U.S. Stocks Slip As Tariff Jitters Offset Big Tech Earnings Surge

Introduction#

Wall Street’s afternoon optimism faded into the close on Thursday, July 31, 2025, as escalating tariff headlines and a rare split inside the Federal Reserve nudged investors back into risk-management mode. At midday the major averages were in positive territory, buoyed by blockbuster quarterly prints from Big Tech, yet by the final bell the market showed a subtle but telling reversal. Index-level damage remained contained, but beneath the surface sector divergences widened, volatility gauges jumped, and pockets of extreme single-stock moves hinted at a market struggling to reconcile strong micro fundamentals with an increasingly noisy macro tape.

Market Overview#

Closing Indices Table & Analysis#

Ticker	Close	Price Change	% Change
^SPX	6,339.38	−23.51	−0.37 %
^DJI	44,130.97	−330.32	−0.74 %
^IXIC	21,122.45	−7.23	−0.03 %
^NYA	20,497.24	−133.64	−0.65 %
^RVX	24.67	+1.33	+5.70 %
^VIX	16.75	+1.27	+8.20 %

The S&P 500 slipped 0.37 % after spending most of the session above 6,400, a level that had marked an intraday record earlier in the week. The Dow Jones Industrial Average fell 0.74 %, dragged by industrial exporters sensitive to tariff risk, while the NASDAQ Composite finished essentially flat, its 0.03 % dip masking a dramatic tug-of-war between AI beneficiaries and chipmakers facing softer guidance. Volatility responded: the CBOE VIX popped 8.2 %, a two-point jump that snapped a three-day stretch of complacency and underscored a late-day demand for portfolio hedges.

From a flow perspective, Monexa AI data show aggregate NYSE and NASDAQ volumes finishing roughly 18 % above the 50-day average, with the bulk of the excess concentrated in mega-cap growth and a handful of healthcare decliners. Options desks report a surge in put activity tied to Friday’s tariff deadline, particularly in industrial ETFs and semiconductor names, while call flows in META and MSFT remained elevated following their earnings beats.

Macro Analysis#

Late-Breaking News & Economic Reports#

Tariff anxiety re-accelerated after the European close when the White House confirmed a 35 % duty on Canadian imports and a blanket 40 % levy on all trans-shipped goods effective August 1. The announcement, branded “Liberation Day III,” broadened a tariff regime already set to hit dozens of countries at midnight. Equity markets had partially priced the risk at midday, but the definitive language and expanded scope released at 2:30 p.m. ET corresponded with the first sustained downtick in the S&P 500 futures and the sharp bid in volatility.

On the monetary front, investors continued to digest the Fed’s first “double dissent” in more than three decades, revealed Wednesday. Two governors voted against holding rates steady, a sign of internal disagreement that could complicate policy guidance later this quarter. The afternoon also delivered June Personal Consumption Expenditures data, showing headline inflation accelerating to 2.7 % year on year. Economists cited tariff pass-through as a partial driver, and the print visibly cooled the reopening-trade bid that had lifted consumer cyclicals earlier in the day.

Bond markets took the macro mix in stride: the 10-year Treasury yield closed unchanged at 4.23 %, but the 2-year/10-year inversion deepened to −44 basis points as traders nudged near-term rate-cut expectations further out. The dollar index added 0.2 %, providing an incremental headwind to commodity-linked equities.

Sector Analysis#

Sector Performance Table#

Sector	% Change (Close)
Consumer Defensive	+1.17 %
Industrials	+0.38 %
Basic Materials	+0.37 %
Utilities	+0.22 %
Energy	−0.51 %
Financial Services	−0.64 %
Communication Services	−0.95 %
Real Estate	−1.42 %
Healthcare	−1.59 %
Consumer Cyclical	−1.69 %
Technology	−2.72 %

Technology’s 2.72 % decline appears at odds with the upbeat tone surrounding AI; the gap stems from steep draw-downs in hardware suppliers—not the platform giants. Monexa’s heat-map shows heavy selling in chipmakers such as QCOM (−7.73 %) and software-tools firm DDOG (−5.98 %), pushing the equal-weighted tech index to its worst loss in a month. By contrast, META added 11.25 % and MSFT climbed 3.95 %, together contributing positive 34 index points to the S&P 500. The intra-sector divergence underscores a market rewarding tangible AI revenue today while punishing any hint of forward-looking caution.

Healthcare ranked as the second-weakest group, and in absolute terms it carried the day’s most violent stock moves. Align Technology’s ALGN 36.63 % collapse after a revenue miss erased nearly $8 billion in market value, while BAX plunged 22.42 % amid margin concerns. Large-cap insurers were not spared: UNH shed 6.19 % and CI slumped 10.23 % as analysts questioned pricing power under evolving reimbursement rules.

On the defensive end of the spectrum, Consumer Defensive and Utilities attracted late-day inflows. Staples bellwether COST advanced 1.31 %, while regulated names such as CMS and DTE posted 2 %-plus gains. The rotation aligns with a classic risk-off playbook when tariff or policy uncertainty spikes.

