The S&P 500 closed slightly lower Thursday after briefly hitting a new intraday high, as strong earnings from Microsoft and Meta Platforms failed to offset broader market weakness.
At 3:08 p.m. ET, the Dow Jones Industrial Average dropped 330 points, or 0.7%. The S&P 500 slipped 0.01% after reaching a record 6,427.02 earlier in the session, while the Nasdaq Composite dipped 0.03%.
Meta, Microsoft Rally on Strong Earnings
Earnings from members of the “Magnificent Seven” kicked off with a bang, as Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META) reported standout second-quarter results late Wednesday.
Meta shares surged after robust ad revenue in the April-to-June quarter exceeded expectations, boosting optimism around its ongoing investments in artificial intelligence. Microsoft also impressed, with its cloud business benefiting significantly from AI adoption, helping the tech giant deliver strong top- and bottom-line growth.
Other key tech names, including Apple (NASDAQ: AAPL) and Amazon.com (NASDAQ: AMZN), are slated to report earnings after the bell.
Broader Corporate Results Mostly Positive
Comcast (NASDAQ: CMCSA) gained after the media conglomerate posted better-than-expected quarterly results despite losing broadband customers.
Biogen (NASDAQ: BIIB) rose after delivering solid revenue and raising its full-year guidance, buoyed by strong sales of its Alzheimer’s treatment.
Norwegian Cruise Line (NYSE: NCLH) jumped following record Q2 revenue and reaffirmed full-year forecasts.
CVS Health (NYSE: CVS) also moved higher, raising its annual profit outlook after beating earnings expectations. The company cited better performance in its Aetna health insurance business due to tighter controls on medical costs.
On the downside, Qualcomm (NASDAQ: QCOM) declined as concerns over losing Apple as a major modem customer overshadowed its upbeat quarterly guidance.
Labor Market Shows Stability
New unemployment claims rose slightly last week, indicating ongoing labor market resilience. Initial jobless claims edged up by 1,000 to a seasonally adjusted 218,000 for the week ending July 26, according to the Labor Department.
These figures come ahead of the closely watched nonfarm payrolls report, due Friday.
Consumer Spending Rebounds; Inflation Creeps Up
U.S. consumer spending increased 0.3% in June after remaining flat in May. Meanwhile, the Personal Consumption Expenditures (PCE) Price Index rose 0.3% month-over-month—slightly faster than May’s 0.2%. On an annual basis, the PCE price index climbed 2.6%, ahead of expectations.
Core PCE, which excludes food and energy, increased 0.3% month-over-month and 2.8% year-over-year, suggesting inflation remains sticky despite recent moderation.
Analysts at Vital Knowledge noted that tariffs appear to be exerting upward pressure on prices, a trend likely to intensify in coming months as recent trade measures take effect.
Fed Holds Rates Steady, Faces Political Heat
The Federal Reserve held interest rates steady on Wednesday. However, two Fed governors—Michelle Bowman and Christopher Waller—voted against the decision, marking the first double dissent since 1993.
The Fed’s cautious stance drew criticism from former President Donald Trump, who urged the central bank to cut rates to spur growth. “Jerome ‘Too Late’ Powell has done it again!!! He is TOO LATE,” Trump posted on his social media platform.
ING analysts said Powell’s comments suggest the Fed is willing to look through tariff-driven inflation, potentially putting him on a collision course with the White House.
Trump Imposes New Tariffs on South Korea and India
Late Wednesday, Trump announced new tariffs on several countries. A 15% tariff will be imposed on South Korean imports, as the country prepares to invest $350 billion in the U.S. and purchase $100 billion in American energy.
Trump also signed a proclamation imposing a 50% tariff on semi-finished and copper-intensive products, citing national security concerns. Additionally, a 25% tariff—and further penalties—will be levied on India beginning August 1, in response to its purchases of Russian military equipment and energy.
Trade negotiations with other nations remain unresolved, with additional “reciprocal” tariffs set to begin August 1.
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