Overview
Today's U.S. stock market saw a decline as inflationary pressures and policy moves by President Trump impacted investor sentiment. The U.S. stock market closed lower, affected by President Trump's pressure on pharmaceutical companies and rising inflation data. Initial gains in the S&P 500 index were reversed later in the day, ending down by 0.4%. The market was primarily influenced by Trump's policy actions. He sent letters to 17 major pharmaceutical companies, including Eli Lilly, Novo Nordisk, and Pfizer, demanding a considerable reduction in U.S. drug prices to match levels paid by overseas countries. Pharmaceutical stocks declined following this news. Additionally, caution increased ahead of tariffs set to take effect from Friday. Trump concluded agreements with South Korea and Europe but set unilateral tariffs on India and Brazil, and extended existing tariffs with Mexico for further negotiations. Inflation data also placed a burden on the market. The core PCE price index, watched by the Federal Reserve, rose by 0.3% month-over-month and 2.8% year-over-year, signaling no significant progress in curbing inflation over the past year. While inflation accelerated, real consumer spending saw only a slight increase, causing ongoing debates among Fed officials about the interest rate path. The labor market, however, showed little stress. Last week's initial jobless claims remained stable, and labor cost growth stood at 3.6%, the lowest since 2021, indicating that the labor market is not a primary driver of inflation. The market's focus now shifts to the July employment report, expected to show moderated employment growth and a slight increase in the unemployment rate to 4.2%. The after-market earnings reports from big tech companies were mixed; Apple exceeded revenue expectations, while Amazon's outlook fell short, pushing its stock lower in after-hours trading.
| Nasdaq Composite | S&P 500 |
| Dow Jones Industrial Average | 1 South Korean won equals |
Major News Story
President Trump's pressure on pharmaceutical companies and changes in tariff policies heightened market caution, while inflation concerns grew. Meanwhile, the labor market remained stable, with low labor cost growth.
Tomorrow's Economic Indicators
| Time (ET) | Indicator |
|---|---|
| 08:30 AM | U.S. July Non-Farm Payrolls |
| 08:30 AM | U.S. July Unemployment Rate |
| 10:45 AM | U.S. July S&P Global Manufacturing PMI |
| 11:00 AM | U.S. July ISM Manufacturing PMI |
| 11:00 AM | U.S. June Construction Spending |
| 11:00 AM | U.S. July University of Michigan Consumer Sentiment Index |
| 11:00 AM | U.S. July University of Michigan Inflation Expectations |
| 02:00 PM | U.S. Baker Hughes Total Rig Count |
General Opinion
Rising inflation and policy changes by President Trump are weighing heavily on the market. The upcoming employment report will be crucial in determining market direction, with investors urged to remain cautious about potential volatility in the coming weeks.
