August 1, 2025

The ominous month of August got off to rough start as the different indexes tumbled at the open after a weak non-farm payrolls number and a big revision lower for the prior month. July payrolls showed an increase of only 73k vs. 106k estimated, but June jobs were reduced to only 14k from 147k showing the labor market was substantially weaker than thought. The Unemployment Rate increased to 4.2%. Other economic data saw Construction Spending down -0.4% vs unchanged estimated, while the ISM Manufacturing Index eased to 48 vs. consensus of 49.5, a fifth consecutive month of contraction. Earnings were solid with Apple (AAPL) and Amazon (AMZN) beating but trading lower. Amazon dropped after issuing a gloomy forecast. Moderna (MRNA) and Coinbase (COIN) were hit hard after disappointing. Stocks dropped at the opening bell with the DJIA down nearly 800-points at the open and briefly trading below its 50-day MA. It wasn't all bad as Healthcare (XLV) stocks rebounded from yesterday's drop, while defensive sectors Utilities (XLU) and Consumer Staples (XLP) outperformed for a third consecutive session. Consumer Discretionary (XLY), Technology (XLK), Energy (XLE) and Financial (XLF) were the weakest market groups. The major averages were able to close off their lows, but the Dow was down for a fifth straight session losing 542.40 points (-1.23%) finishing at 43588.58. The S&P 500 lost 101.38 points (-1.60%) and settled at 6238.01, while the NASDAQ sank 472.32 points (-12.24%) closing at 20650.13.

Breadth negative with declining issues beat advancing issues 2.3:1 on the NYSE and 2.7:1 on the NASDAQ. Declining volume was 69% on the NYSE and was 64% of the NASDAQ. The VIX jumped 3.66 (+21.89%) and closed at 20.38. Crude oil prices fell 2.07 (-2.99%) and the September contract closed at $67.19 a barrel. Gold prices jumped $63.90 (+1.91%) and finished at $3412.50 an ounce. Bitcoin (BTC) closed the session at $113,200.

The major averages cut some of their losses in the afternoon as yields ticked lower and a September rate cut was back on the table, but geopolitical concerns between the US and Russia sent investors back to the sidelines late. On a technical basis, the DJIA was able to hold support at its 50-day MA and the Russell 2000 was sitting on support at its 50 and 200-day MA. The DJ Transportation Index broke below its 50 and 200-day MA which is a negative for the broader market. Today's spike in the VIX shows the selloff caught the eye of traders that may have become too complacent over a market setting new highs. Investors will be keeping an eye on key MA support levels to start the week and we're likely to see dip buyers move in early. However, the negative divergences that have been showing up in the charts for the last few weeks indicate we have more downside before this pullback runs its course.

Earnings releases to watch for on Monday include: Boise Cascade (BCC), Waters Corp (WAT), Tyson Foods (TSN), ON Semiconductor (ON), Wayfair (W), Air Lease (AL), Hims & Hers Health (HIMS), Trex Co (TREX), Palantir (PLTR) and Vertex Pharmaceuticals (VRTX).

Monday's Market Moving Economic Calendar: Motor Vehicle Sales and Factory Orders.

By David L. Blake, CMT