Pre-Market Pulse 6th August – Weakening Economy give investors cause to tap the brakes

Overnight – Weakening Economy give investors cause to tap the brakes
Stocks most momentum from Mondays rebound after data showing services activity unexpectedly contracted stoked concerns about the underlying of the economy just as the quarterly earnings season continues.
U.S. stock markets rebounded strongly on Monday after a steep sell-off last Friday, with the S&P 500 rising 1.5%, the Dow Jones gaining 1.3%, and the NASDAQ climbing 2%. The rally was underpinned by renewed expectations for an earlier Federal Reserve rate cut, following weak economic data and a soft jobs report showing nonfarm payrolls increased by just 73,000 in July—well below forecasts—with heavy downward revisions to previous months’ job numbers. This jobs data, alongside President Trump’s dismissal of the statistics bureau chief and the imposition of sweeping tariffs on imports from nearly 70 countries, created uncertainty around the health and transparency of U.S. economic data and trade prospects, but also boosted hopes for Fed action as the probability of a September rate cut surged past 80%.
Despite near-term caution given these economic signals, some strategists remain bullish on U.S. equities. Morgan Stanley’s Mike Wilson reaffirmed his positive outlook for the stock market, highlighting a sharp rebound in corporate earnings per share (EPS) revisions and labeling recent market events in April as the clear end of the bear market that began in 2024. Wilson sees pullbacks as buying opportunities and expects sustained strength for equities over the next 12 months, even if short-term consolidation occurs amid interest rate uncertainties.
Big technology stocks continued to lead market gains, driven by optimism surrounding artificial intelligence. Shares of NVIDIA, Microsoft, and Meta Platforms all moved higher, with Microsoft and Meta extending gains after strong quarterly reports. Investors are keenly watching a packed earnings calendar this week, with results due from more than 150 companies including Advanced Micro Devices (AMD), Caterpillar, Walt Disney, McDonald’s, and Uber Technologies. Meanwhile, Berkshire Hathaway saw its shares slide after disclosing a major write-down on its Kraft Heinz stake, and Tesla shares climbed as the company approved a substantial stock award for CEO Elon Musk based on a special board committee’s recommendation.
Corporate Earnings
• Advanced Micro Devices -4% – on Tuesday reported disappointing data center revenue, a segment which includes lucrative artificial intelligence chips that investors are depending on for rapid growth.
• Pfizer +5% – stock gained after the drugs giant posted second-quarter earnings and revenue that exceeded analyst estimates and raised its full-year profit outlook.
• Caterpillar +0.15% – stock was slightly higher after the heavy equipment manufacturer reported second-quarter 2025 adjusted earnings that fell short of analyst expectations, despite posting better-than-expected revenue.