Fresh Record. Markets kicked off the first trading day of August on a strong note, with the Dow Jones Industrial Average closing at a new high on Monday. The pullback in oil prices held despite Iran's denial of any peace talks taking place, allowing markets to look through the latest geopolitical back-and-forth and focus on a Magnificent 7 rally.
The Dow finished the day up 1.3% or 693 points, to close at 53,178.41. The S&P 500 rose 1.5% and the Nasdaq Composite Index closed up 2.1%.
The heavy hitters are providing a lot of the lift. Mag 7 stocks have added $1.77 trillion in market cap over the last three trading days. In fact, The Roundhill Magnificent Seven ETF (MAGS) closed the day up 3.6% on Monday, with Microsoft and Alphabet leading the charge. Meanwhile Amazon.com closed above the $3 trillion market cap threshold for the first time.
Strong earnings are helping power markets' performance. "Earnings growth has been the story," writes Mona Mahajan, head of investment strategy and asset allocation at Edward Jones. Coming into this quarter, Mahajan was projecting second quarter earnings growth would be about 25%, but it's been closer to 35% to 40% so far .
"This slew of earnings showed not only capital expenditure spending increasing, but earnings and revenue backlogs increasing, along with meaningful revenue potential for the Magnificent Seven and the hyperscalers," Mahajan notes.
That is expected to roll into this week, with the Walt Disney Company and Advanced Micro Devices $(AMD)$ are all set to release quarterly results. SpaceX will make its first earnings report as a public company on Tuesday.
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The Hot Stock: First Solar +10.3% The Biggest Loser: Marriott International -7%
Best Sector: Communication Services +4.3% Worst Sector: Energy -1.2%
Let the Good Times Roll
The U.S. manufacturing sector is emerging from a long period of malaise, largely due to the AI boom, strong demand in aerospace and defense, and customer inventories shrinking to unsustainably low levels.
Those factors propelled manufacturing activity forward this year; in July, the sector expanded for the seventh straight month. The Institute for Supply Management's Purchasing Managers Index came in at 55.6 for July, up from 53.3 for June. (A reading above 50 indicates the sector is growing). That beat economist's forecasts, and marked the index's highest print since May 2022.
The good headline reading was powered mostly by the AI build out. Production rose from 52.2 in June to 58.5 in July -- the highest level in about five years. The index for new orders, a gauge of future demand, also inched up in July. Input costs fell as oil prices retreated, but the data show inflation is still a widespread concern for manufacturers.
For the first time in nearly three years, the index's employment measure was also in growth mode. The employment index jumped by more than 3 points to a reading of 52.8, the strongest measure since 2022.
The Bureau of Labor Statistics is set to release the July jobs report on Friday, which will also provide a look at manufacturing employment. In June, payrolls in the sector were down slightly year-over-year.
"Conditions in the manufacturing sector appear to be strengthening further after a first half of the year that was already noticeably better than 2025, when tariffs roiled the situation," writes Stephen Stanley, chief U.S. economist for Santander.
But he notes that as strong as the numbers are, rising prices are still a concern. Purchasing managers feel "better," he says, but not exactly "great."
The Calendar
Advanced Micro Devices, Ametek, Amgen, Apollo Global Management, Arista Networks, Ball Corp., Booking Holdings, Broadridge Financial Solutions, Caterpillar, Cummins, DaVita, Devon Energy, Duke Energy, DuPont, Emerson Electric, Fidelity National Information Services, Gilead Sciences, Gartner, Henry Schein, Jacobs Solutions, Kimberly-Clark, Kimco Realty, Marathon Petroleum, McDonald's, Merck, Mosaic, NRG Energy, Paramount Skydance, Pfizer, Prudential Financial, Public Service Enterprise Group, Qnity Electronics, Revvity, Rockwell Automation, SpaceX, Spotify Technology, Sysco, TransDigm Group, Waters, W.W. Grainger, Wynn Resorts, and Zebra Technologies report quarterly results tomorrow.
The Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey. Economists forecast 7.4 million job openings on the last business day of June, roughly 200,000 less than in May.
What We're Reading Today
-- United Airlines' Megamergers Didn't Fly -- but CEO Has the Stock on the
Right Trajectory
-- Valuations Are Falling While the S&P 500 is Flat. That Could Be Great
News for the Bulls.
-- How UBS' New U.S. Financial Advisor Chief Plans to Stop Attrition and
Fuel Growth
-- Ferguson Added to S&P 500 and the Plumbing Stock Pops. Where It Can Go
Next.
-- Tyson Foods Is Relying on Chicken Sales to Drive Gains as Rising Prices
Sink Beef Segment
-- Nvidia Stock Is in a $200 Rut, and Big Tech Earnings Aren't Helping
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