Stock Market Rally Stalls as Nasdaq Leads, Dow Lags on Tesla, IBM

Nasdaq, S&P 500, Dow Diverge as Tech Roars and Industrials Falter

Nasdaq (^IXIC) Eyes New Highs as Alphabet (GOOGL) Powers AI Narrative

Alphabet (GOOGL) surged 1.68% to $194.46 after crushing Q2 expectations and reaffirming its AI dominance. Revenue hit a staggering $96.43 billion, with EPS at $2.31, outpacing estimates of $2.18. Notably, its capital expenditures ballooned to $85 billion, up from prior guidance of $75 billion, as it pours resources into data centers and server architecture. Despite market fears over AI cannibalizing Search, Alphabet’s core ad business remained resilient, driven by 10% growth in AI-driven search queries. With Gemini reaching 450 million MAUs and AI Overviews gaining 2 billion monthly interactions, the company’s valuation gap may narrow quickly from its 19.3x forward P/E. Wall Street now eyes a potential re-rating, with analysts like RBC pushing targets to $220.

S&P 500 (^GSPC) Maintains Momentum on AI, Trade Hopes

The S&P 500 rose 0.29% to 6,377.43, boosted by Big Tech outperformance and signs of progress in US-EU tariff negotiations. With 12% of the index reporting, earnings are tracking a 5.6% YoY gain in Q2 EPS, slightly ahead of the 5% forecast. AI optimism remains a central tailwind, particularly with Nvidia (NVDA) up 1.29% and Meta Platforms (META) continuing to benefit from sector-wide infrastructure buildouts.

Trade tensions eased as the US and EU approached a compromise: replacing a 30% tariff with a 15% reciprocal rate on goods, echoing the recent Japan pact. While not finalized, the potential agreement reduced downside risks, supporting equity valuations.

Dow Jones (^DJI) Slides as IBM (IBM) and UnitedHealth (UNH) Weigh Heavily

The Dow dropped 0.33% to 44,863.60, dragged by an 8.35% collapse in IBM after its software revenue missed ($7.39B vs. $7.41B est.). Despite a beat on EPS ($2.80 vs. $2.73 est.), the lack of forward guidance and investor fatigue after a 30% YTD rally triggered selling.

UnitedHealth (UNH) plunged 3.5% to $282.28 following confirmation of a DOJ investigation into Medicare billing. Already down 43% YTD, the probe adds to uncertainty over compliance practices. With civil and criminal inquiries confirmed, sentiment is fragile despite the company’s public reassurances of strong internal controls.

Tesla (TSLA) Tanks 9% as Trump Tariffs, Earnings Miss Shake Confidence

Tesla shares collapsed 9% to $302.64 after Q2 EPS missed and CEO Elon Musk warned of multiple "rough quarters" ahead. The $7,500 EV tax credit is expiring post-Q3, with CFO Vaibhav Taneja flagging delivery constraints and rising tariff costs, now pegged at $300 million for the quarter.

European sales fell 23% YoY in June—the sixth consecutive monthly decline. Tesla's plans to ramp production of a low-cost model after the incentive phase-out signals strategic pivot, but near-term visibility remains cloudy. Trump’s OBBB legislation, which slashes clean-energy subsidies, has triggered a reassessment of Tesla’s forward earnings power.

Intel (INTC) Slips 2.23% as Q2 Revenue Slides to $11.8B

Intel dropped to $22.97 after pre-announcing Q2 results that undershot YoY, with EPS slipping to $0.01 and revenue dropping from $12.8B to $11.8B. Despite a 16% YTD gain, Intel’s market cap remains dwarfed at $101B compared to AMD's $257B and Nvidia's $4T. The chipmaker’s turnaround under new CEO Lip-Bu Tan remains a slow grind amid fierce AI competition.

Meme Mania Reignites: Opendoor (OPEN), American Eagle (AEO) Surge

Speculation gripped retail as Opendoor soared 8% and AEO exploded over 25% after a Sydney Sweeney ad campaign stoked retail trader frenzy. The meme trade rotation continues to lift names with thin fundamentals but viral momentum, replacing older favorites like GameStop and AMC.

Blackstone (BX) Jumps 4.76% as Dealmaking Pipeline Reignites

Blackstone rallied to $180.15 after COO Jon Gray declared the M&A freeze "behind us." With IPO pipelines swelling and merger discussions like the Union Pacific (UNP) and Norfolk Southern (NSC) deal gaining traction, capital markets optimism is returning. Blackstone sees the deregulatory wave and lower short-term rates as catalysts to unlock deal activity.

Airlines Tumble: American Airlines (AAL) -8%, Southwest (LUV) -11.7%

AAL guided to a potential full-year EPS swing between a $0.20 loss to a $0.80 profit, citing domestic travel headwinds. Southwest Airlines missed Q2 profit estimates as pricing pressure from discounting and soft summer demand persists. With tariff uncertainty looming, airline stocks face asymmetric risk skewed to the downside.

Chip Sector Stumbles: STMicro (STM) -16%, Dow (DOW) -15.4%

STM plunged after restructuring charges and a weak Q3 outlook, worsened by Tesla-related auto chip weakness. Dow Inc. fell over 15% following a wider-than-expected Q2 loss ($0.42 per share vs. est. loss of $0.17). Broad exposure to industrial materials and global tariffs makes Dow especially vulnerable to trade shocks.

Fed Lawsuit and Trump-Powell Clash Cloud Monetary Outlook

A legal challenge from Azoria Capital against the Fed demands public access to FOMC rate meetings, arguing transparency violations. Simultaneously, President Trump’s vocal critique of Powell and his symbolic visit to the Fed—amid a $2.5B renovation backlash—underscore deepening friction that could erode central bank independence.

Buy, Sell, Hold Verdicts Based on Data

• Buy: GOOGL, BX, NVDA

• Hold: INTC, AEO, UNP

• Sell: TSLA, IBM, UNH, STM, DOW, AAL, LUV

AI continues to bifurcate the market, boosting megacaps while cyclical names suffer under tariff policy and rate uncertainty. The Nasdaq remains the most structurally bullish index, while the Dow reflects mounting fragility in traditional sectors.

That's TradingNEWS