August 5th Market Overview

Happy Tuesday

Markets pulled back today as Trump promised 250% pharma tariffs and the services sector nearly fell into contraction. Palantir hit the big $1 billion revenue mark, Switzerland’s president rushed to Washington for emergency trade talks, and Trump narrowed his Fed chair search to the two Kevin’s.

Let's dig in...

Market Summary

Trump Unveils 250% Pharma Tariff Threat
The president announced pharmaceutical tariffs could reach 250% while semiconductor levies are coming within the week. India faces tariff increases within 24 hours over Russian oil purchases, prompting Switzerland’s president to fly to Washington seeking relief from proposed 39% trade barriers.

Services Sector Nearly Contracts
The ISM Services index hit 50.1, missing the 51.2 estimate and marking the weakest reading since May 2020. The prices component jumped to 69.9, the highest since October 2022, while employment dropped to 46.4 in contraction territory.

Palantir Hits $1 Billion Revenue Milestone
The defense technology company crossed the billion-dollar quarterly threshold for the first time with 48% year-over-year growth. U.S. commercial revenue surged 93% while the Rule of 40 score reached 94%.

Fed Chair Search Narrows to Four Candidates
Trump revealed Kevin Hassett and Kevin Warsh are under consideration while ruling out Treasury Secretary Scott Bessent, who prefers his current role.

Market Overview

U.S. Stock Indexes, This Week so Far

Stock Spotlight

Palantir $PLTR ( ▼ 1.77% ) crossed the $1 billion revenue milestone for the first time. The defense technology company posted growth across all segments, with U.S. commercial revenue up 93% year-over-year. CEO Alex Karp highlighted a Rule of 40 score of 94%. The company raised full-year guidance and expects next quarter to represent the highest sequential growth in company history.

Pfizer $PFE ( ▼ 0.28% ) beat earnings and revenue expectations while raising full-year guidance. The pharmaceutical giant benefited from cost-cutting initiatives.

Caterpillar $CAT ( ▲ 1.19% ) missed earnings expectations and projects annual tariff expenses of $1.3-1.5 billion. The machinery maker’s reliance on imported parts and materials leaves it exposed despite extensive U.S. manufacturing operations.

Hims & Hers $HIMS ( ▼ 2.0% ) disappointed with revenue missing estimates and weak forward guidance. The telehealth company continues managing fallout from ending its relationship with Novo Nordisk $NVO over copycat weight-loss drugs.

Big Name Updates

DuPont $DD ( ▲ 0.15% ) beat expectations and raised guidance. The chemicals company now expects 2025 tariff costs of $20 million versus the previously feared $60 million.

Eaton $ETN ( ▲ 0.7% ) fell despite beating quarterly numbers. The power management company’s forward guidance disappointed, though it continues benefiting from AI data center demand.

Axon $AXON ( ▲ 4.96% ) posted strong results with revenue beating estimates and annual recurring revenue growing. The law enforcement technology company is expanding AI offerings for police departments, with productivity tools like Draft One saving officers significant time on paperwork.

Other Notable Company News

DigitalOcean $DOCN ( ▲ 2.13% ) beat quarterly expectations and raised full-year guidance. The cloud infrastructure company is benefiting from increased developer demand.

Coinbase $COIN ( ▲ 1.0% ) announced plans to raise $2 billion through convertible senior notes in a private placement.

BWX Technologies $BWXT ( ▼ 1.33% ) hit record highs as the U.S. announced plans to build a nuclear reactor on the moon by 2030. The nuclear components manufacturer is positioned for potential space contracts.

Sector Watch

Bond Market

Treasury yields edged higher with the 10-year note holding around 4.205% following a soft three-year note auction. Wednesday brings a 10-year note auction that could provide direction for longer-term rates.

Policy Watch

The White House is prepping an executive order targeting "debanking," threatening fines against financial institutions that drop customers for political reasons. Trump complained that JPMorgan Chase $JPM ( ▲ 0.36% ) and Bank of America $BAC ( ▲ 2.09% ) rejected him as a customer, signaling increased regulatory scrutiny of banking practices.

• Trade negotiations continue with mixed results. The European Union is pushing for exemptions on wine and spirits exports while Switzerland's emergency diplomatic mission aims to prevent devastating tariffs.

• On China, Trump indicated progress: "We're getting very close to a deal. We're getting along with China very well." The current trade truce expires next Tuesday.

• June trade data showed the deficit shrinking to $60.2 billion, the lowest level since September 2023, as imports fell while exports remained roughly flat.
  

Today’s Sponsor

Former Zillow exec targets $1.3T

The top companies target big markets. Like Nvidia growing ~200% in 2024 on AI’s $214B tailwind. That’s why the same VCs behind Uber and Venmo also backed Pacaso. Created by a former Zillow exec, Pacaso’s co-ownership tech transforms a $1.3 trillion market. With $110M+ in gross profit to date, Pacaso just reserved the Nasdaq ticker PCSO.

Invest for $2.90/Share

_{Paid advertisement for Pacaso’s Regulation A offering. Read the offering circular at invest.pacaso.com. Reserving a ticker symbol is not a guarantee that the company will go public. Listing on the NASDAQ is subject to approvals.}

What to Watch

Disney Earnings Wednesday
The entertainment giant reports after market close. Focus will be on streaming subscriber growth and theme park recovery.

Thursday’s Tariff Deadline
Multiple countries face new trade barriers this week, with Switzerland leading diplomatic efforts to secure exemptions.

Fed Appointments This Week
Trump promised to name Adriana Kugler’s replacement along with a new Bureau of Labor Statistics chief.

China Trade Extension
The current truce expires next Tuesday. Trump’s optimistic comments suggest progress but any extension announcement could move markets.

ISM Manufacturing Friday
The manufacturing PMI will show whether services sector weakness is spreading to goods production. A reading below 50 would confirm broader economic slowdown and support Fed rate cuts.

Thanks for reading 🙂

- John