Stock Market Rebound Powers Gains in Nasdaq, S&P 500 and Dow

Stock Market rebound

Equity benchmarks staged a broad rally on Monday, erasing much of last Friday’s steep sell-off. The Dow Jones Industrial Average surged 471 points (1.1%) to 44 066, the S&P 500 climbed 1.16% to 6 310, and the Nasdaq Composite posted a 1.48% gain to 20 955. Several catalysts fueled the turnaround:

• Labor data weakness: July’s nonfarm payrolls rose by only 73 000 vs. 104 000 expected, with May/June downward revisions totaling –258 000 jobs. That spurred expectations for a Fed rate cut as soon as September.

• Tariff uncertainty: President Trump’s new reciprocal levies—ranging from 10% to 41% on dozens of trading partners—initially rattled markets, but investors appear to have baked in the political risk.

• Technical relief: All three major indexes plunged >1.5% last Friday, triggering oversold readings (RSI <30 on the S&P 500) that attracted dip buyers.

• Seasonal context: August is historically the weakest month for U.S. stocks (Dow –1.0% avg., S&P –0.7%), so any early-month overshoot tends to reverse as bargain hunters step in.

Semiconductor divergence

The semiconductor sector bifurcated sharply:

• ON Semiconductor (ON): Shares collapsed over 10% to $50.83 after management guided Q3 adjusted EPS of $0.54–0.64 (vs. $0.58 consensus), citing component shortages and customer destocking. Q2 revenue of $1.47 billion beat by $20 million, but the weak outlook and inventory overhang justify a Sell rating.

• Advanced Micro Devices (AMD): Q2 results arrive Tuesday after the close. Consensus forecasts call for $1.05 EPS on $5.8 billion revenue. While data-center demand remains robust, macro headwinds warrant a cautious Hold until clarity on margins and cloud capex emerges.

• Sector outlook: The SOX index rallied 1.3% Monday, but remains 5% off its June peak. Inventory correction in auto and industrial end markets could extend until Q4.

E-commerce upside

Consumer spending shifts continue to favor online platforms, with divergent results:

• Wayfair (W): Leapt 10% premarket to $71.77 on Q2 results showing $0.87 adjusted EPS (vs. $0.33 cons.) and $3.27 billion revenue (+6% YoY vs. $3.13 billion cons.). U.S. net sales rose 5.3% to $2.90 billion, international up 3.1% to $399 million. Adjusted EBITDA margin expanded to 6%, highest since 2021. CEO Niraj Shah’s commentary on “significant operational leverage” underscores sustainable profitability—Buy. Price target raised to $85.

• Palantir (PLTR): Added 2.9% to $10.20 after clinching a $10 billion Army consolidation contract. Q2 bookings beat but software license growth decelerated to 12% YoY. Trading at ~20× forward revenues leaves little margin—Hold with a $12 price cap.

• Opendoor (OPEN): Jumped 16% in premarket speculation ahead of Q2 results. While the iBuyer model faces margin compression (Q1 gross loss per home widened to $8 000), opportunistic entry on housing rebound makes it a Speculative Buy with strict stop at $13.

Consumer staples outperform

Defensive names outshone cyclicals as tariff-driven cost pressures disrupted broad sentiment:

• Tyson Foods (TSN): Rose 4.3% to $54.75 after Q3 adjusted EPS of $0.91 topped the $0.80 consensus and revenue of $13.88 billion beat by $340 million. Chicken segment volumes +2.4% YoY, sales +3.5%; beef volumes –3.1% with a price-driven 6.9% sales increase. Upgraded full-year guidance: revenue +2–3% (prev. +1–2%); chicken op income of $1.3–1.4 billion (prev. $1.0–1.3 billion). Margins resilient—Buy, target $62.

• Colgate-Palmolive (CL): Climbed 1.8% on Q2 EPS of $0.92 vs. $0.90 cons. and $5.11 billion revenue vs. $5.03 billion. Tariff headwinds estimate of $75 million vs. $200 million prior suggests improving supply-chain resilience. Given steady demand for essentials, maintain Hold at $90 target.

Tech investment

Big Tech remains the backbone of the market, but faces margin trade-offs between AI outlays and top-line growth:

• Apple (AAPL): Posted Q3 revenue $94.0 billion (+10% YoY) and EPS $1.57 vs. $1.43 cons. Services revenue hit a record $27.4 billion (+18% YoY). AI R&D ramp-up (“significantly growing investments”), tariff-related cost of ~$1.1 billion, and macro uncertainty warrant a neutral stance—Hold at $210.

