TheDrop Market Analysis, 08/05/25

Markets fell as several earnings reports dragged stocks down, along with new tariff announcements by President Trump and weak U.S. service sector data.

AMD Chief Executive Officer Lisa Su.

The S&P 500 index fell 0.49%, the Dow 30 index fell 0.14%, and the Nasdaq index fell 0.65%. Meanwhile, the small business-heavy Russell 2000 (comparatively to the Dow or S&P) rose by an astonishingly high margin, 0.6%. Foreign ETFs, in contrast with their American counterparts, did well, including the Japanese Nikkei 225 and the British tech-heavy FTSE 100.

The 10-yr bond rate stagnated, reflecting how the general trend in the market was a minor shift downward.

Currency traded around level, with gold and silver stagnated, and the USD narrowly strengthening. However, Bitcoin, XRP, and other cryptocurrencies fell as they remain in corrective territory, and the Federal Reserve signals no rate cut soon.

In general, stocks fell mildly after the release of the Institute for Supply Management (ISM) services index showing a mild drop to 50.1 compared to June's 50.8, below expectations by economists of 51.2. This indicates a slowing service sector. However, the prices index by ISM rose, suggesting mildly rising inflation and prices, consistent with CPI results from the past few months.

Exacerbating the situation, President Trump announced tariffs on semiconductors and pharmaceuticals without offering specifics, shaking markets further.

However, some stocks fell more than others due to a streak of bad earnings reports across the board, with the exception of Palantir, which reported very strong earnings and subsequently rose 7.8% over the course of the day despite the main consensus that tariffs would suggest a selloff.

Among the group of underperformers included Vertex Pharmaceuticals, Hims & Hers Health, and Eaton.

In market after hours, AMD plunged 3.5% as its earnings report was average and not very impressive for investors, and SNAP fell 14% as its its quarterly losses widen and its advertising revenue declined more than expectations.