Summary:
Dow plunges 423 points, S&P 500 slips 0.4%, but Nasdaq sets new record as Nvidia surges. Traders eye tariffs, inflation, and earnings for direction.
After a volatile trading session on 16 July 2025, US equities delivered a split verdict as the blue-chip Dow Jones Industrial Average tumbled, the S&P 500 edged lower, and the tech-heavy Nasdaq soared to another record high.
Market participants navigated fresh tariff threats, inflation data, and the first wave of key US corporate earnings reports, all under the shadow of global economic uncertainty.
Dow Jones Sinks on Renewed Tariff Anxiety
The Dow Jones Industrial Average was the session's major laggard, plunging 423.81 points, or 0.91%. The decline followed President Trump's escalating rhetoric on new 30% tariffs targeting imports from major trading partners, including Mexico and the European Union, fuelling concerns over global supply chain disruptions and higher corporate costs.
Top Dow drags included:
Caterpillar: -2.7%, pressured by global trade worries and commodity volatility.
JPMorgan Chase: -1.9%, ahead of anticipated Q2 earnings results.
Procter & Gamble: -1.2%, caught in the crossfire of input cost inflation and tariff uncertainty.
S&P 500 Under Pressure, Retreats from Highs
The broader S&P 500 slipped 26.88 points, or 0.44%. Losses were spread across industrials, consumer discretionary, and financials, as investors rotated out of sectors most exposed to tariff and demand uncertainty.
The Russell 2000 small-cap index fared even worse, falling 1.5% and reflecting continued risk-off sentiment among growth and cyclical names.
Nasdaq Sets New Record as Nvidia Leads Tech Rally
Unlike its peers, the Nasdaq Composite extended its bullish run, gaining 20.21 points, or 0.10%, to close at a new all-time high of 20,431.10. The rally was powered by semiconductor giant Nvidia, which jumped 3.8% after resuming select AI chip shipments to China, and by solid performances from Microsoft (+0.9%) and Alphabet (+1.2%).
Other tech highlights:
Nvidia: Closed at $1550.80, up 3.8%, briefly touching a market valuation above $4 trillion.
Apple: Rose 0.6% as product cycle optimism trumped tariff headlines.
Meta Platforms: Advanced 1.3% amid strong digital ad spend projections.
Ahead of the opening bell on Wednesday, Dow futures pointed to a further 0.5% decline, while S&P 500 futures edged down 0.2%. Nasdaq futures held flat, mirroring continued tech sector optimism against a backdrop of broader caution.
The subdued outlook followed weaker global cues and ongoing headlines around tariff escalation.
Biggest losers: Industrials, materials, and financials led the declines, each down 1% or more.
Relative winners: Information technology (+0.6%) and communication services (+0.4%) stayed resilient as investor capital flocked to market leaders.
Energy: Oil majors saw modest losses after crude prices remained soft, with Brent crude trading at $68.90 per barrel and WTI around $66.90.
1. Tariff and Trade Policy Uncertainty
The White House doubled down on threats to impose a 30% import tax on EU and Mexican goods starting 1 August, on top of existing measures targeting Canada and Asia. While the EU extended its suspension of retaliatory moves, investors remain nervous about the risk of disruptions to global supply chains, higher input costs, and weaker international demand.
2. Inflation Remains Centre Stage
June's Consumer Price Index (CPI) showed prices rising 0.3% month-over-month and 2.7% year-on-year, holding roughly in line with expectations but reinforcing the view that inflation remains sticky. Producer price data due later this week will offer further clarity on future cost pressures.
3. Earnings Season Begins
The second-quarter earnings cycle kicked off, with giants like JPMorgan Chase, Wells Fargo, and Citigroup reporting results. Markets are watching closely for commentaries on the impact of tariffs, inflation, and consumer demand.
4. Currency and Commodity Moves
US Dollar Index: Firmed to 97.99, limiting upside for risk assets.
Gold: Rose to $3,334.12 per ounce on safe-haven demand.
Oil: Remained subdued after the previous session's losses; traders await further OPEC+ output signals and US inventory data.
5. Futures Activity
As US futures retreated before Wednesday's open, global investors maintained a risk-off stance. European indices pointed lower, Asia closed mixed, and volatility remained elevated.
The trajectory of tariffs and trade negotiations between the US, EU, and emerging markets.
Federal Reserve commentary and monetary policy potential in response to persistent inflation.
Further results from Q2 earnings season, especially within tech, financials, and industrials.
Macro data including US PPI, Chinese GDP, and Eurozone growth figures.
Dow Jones: Now testing short-term technical support near 44,000, with next levels at 43,700 and 43,200 if selling accelerates.
Nasdaq: Remains in a robust uptrend, but extended RSI readings suggest potential overbought conditions in the tech space.
Volatility Index (VIX): Climbed above 16, signifying heightened risk awareness.
US equities delivered a mixed performance, with the Dow sliding over 400 points and the S&P 500 also under pressure amid trade and inflation concerns. The Nasdaq's march to new records, driven by Nvidia and tech leadership, highlights divergent sectoral trends and ongoing rotation towards perceived growth havens.
With fresh tariffs looming, sticky inflation, and earnings season underway, investors will be closely monitoring the newsflow for the next catalyst.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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