• Amazon (AMZN): Delivered $1.68 EPS vs. $1.33 cons. and $167.7 billion rev (+13% YoY). AWS sales $30.8 billion (+17%) beat by $0.1 billion, but third-quarter guidance of $15.5–20 billion operating income disappointed. Heavy capex of ~$118 billion for 2025 underpins long-term infrastructure, yet tight near-term margins—Hold at $215.

• Microsoft (MSFT) & Alphabet (GOOG): Together plan to spend ~$253 billion on AI in 2025 (MSFT $88.7 billion; GOOG $85 billion, up from $75 billion). Azure & Google Cloud growth of 28% YoY and expanding AI services support an Outperform view on both; rate as Buy with targets of $415 (MSFT) and $180 (GOOG).

Energy dynamics

OPEC+ supply moves and U.S. demand trends are driving divergent energy stock performances:

• Chevron (CVX): Advanced 0.3% to $151.09 post Q2 results showing record production, beat consensus, and strong cash flow. The $55 billion Hess acquisition (Guyana assets) solidifies growth runway. Yield of 4.0%, free cash flow yield ~6%. Buy, target $170.

• Exxon Mobil (XOM): Held flat at $109.05 with Q2 EPS $1.64 vs. $1.56 cons., highest quarterly production in 25+ years. However, Brent crude slid 11% Q2; near-term headwinds keep it at Hold, $115 target.

• First Solar (FSLR): Up 2% on raised 2025 sales outlook of $4.9–5.7 billion vs. $5.07 billion consensus. Tariff-induced pricing improvements bolster margins—Buy, set at $135.

• OPEC+ Output & Prices: The group approved a 547 000 bpd increase for September. Brent trades at $69.14 (–0.76%), WTI at $66.77 (–0.83%). The U.S. 10-year yield rose 3 bp to 4.2493%, tightening energy financing costs.

Precious metals

Gold and FX flows reflect macro uncertainty and Fed dynamics:

• Gold (COMEX GC=F) trades at $3 373 (+0.34%). Citi foresees $3 500/oz in three months, driven by tariff-fuelled inflation expectations and Fed-cut speculations—Bullish.

• Dollar Index (DXY) sits at 95.81 (+0.06%). While tariffs create near-term upward pressure, Fed-cut probabilities cap further USD strength—Neutral.

Global divergence

Regional markets responded unevenly:

• Asia-Pacific:

  • Hang Seng +0.92% to 24 732.55

  • CSI 300 +0.39% to 4 070.70

  • Nikkei 225 –1.25% to 40 290.70

  • Kospi +0.91% to 3 147.75

• Europe: EU Commission delayed U.S. counter-tariffs by six months. Swiss SMI fell 0.88% amid surprise 39% levies. DAX and CAC slipped amid industrial export worries.

Economic drivers

Key data and Fed outlook:

• ISM Manufacturing dipped to 48.0 in July (contraction territory).

• Factory Orders in June flat MoM.

• July Jobs: +73 000 net hires (vs. +104 000 exp.), unemployment 4.2% (vs. 4.1% prior), average hourly earnings +0.3% MoM, +3.9% YoY.

• Fed Cut Odds: CME FedWatch signals 83% probability of a September rate cut following the weak labor print. Two Fed governors dissented at last meeting, citing labor market fragility.

Insider moves

Monitoring C-suite positioning reveals strategic confidence:

• Tesla (TSLA) board approved a potential 96 million-share ($24 billion) award for Elon Musk, diluting existing equity. Must watch SEC filings for vesting schedules.

• Other notable trades: Limited material insider activity so far in August; absence suggests no widespread top-tier profit-taking.

Tactical ratings

Overall stance: With tariffs and macro headwinds creating heightened volatility, overweight quality growth and defensive names exhibiting secular tailwinds—namely AI/cloud (MSFT, GOOG), reopening energy (CVX), and resilient staples (TSN)—while selectively shorting or avoiding stocks with exposed cyclicality (ON, JOBY). Focus on risk-adjusted returns and maintain liquidity buffers for tactical rebalancing as data flows and trade negotiations evolve.