Company-Specific Insights#

Late-Session Movers & Headlines#

Earnings season remained the primary catalyst. After yesterday’s close, META delivered top- and bottom-line beats, citing a 22 % revenue jump to $47.5 billion and announcing a $100 billion early-stage AI capex plan through 2026. Investors pushed the stock to an all-time high, lifting its market cap within reach of $2 trillion.

Meanwhile MSFT broke through the $4-trillion threshold, joining only NVDA in that rarified air, after Azure logged 39 % year-over-year growth and management credited “broad-based AI demand” for incremental cloud seats. Sell-side commentary labeled the print “a slam-dunk,” yet the stock trimmed intraday gains as Arm’s softer guidance stirred questions about hardware bottlenecks.

Semiconductor sentiment darkened when ARM projected fiscal-Q2 EPS of $0.29-$0.37 versus the $0.35 consensus midpoint; shares slid 13.44 % and the news appeared to snowball into other chip names. Memory maker WDC bucked the trend, surging 10.16 % on better-than-expected NAND pricing, and competitor STX followed suit with a 6.51 % pop.

In Industrials, freight broker CHRW soared 18.10 % on margin recovery and signs that U.S. trucking spot rates are stabilizing. The rally mitigated pressure from HWM, whose shares dropped 6.44 % despite delivering a 36 % EPS beat; management’s full-year free-cash-flow guide of up to $1.275 billion failed to offset concerns about jet-engine program delays that could arise if tariffs disrupt cross-border supply chains.

Among Consumer Cyclicals, EBAY leaped 18.30 % after raising its buyback authorization by $3 billion, while paper producer IP cratered 12.85 % on capacity-cut rumors linked to higher import costs for pulp. Cruise operator NCLH notched a 9.23 % gain, aided by robust forward bookings and falling bunker fuel prices.

Crypto proxy COIN ended flat (+0.07 %) in choppy trade. A miss on Q2 volumes overshadowed a bullish sell-side target of $405, yet after-hours commentary centered on stable-coin settlement opportunities for cross-border B2B payments—a narrative aligned with tariff-related frictions.

Extended Analysis#

End-of-Day Sentiment & Next-Day Indicators#

The closing pattern—strength in safe-haven equities, weakness in rate-sensitive growth ex-AI, and a volatility uptick—reflects a market that remains fundamentally constructive on earnings but is unwilling to dismiss macro left-tail risks. The tariff roll-out scheduled for midnight could act as a short-term accelerant for both price and volatility; S&P 500 gamma positioning is now modestly short below 6,300, implying dealers will sell weakness should futures gap lower on Friday’s open.

Macro-watchers will turn to the July ISM Manufacturing report due at 10:00 a.m. ET, with consensus at 49.8. A print below 49 coupled with tightened financial conditions could reignite recession chatter and amplify downside momentum in cyclicals. Conversely, any upside surprise may embolden dip-buyers, particularly given that hedging costs have already repriced higher.

After-hours earnings are light, but Friday morning brings results from maintenance supplier GWW and several regional banks including PNFP and FFWM. Given the 11.48 forward P/E on PNFP and the merger scrutiny it faces, regional financials remain a potential volatility pocket, especially if management commentary flags credit deterioration tied to commercial real estate.

Commodity markets merit attention as well. WTI crude slid 0.6 % to $79.40 despite the Energy sector’s muted equity reaction. Mid-stream outperformance—exemplified by WMB up 1.20 %—suggests investors are distinguishing between tariff-sheltered domestic gas logistics and export-exposed oil majors like CVX (−1.25 %).

Technical cues reinforce the idea of a near-term inflection. The S&P 500’s daily candle carved a bearish outside-day pattern and closed back below its 5-day moving average for the first time since July 22. Breadth continues to narrow: only 39 % of index members finished higher, and the equal-weight S&P 500 underperformed the cap-weight benchmark by nearly 100 basis points. Historically, such setups have preceded modest pullbacks that reset momentum before rally leadership resumes—particularly when mega-cap earnings remain constructive, as they do today.

Conclusion#

Closing Recap & Future Outlook#

Thursday’s session underscored the growing divergence inside U.S. equity markets. Earnings from MSFT and META validated the AI-driven spending cycle, yet that very optimism collided with cautionary guidance from ARM and the cold reality of tariff escalation. The result was a modest index decline that masked heightened sector churn and individual stock volatility.

Looking ahead, traders face a binary catalyst: how aggressively markets interpret the new tariff schedule and whether Friday’s ISM data confirm a soft-patch narrative. A benign combination could invite a relief bid, particularly in oversold semis and healthcare names. Conversely, a downside macro surprise against the backdrop of tighter trade policy could extend the rotation into defensives, pushing the VIX deeper into the high-teens and forcing another look at June support near 6,210 on the S&P 500.

For now, the prudent stance is selective exposure: lean into visible earnings strength—large-cap AI platforms, high-quality utilities, and cash-rich industrials—while maintaining optionality via hedges or tactical cash for opportunities that may arise from tariff-induced dislocations. Even in a market defined by record valuations for a handful of titans, price discovery is alive and well, and Thursday’s tape offered a clear reminder that not all tech, nor all growth, is created equal.