Closing Recap

U.S. stocks pulled back from record highs in a late-day fade, as investors took profits in the AI space and digested slightly hotter-than-expected inflation data ahead of tomorrow’s jobs report; the dollar and Treasury yields were little changed, while oil and gold prices slipped. 

Key Takeaways 

• Profit-Taking Hits Markets Late Day: Stocks reversed from record intraday highs to finish mostly lower, as investors took profits, particularly in the high-flying tech and AI sectors. 
• AI Rally Remains Dominant Theme: The market continues to be driven by the AI narrative, with positive earnings from META, MSFT, and GOOGL this week boosting related stocks before today’s pullback. 
• PCE Inflation Ticks Up: The June Core PCE Price Index, the Fed’s preferred inflation gauge, came in slightly hotter than expected (+2.8% YoY), potentially complicating the Fed’s path to rate cuts. 
• More Trade Deals Announced: The U.S. signed a new trade deal with South Korea and increased tariffs on Brazil and India, while extending the deadline for a deal with Mexico. 
• Rotation Continues: Today’s action showed a clear divide, with strong underlying breadth but weakness in the mega-cap tech names that have led the rally. 
• Gold & Oil Slip: Gold and crude oil prices both finished slightly lower. 
• Yields & Dollar Steady: Treasury yields and the U.S. dollar were little changed as the market absorbed the day’s data and looked ahead to Nonfarm Payrolls. 

 Market Overview 

U.S. equity markets opened at new all-time highs, continuing the powerful rally driven by the artificial intelligence theme, but succumbed to profit-taking in the afternoon to finish mostly in negative territory. The narrative of the past several weeks has been dominated by strength in AI-related stocks, from mega-cap leaders to semiconductors, data centers, and power generation plays. Positive earnings reports this week from Meta, Microsoft, and Google, which all highlighted increased capital expenditures for AI investment, further fueled this buying frenzy. 

Index	Up/Down	% Change	Last
DJ Industrials	-330.3	-0.0074	44130
S&P 500	-23.35	-0.0037	6339
Nasdaq	-7.23	-0.0003	21122
Russell 2000	-20.75	-0.0093	2211

However, the relentless upward momentum took a pause today. Despite the market opening at records, selling pressure emerged in the afternoon, pulling indices well off their highs. The weakness was concentrated in the very mega-cap tech names that have led the charge, suggesting some profit-taking after an incredible run. The broader market showed resilience, with strong underlying breadth and leadership from financials, industrials, and utilities, but the weight of the tech giants was too much to overcome for the headline indices. 

On the economic front, the June Core PCE inflation report came in a touch hotter than expected on a year-over-year basis, which, combined with the Fed’s cautious stance yesterday, has likely pushed out expectations for a September rate cut. Weekly jobless claims, however, came in better than forecast. On the trade front, the U.S. continued its deal-making, signing an agreement with South Korea and extending the deadline for Mexico, though tariffs were increased on Brazil and India. Investors are now squarely focused on tomorrow’s official July jobs report.

Economic Data

Yesterday’s economic data featured a slightly hotter-than-expected PCE inflation report and better jobless claims, painting a mixed picture of the U.S. economy. 

• PCE Price Index (June) Headline PCE M/M: +0.3% (In line with consensus, vs. +0.2% prior). 
• Headline PCE Y/Y: +2.6% (vs. +2.5% est., +2.4% prior). 
• Core PCE M/M (Fed’s preferred gauge): +0.3% (vs. +0.2% est. & prior). 
• Core PCE Y/Y: +2.8% (vs. +2.7% est., +2.8% prior). 
• Weekly Jobless Claims: Fell to 218,000 (from 224,000 prior), better than the 224,000 consensus. 
• Personal Income/Spending (June): Income +0.3% (vs. +0.2% est.). Spending +0.3% (vs. +0.4% est.). Real Spending +0.1%. Saving rate 4.5%. 
• Employment Cost Index (Q2): +0.9% q/q (vs. +0.8% est.). Wages +1.0%, Benefits +0.7%. 
• Chicago PMI (June – from prior): 47.1 (Forecast 42, Previous 40.4). 

Commodities, Currencies, and Treasuries 

Gold futures finished slightly lower, with August futures down $4.20 (-0.12%) to settle at $3,348.60 per ounce, in a relatively quiet session for the metal. Crude oil prices also slipped, with WTI down $0.74 (-1.06%) to $69.26/bbl, closing out a monthly gain of over 6%. Natural gas prices, however, plunged over 10% in July. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-0.74	USD/bbl	69.26
Brent	-0.71	USD/bbl	72.53
Gold	-4.2	USD/oz	3348.6
EUR/USD	0.0023	USD	1.1427
USD/JPY	1.24	JPY	150.74
10-Year Note	-0.02	%	0.04358

The U.S. dollar was mixed but notably weakened against the Japanese Yen, which reached 150.74 per dollar for the first time since April, a significant move. Treasury yields were little changed on the day but saw notable increases over the month of July, with the 10-year yield up 13.3 bps and the 2-year yield up 23 bps. Bitcoin prices rose about 1%, holding just under $118,000.

Looking Ahead

The market will be intensely focused on today morning’s official July Nonfarm Payrolls report. The data will be a critical input for the Federal Reserve’s policy outlook and could set the tone for market direction heading into August. With the FOMC meeting and the bulk of earnings season now complete, macroeconomic data and the evolving global trade landscape will once again become the primary market drivers. The August 1st deadline for several tariff implementations also looms.