August 7th Market Overview

Happy Thursday

Honestly, kinda weird day where the market basically shrugged off Trump's chip tariff drama and kept doing its thing. Apple rallied hard after promising to build more stuff in the US, while Lilly got absolutely crushed on disappointing obesity pill data. Goes to show → execution is everything right now.

P.S. sorry for being late today, will do better.

Let's dig in...

Market Summary

Trump’s Semiconductor Tariff Policy 
100% tariffs on chips but exemptions for domestic manufacturing. This is massive for the entire tech sector and directly moved Apple, Nvidia, Intel, AMD.

Eli Lilly Obesity Pill Disaster 
Major pharma stock crashes 14% on disappointing trial data, rotating money to Novo Nordisk. This affects the entire GLP-1 obesity drug market worth billions.

Earnings Execution Gap Exploding 
Sunrun delivered a monster beat (EPS from -$0.18 to +$1.07), Datadog raised guidance, Celsius had explosive growth. Meanwhile Symbotic missed cash by $222M despite revenue beating. Markets are brutally rewarding execution and punishing any operational weakness.

Reciprocal Tariffs Launch Across Global Trade 
Trump’s tariff plan officially kicked in affecting dozens of countries from EU (15%) to Switzerland (39%). Toyota expects $9.5B annual impact, other multinationals getting hit hard.

Market Overview

U.S. Stock Indexes, This Week so Far

Stock Spotlight

Eli Lilly $LLY ( ▼ 0.45% ) dropped after oral obesity pill trials showed 11% weight loss versus 13-14% expectations. 10.3% of patients discontinued treatment due to side effects at the highest dose.

Apple $AAPL ( ▼ 0.3% ) announced $100 billion additional US investment including $2.5 billion Kentucky glass plant. This positions Apple for exemption from proposed 100% chip tariffs.

Sunrun $RUN ( ▲ 11.35% ) reported revenue of $569.3M beating estimates with EPS of $1.07 versus -$0.18 expected. Management raised contracted net value creation guidance to $1.0-$1.3B from $650M-$850M.

Intel $INTC ( ▼ 3.66% ) declined after Trump called for CEO Lip-Bu Tan’s resignation over conflicts of interest. Tesla 

Big Name Updates

Tesla $TSLA ( ▲ 1.39% ) shifted AI chip supply to Samsung and Intel for Dojo 3 production, reducing TSMC dependence.

Advanced Micro Devices $AMD ( ▼ 0.77% ) recovered from Tuesday’s earnings miss on speculation that US-based operations could benefit from tariff exemptions.

Nvidia $NVDA, Broadcom $AVGO, Arista Networks $ANET, and Palantir $PLTR hit fresh all-time highs on AI infrastructure demand.

DoorDash $DASH ( ▲ 2.15% ) reached records after Q2 EPS of 65 cents beat 44 cents expected with revenue also beating consensus.

Other Notable Company News

Celsius $CELH ( ▲ 6.81% ) reported revenue of $739.3M with EPS beating estimates. US market share reached 17.3%, up 180 basis points year-over-year. Alani Nu brand contributed $301M.

Datadog $DDOG ( ▲ 1.43% ) posted revenue of $826.8M with EPS beating expectations. The company launched 125+ new features and raised full-year revenue guidance.

Caterpillar $CAT ( ▲ 1.19% ) downgraded to underweight by Morgan Stanley citing shares “priced for perfection” with earnings revision risks from tariff impacts.

Toyota $TM ( ▲ 2.15% ) expects $9.5B annual tariff impact and cut full-year net profit forecast by 44% after Q1 profits dropped 37%.

Sector Watch

Bond Market

Treasury yields climbed across the curve after weak demand at the 30-year bond auction. The 10-year yield reached 4.249%, creating headwinds for rate-sensitive sectors.

• The auction's poor reception suggests investors want higher compensation for duration risk

• Rising yields pressured utilities and real estate while supporting financial sector margins

Policy Watch

Federal Reserve Changes

• Trump nominated Stephen Miran to replace departing Fed Governor Adriana Kugler

• Christopher Waller emerged as betting favorite for next Fed chair according to Bloomberg

• Waller dissented last week, preferring rate cuts over the hold decision

Trade Policy Escalation

• Reciprocal tariffs officially launched with rates from 15% to 39% across dozens of countries

• Japan faces additional 15% levies on top of existing tariffs

• India hit with doubled tariffs to 50% as punishment for Russian oil purchases

Crypto Opening

• Trump plans executive order opening crypto access to $43 trillion retirement industry

• Coinbase $COIN ( ▲ 1.0% ) and other crypto stocks gained on the potential for mainstream adoption
  

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What to Watch

Semiconductor US Investment Announcements 
Companies will announce domestic manufacturing commitments to secure tariff exemptions. Foreign chipmakers without US strategies face 100% import duties that could eliminate profit margins on US sales.

Cash Flow Quality in Earnings
Q2 results show widening execution gaps. Symbotic's $222M cash miss despite revenue beat signals operational issues. Focus on working capital management and cash generation guidance, not just top-line beats.

Treasury Auction Demand 
30-year bond auction weakness suggests duration risk concerns. Watch upcoming 10-year and 2-year sales for persistent weak demand that could force yield concessions and pressure rate-sensitive sectors.

Fed Chair Speculation Christopher Waller 
leads betting markets to replace Jerome Powell. His dissent favoring rate cuts signals more dovish Fed leadership. Monitor his speeches for policy direction that could impact dollar strength and growth stock valuations.

Thanks for reading 🙂

- John