July 30th Market Overview

Happy Wednesday

Started strong, finished down/ flat. The market loved that 3% GDP print this morning but Powell quickly reminded everyone the Fed’s running the show. His "made no decisions" comment on September cuts sent everything straight down from session highs despite the economy clearly handling these tariffs better than expected.

Sometimes the strongest economic data can't overcome a cautious Fed Chair. Today was one of those days and it is what it is.

Let's dig in...

Market Summary

Fed Holds Rates, Powell Stays Hawkish

The Fed kept rates steady at 4.25%-4.5% but Chair Powell’s press conference ended hopes for September cuts. His “made no decisions” comment sent Treasury yields higher and stocks lower from session peaks. Two governors dissented for immediate cuts - the first split since 1993.

GDP Beats Expectations

The economy expanded at a 3% annualized pace in Q2, beating the 2.3% forecast. Consumer spending drove the beat, showing Americans are handling higher import costs better than expected. This gives the Fed cover to stay patient on cuts.

Trump Escalates Tariff Pressure

The President confirmed Friday’s deadline won’t be extended, hitting India with 25% tariffs for Russian energy ties and Brazil with 50% levies. The administration also ended the de minimis exemption allowing small packages under $800 to enter duty-free.

Major M&A Shakes Up Cybersecurity

Palo Alto Networks announced a $25 billion acquisition of CyberArk, marking its biggest deal ever and major push into identity security. The 26% premium sent cybersecurity stocks higher.

Market Overview

U.S. Stock Indexes, This Week so Far

Stock Spotlight

Palo Alto Networks $PANW ( ▼ 0.52% ) announced its largest acquisition ever, buying CyberArk $CYBR for $25 billion in cash and stock. The deal expands Palo Alto into identity security alongside its firewall and AI platforms.

Starbucks $SBUX ( ▲ 2.14% ) beat Q3 revenue expectations at $9.5 billion as CEO Brian Niccol said the turnaround plan is ahead of schedule. Over 20 firms have expressed interest in the China business, which could unlock value through partnerships or joint ventures.

Humana $HUM ( ▲ 0.28% ) raised full-year guidance after posting adjusted earnings of $6.27 per share, beating the $5.92 estimate. The strong results show healthcare demand remains solid despite broader economic concerns.

Big Name Updates

Tesla $TSLA ( ▲ 1.39% ) signed a $4.3 billion supply agreement with LG Energy for lithium iron phosphate batteries - not for vehicles but for energy storage systems. This moves Tesla deeper into the grid-scale storage market beyond automotive.

Microsoft $MSFT ( ▼ 0.59% ) hit another chip development snag as the Maia 200 launch slips to 2026 due to design changes. The company is now focused on the next-generation Maia 300 chip co-designed with Marvell $MRVL. Creating chips competitive with Nvidia continues proving difficult.

Apple $AAPL ( ▼ 0.3% ) faces potential iPhone pricing increases as Jefferies expects a $50 hike for iPhone 17 models to offset component costs and tariffs. The new India tariffs complicate supply chain diversification efforts.

Google $GOOGL ( ▼ 0.2% ) joined the EU’s AI code of practice, supporting Brussels’ efforts to enforce strict AI regulations. This shows Big Tech is accepting tighter oversight as global AI rules expand.

Other Notable Company News

JPMorgan $JPM ( ▲ 0.36% ) and Coinbase $COIN ( ▲ 1.0% ) partnered to directly link Chase bank accounts with crypto wallets, removing middlemen like Plaid. Chase users will fund crypto with credit cards starting this fall, marking traditional banking’s deeper move into crypto.

SoFi $SOFI ( ▲ 1.94% ) announced a $1.5 billion common stock offering underwritten by Goldman Sachs for general corporate purposes and business expansion. The share dilution reflects capital needs in competitive fintech.

Sector Watch

Bond Market

Treasury yields moved higher after Powell's press conference. The 10-year climbed to 4.376% while the 2-year hit 3.947%.

The Treasury Department announced increased debt buybacks while keeping auction sizes unchanged, providing some technical support for bonds.

Policy Watch

Federal Reserve: The historic dissent from Governors Bowman and Waller signals growing internal pressure for cuts despite Powell's patient approach. Future moves depend on incoming data as the Fed balances solid employment against above-target inflation.

Trade Policy: The administration's moves target specific trade relationships rather than blanket tariffs:

• Brazil and India face immediate pressure with new 50% and 25% tariffs respectively

• The de minimis exemption ends for packages under $800, closing a key import loophole

• Copper products get 50% tariffs while raw materials stay exempt, helping domestic manufacturers

• Friday's deadline puts Canada, Mexico, and South Korea on notice to finalize deals
  

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What to Watch

Friday’s Jobs Report

With Powell emphasizing labor market data, Friday’s employment numbers could tip the scales on September rate cuts. Any signs of weakening could change the Fed’s thinking quickly.

Meta and Microsoft Earnings After Close

Two tech giants report quarterly results tonight. Investors want to see AI spending trends and cloud growth as the tech sector continues leading markets higher.

August 1st Tariff Deadline

Friday’s deadline creates immediate pressure on Canada, Mexico, and South Korea to cut deals or face higher tariffs. Last-minute negotiations could move markets.

Banking Sector Positioning

The Fed’s internal split on rates creates opportunity for regional banks. Whether rates move up or down, banks typically benefit from clearer policy direction and spread adjustments.

Cybersecurity Consolidation

The Palo Alto-CyberArk deal could spark more M&A activity as cybersecurity companies seek scale and broader platforms. Other potential targets may see increased interest.

Thanks for reading 🙂

- John