publication
2025-08-05 22:10
Weaker data from the American economy did not allow the continuation of Monday's reflection. New York indexes ended in Tuesday's moderate decline.
The S & P500 index gave 0.49% on Tuesday and ended the day at 6,299.20 points. The day before, the same benchmark recorded an increase of nearly 1.5% after losing 1.6% on Friday and establishing historical peaks at the end of July (i.e. last week).
Nasdaq Composite went down by 0.65%, ending the session at the level of 20 916.55 points. However, the industrial average of Dow Jones gave only 0.14% and finished with a result of 44 111.74 points.
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– Today's market response indicates that investors are in waiting mode. The evaluation of duties on the economy is still ongoing – noted Terry Sandven, the main market strategist at the US Bank Wealth Management quoted by the Reuters agency.
Even at the beginning of trade, New York indexes wanted to continue Monday's reflection. But very poor data from the service sector stood in the way. The ISM indicator in July dropped to 50.1 points against 50.8 points. in June. Analysts expected an increase in “service” ISM to 51.5 points. So we have a lot of disappointment from the sector generating over 70% of the United States GDP.
The result similar to 50 points means stagnation. What's more, basically from March, “service” ISM takes stagnant values, balancing 50 points on the border. The composition of this indicator was also bad. A strong decrease was made by a subindex of employment, pointing to the faster rate of the loss of jobs in the service sector. Instead, the price subindex signaling the severity of inflationary pressure has increased. It is stagflation – and therefore the worst possible – connection. In addition, export and import orders have collapsed.
Such data combined with poor data from the labor market signal that the slowdown in the growth of the world's largest economy has become a fact. At the same time, CPI inflation still exceeds the 2 % federal reserve. In this environment, the Fed will probably resume interest rates in September, but they will not be as dynamic as during the previous few periods of economic slowdown in the USA.
Reports from companies did not help either. Yum Brands shares (the owner of, among others, KFC) were overestimated by 5% after the company disappointed the results for the second quarter explaining the impact of customs wars on consumer expenses. In turn, Caterpillar warned that President Trump's duties could cost him $ 1.5 billion in the second half of 2025.
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