I. Market Overview: Sudden Reversal Signals Weakened Trend
On Thursday and Friday, U.S. stocks suffered back-to-back sharp declines. Taken together, these two sessions effectively formed a large bearish candle on the weekly chart, breaking below the 5-day, 10-day, and 20-day moving averages—signaling the end of the slow upward grind and the start of a choppy consolidation phase.
On August 1st (Thursday), the market opened with a downward gap, immediately under pressure from sellers. The strong bearish candlestick suggests bulls had only weak intraday resistance. Technical signals are clear: a short-term breakout is unlikely, and S&P 6,427 now stands as a key resistance level.
The Nasdaq was hit even harder, plunging 472 points in a single day (down 2.24%). With a two-day combined drop of over 2%, this is no coincidence. If Thursday's gap is not filled, it could mark a breakaway gap and trigger further declines.
II. Macro & Policy: A Triple Shock from Data, Rhetoric, and Regulation
1. Weak Jobs Report Fuels Rate Cut Expectations
July’s non-farm payroll report, released on August 1st, was a major disappointment: only 73,000 new jobs were added (vs. 185,000 expected), and May and June figures were revised down by 260,000, pushing adjusted numbers to the lowest levels since the pandemic.
The unemployment rate ticked up to 4.2%, and labor force participation (62.2%) hit a 3-year low—suggesting demand for labor is falling faster than supply, stoking recession fears. Rate cut bets surged post-release, with BlackRock and others forecasting a 50 bps cut in September. Still, Powell remained hawkish, reiterating after the FOMC meeting that “we’re not in a rush to cut,” and calling for “more data confirmation.”
2. Policymaker Split: Two Fed Officials Push Back
Interestingly, the two dissenting FOMC voters—Waller and Bowman—spoke out, arguing that “with a cooling labor market, keeping rates this high is a mistake.” They favor a gradual 150 bps rate cut (vs. Trump’s call for a more aggressive 300 bps cut).
Their key argument: tariffs have a limited and one-off impact on inflation, and policy must adapt more flexibly to slowing growth.
3. Tariff Escalation Raises Global Concerns
On August 1st, Trump signed an executive order triggering a new round of tariffs:
- Imports from non-friendly nations: raised to 10%
- EU goods: raised to 15% (if previously lower)
- Transshipment trade: punitive tariff set at 40%
- Canada: tariff raised to 35% (Mexico exempted for 90 days, holding at 20%)
The move immediately dragged down the Toronto Stock Exchange, raised global supply chain costs, and may pressure other central banks to follow with rate cuts.
4. Looser Regulations: Basel III “Lite” on the Table
Fed Vice Chair Bowman is also pushing for a relaxed version of Basel III, aimed at lowering capital requirements for major banks. If passed, this would enhance bank profitability through increased leverage (though financial risks may rise too).
5. End of an Era: Ray Dalio Retires
Ray Dalio, founder of Bridgewater Associates, announced his full retirement, with the firm set to repurchase his remaining stake. Over 48 years, Dalio turned Bridgewater from a two-bedroom apartment startup into a global powerhouse managing $150B at its peak. His book P
rinciples remains a classic among investors.
III. Stock Performance: Big Tech Diverges, IPOs and Crypto Suffer
1. Big Tech: Mixed Reactions to Earnings
This week, major tech earnings (Apple, Microsoft, Amazon, Meta) triggered sharply divergent market responses:
- Apple posted Q3 revenue of $94.04B (+10% YoY) and net income of $23.43B (EPS $1.57, beating expectations), but shares fell 2.5% after a brief intraday rally—classic “sell the news” behavior. The daily chart shows visible overhead pressure.
- Microsoft and Meta both beat expectations but saw two straight days of pullbacks.
- Amazon beat on revenue and EPS, but AWS cloud growth disappointed, leading to a heavy 8.27% decline on high volume.
This growing weakness in tech leaders has become a key drag on the broader market.
2. IPO Frenzy: Figma’s “AI Halo Effect”
Figma surged again, up 5.63% on its second trading day after a stunning 250% gain on debut. With a sky-high turnover rate of 150%, Figma stands out as a flagship “real-time collaborative + AI-enhanced” design platform, boasting net revenue retention over 100%.
Adobe’s failed $20B acquisition two years ago now looks like a bargain, as Figma’s market cap approaches $60B—three times Adobe’s old offer. With strong AI buzz and institutional buying (e.g., Cathie Wood), short-term upside remains, but a hype-driven reversal is a real risk.
3. Crypto Stocks Hit: Coinbase & Circle Slide
Coinbase posted a stellar earnings surprise (net income jumped from $36M to $1.43B YoY), but most of it came from unrealized investment gains (not operations). Trading revenue disappointed, and a new regulatory bill sparked fears of intensified competition.
- Coinbase stock plunged 16.7%
- Circle followed with an 8.4% drop (14.15% turnover)
As trader attention shifted to Figma, crypto names lost momentum.
IV. Looking Ahead: A Packed Week of Earnings and Opportunities
Next week will be a key earnings window, especially for mid- and small-cap stocks. Highlights include:
- August 4: Palantir (PLTR)
- August 5: AMD, Super Micro Computer (SMCI)
- August 7: Lyft
- Also on watch: McDonald’s and other consumer names
Note: While Big Tech earnings are now priced in, “earnings landmines” among smaller names could trigger sharp moves. Stock selection matters more than ever.
Final Thoughts: Stay Calm Amid Volatility — Market Pullbacks Can Be Setups
This week’s correction reflects a convergence of technical mean-reversion, weak data, and policy shocks. Short-term, the market may remain volatile—but resilient businesses will shine through in the long run.
For investors, the key is not to ask: “Will I lose more?”
But instead: “Has the core thesis behind my holdings changed?”
If the answer is no, temporary dips could be long-term opportunities.
The market is always moving, but it rewards those who think long, act short, and stay patient through the storm.
