6 weeks).

Markets now largely doubt the so‑called “TACO trade” (Trump negotiating/reversing threats). Instead, the baseline for U.S. tariff rates has shifted higher, increasing policy uncertainty.

3. Mixed Earnings and Tech Leaders Rally

Despite headwinds, earnings from Palantir impressed. PLTR soared nearly 8% after exceeding billion‑dollar revenue expectations and raising its forecast amid strong AI demand.

Meanwhile, Advanced Micro Devices $AMD posted solid Q2 results and upward guidance, though it is grappling with uncertainty over Chinese export access. The chip stocks group declined over 1% today.

On the broader tech front, Apple $AAPL jumped 5.5% when the Trump administration pledged a new $100 billion US investment from the company—seen as a potential shield against tariffs.

4. Tesla Legal Headwinds and Shareholder Suits

Tesla $TSLA — and CEO Elon Musk — are facing a major securities class‑action alleging overstatements of autonomous driving capability surrounding the robotaxi rollout in Austin (June 22, 2025). This case follows a Florida jury verdict that found Tesla partially responsible for a fatal 2019 Autopilot crash, awarding $329 million in damages. Despite a 30% bounce since April, TSLA remains ~23% down year-to-date and well off its peaks.

5. Resilient Bonds and Fragmented Market Sentiment

Markets reflect a tale of two narratives: soaring megacap tech stocks (like $AAPL, $MSFT, $META) are driving indices higher, while the rest of the S&P‑500 lags behind.

Meanwhile, the bond market shows divergence—long-dated U.S. Treasury yields remain elevated amid deficit concerns, even as short-term yields fall on weak hiring data.

Summary: Watchlist & Outlook

• Macro spoilers: Stagflation concerns, tariffs and trade policy uncertainty continue to weigh on sentiment.

• Earnings bright spots: Palantir (PLTR) and AMD (AMD) show pockets of strength, while Apple (AAPL) benefits from political headlines.

• Key risks ahead: Tesla faces legal risk; global trade dynamics remain fluid; Fed policy timing is uncertain—and markets are deeply split between big tech strength and wider market vulnerability.