From the T&Q Desk
Good morning Traders and Quants! August came in swinging with Friday’s session bringing a sharp reversal as fresh tariffs and a softer jobs print knocked risk appetite. The S&P 500 slid 1.7% and the Nasdaq lost nearly 2%, ending a stretch of steady summer gains. The pullback wasn’t panic, but it did remind traders that record highs don’t erase macro headwinds.
This week opens with two questions in focus: Can markets absorb higher tariffs without losing momentum? And will softening labor data lock in a September Fed cut?
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US tech stocks have reached a 100-year high relative to the S&P 500 in 2025, with the Mag 7 now accounting for 35% of total US market capitalization. - BofA
— #Ayesha Tariq, CFA (#@AyeshaTariq)
9:19 AM • Aug 4, 2025
Word Around the Street
The positive response to MSFT and META last week was quickly overshadowed by Amazon, Apple, and payrolls on Friday. Amazon’s weaker profit outlook sent shares tumbling 8%, while Apple slipped despite solid results. The disappointment coincided with Trump’s tariff blitz, pushing average rates on global imports to ~18% from just 2.5% last year.
Jobs data added fuel to the shift in tone and resulted in a change at the top of the BLS. July’s 73K payroll gain fell well short of expectations, with 258K in downward revisions to May and June. The unemployment rate ticked up to 4.2%, still historically low but a clear sign of cooling momentum. Fed funds futures quickly moved to price a 94% chance of a September rate cut, with two cuts fully priced by year-end.
Defensives (health care, staples, utilities) led on Friday while cyclicals and tech underperformed. Treasuries rallied sharply, with the 10-year yield down to 4.21%. The dollar softened on rising rate-cut expectations, while gold rallied 1.5% as a safety bid returned.
Trade Winds and Global Shifts
Trump’s tariff deadline came with a wave of new rates: 39% on Switzerland, 35% on Canada, 30% on South Africa, and 20% on Taiwan. Countries with deals in place stay at 15%, while the global minimum remains 10%. Higher rates target non-deal countries with significant trade deficits.
The new schedule buys time, tariffs don’t hit until next Friday, but the tone is unmistakable. Negotiations with Canada, India, and Switzerland continue this week, with exemptions possible in sectors like autos, steel, and energy. Modi’s India remains in a bind as it tries to balance U.S. trade pressure with Russian crude imports.
D.C. in the Driver’s Seat
Friday’s jobs report has re-centered the Fed. Powell’s July statement made the unemployment rate the key labor metric, and at 4.2%, the pressure to cut is growing. Fed Governor Kugler’s resignation last week adds another wrinkle, just as Trump renews attacks on Powell, even floating a Fed board takeover if rate cuts don’t materialize.
Meanwhile, the administration is rolling out its new tax law alongside tariffs. Large corporates are already reporting cash windfalls, and how those funds flow (buybacks, capex, or dividends), will shape market tone into Q4.
Economic Data - Monday, August 4th
Factory Orders
Earnings Reports - Monday, August 4th
Today: PLTR, VRTX, AAXN, SPG, OKE, FANG, IDXX
Overnight Markets
Asia: Nikkei -1.25%, Shanghai +0.66%
Europe: FTSE +0.31%, DAX +1.27%
U.S. Pre-Market:
Final Thoughts
Friday was a reminder: Tariffs and softer jobs data can still move this market. But rate-cut expectations are now firmly in play. If September brings easing and tariffs de-escalate, this dip may look like another summer buying opportunity.