U.S. equities are experiencing a midday tug-of-war on Tuesday, August 5, 2025, as early session gains have largely evaporated, giving way to renewed concerns over economic signals and persistent tariff threats. Major market indexes, which opened higher, have since slipped into negative territory, reflecting investor caution amidst a mixed bag of corporate earnings and a crucial economic data release.
The S&P 500 (SPX) was recently down 0.5%, retreating from an earlier positive open of 0.11% and Monday's strong rebound. Similarly, the Dow Jones Industrial Average (DJI) has shed 0.5%, dropping approximately 189 points as of 11 a.m. Eastern Time, after starting the day with fractional gains. The tech-heavy Nasdaq Composite (IXIC) also saw its initial momentum fade, recently declining 0.6%. This midday reversal underscores the market's sensitivity to macroeconomic headwinds, particularly following a weaker-than-expected services sector report.
A significant factor contributing to the midday slump is the July ISM Services PMI report, which came in at 50.1, missing the consensus estimate of 51.5 and nearing contraction territory. This discouraging signal on the U.S. economy has amplified worries that President Donald Trump's tariffs are beginning to hurt business activity, with several sectors reporting increased pricing due to these trade barriers. The looming Thursday deadline for hefty tariffs on dozens of countries continues to keep investors on edge, with President Trump also hinting at potential new tariffs on semiconductors and chips in the coming week.
Despite the economic jitters, hopes for future interest rate cuts by the Federal Reserve are providing some underlying support, preventing a more significant downturn. Following a weak jobs report last Friday, market participants are now pricing in an almost 80% chance of a Fed rate cut in September. It's important to note that the Federal Open Market Committee (FOMC) does not have a scheduled meeting in August, making the September 16-17 meeting the next potential opportunity for a policy adjustment. The minutes from the July 29-30 FOMC meeting are anticipated on August 20, offering further insights into the Fed's thinking. Other upcoming economic data includes the June US Trade Balance due today, and the 3-year Treasury note auction this afternoon. Looking further into August, key releases include the July CPI on August 12 and July Retail Sales on August 15.
On the corporate earnings front, Q2 results continue to drive significant stock movements. Palantir Technologies (PLTR) was a standout performer, surging between 7% and 9% in midday trading after reporting better-than-expected Q2 earnings and raising its full-year outlook, propelled by strong demand for its AI platforms. The company's revenue surpassed $1 billion for the first time. Pharmaceutical giant Pfizer (PFE) also saw gains, rising nearly 5% after its Q2 earnings and revenue beat expectations.
Conversely, some industrial stalwarts faced headwinds. Caterpillar (CAT) declined over 1% after its Q2 earnings missed Wall Street forecasts, with the company citing rising tariff costs as a primary reason for the miss. Yum! Brands (YUM), parent company of KFC and Pizza Hut, slipped nearly 2% as its Q2 earnings fell short of estimates, despite growth from Taco Bell. Edgewell Personal Care (EPC) tumbled over 20% after reporting lower-than-expected profit and revenue, attributing weakness to a poor sun care season and tariffs.
Other notable movers include Hims & Hers Health (HIMS), which fell 12-13% despite an EPS beat, as revenue and guidance disappointed analysts. Vertex Pharmaceuticals (VRTX) was down significantly, between 14% and 17%, despite beating earnings expectations, due to news regarding a clinical trial. On the positive side, DuPont (DD) rose 4.5% after exceeding profit and revenue expectations and raising its full-year forecast. Tyson Foods (TSN) gained 2.4% after beating its Q3 fiscal 2025 earnings and revenue estimates and raising its outlook. Online retailer Wayfair Inc. (W) surged 12.7% following a strong Q2 earnings beat. However, TG Therapeutics, Inc. (TGTX) plummeted 18% and ON Semiconductor Corporation (ON) fell 15.6% after both companies missed their Q2 earnings estimates.
Looking ahead, Advanced Micro Devices (AMD) is set to release its Q2 earnings after the market closes today, a report highly anticipated by investors, especially given the ongoing focus on AI and semiconductor demand. Amgen Inc. (AMGN) and Eaton Corporation PLC (ETN) are also scheduled to report earnings today. The market remains in a state of flux, balancing corporate performance against broader economic concerns and geopolitical tensions.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.