Investor sentiment turned cautious midweek as global equity markets slipped, weighed down by mixed retail earnings and declining technology shares. Despite strong showings from the energy and consumer staples sectors, the consumer discretionary and tech sectors underperformed. Meanwhile, bond yields retreated, and the U.S. dollar weakened against major currencies.

Retail earnings highlight consumer resilience

Retail earnings this week offered a snapshot of consumer strength, even as the labor market shows signs of cooling.

Target, Lowe’s beat estimates

Retail giants Target and Lowe’s both delivered quarterly earnings slightly above forecasts, signaling continued consumer resilience. While sales outpaced expectations, market sentiment remained lukewarm. Shares of Target fell by more than 6% despite the company’s solid performance. Investors questioned leadership direction amid internal strategic shifts.

Eyes on Walmart and broader earnings strength

Investors await Walmart’s results later in the week. So far, 82% of S&P 500 companies have surpassed earnings forecasts, with 10 out of 11 sectors showing growth. However, the momentum from earlier in the year has faded for tech stocks, with the so-called “Magnificent Seven” megacaps all trading lower.

Tech shares struggle amid AI spending and cyber concerns

Technology stocks, once leaders in the 2025 rally, are facing renewed pressure from high investment costs and security concerns.

Meta and Microsoft in focus

Meta paused hiring in its AI division, drawing investor scrutiny over its $72 billion AI spending strategy, triggering a 5% share drop. Meanwhile, Microsoft restricted cybersecurity information access for Chinese firms after cyberattack reports, tightening internal controls after breaches affected over 400 organizations, including the U.S. National Nuclear Security Administration.

Asia, Europe move higher despite mixed data

Global equity markets saw mixed performance, shaped by local economic indicators and monetary policy expectations.

Asian equities mostly advance

Asian markets were broadly higher. China’s decision to hold its one-year loan prime rate steady at 3.0% supported sentiment. Australia’s ASX 200 reached new highs on strong PMI data, while South Korea’s KOSPI rebounded after recent tech-led declines. Japan lagged due to weak manufacturing figures, and Hong Kong’s market was flat as Baidu’s earnings fell short.

European stocks mixed

European equities showed mixed results. The STOXX 50 slipped by 0.2% while the STOXX 600 edged up 0.3%. Consumer staples outperformed, while industrials dragged down the broader index. Eurozone inflation remained at 2.0%, aligning with the European Central Bank’s target.

Oil prices climb as U.S. crude stockpiles fall

Oil prices rallied after a sharp drop in U.S. crude inventories, supported by robust demand and geopolitical factors. Brent traded at $67.20 and WTI at $63.11. U.S. crude inventories fell by 6 million barrels, far exceeding forecasts. Traders are also watching potential peace talks between Russia and Ukraine, which could reshape global supply expectations.

Investors eye Powell’s speech and rate cut odds

With markets looking to Jackson Hole for guidance, rate cut expectations remain high amid softer job data and inflation pressures. The Fed’s July minutes showed most officials backed holding rates at 4.25%–4.50%, though two members favored a cut. The dollar index held near 98.3 ahead of Powell’s remarks, while the euro held steady at $1.1648.

Political tensions also rose after President Donald Trump called for the resignation of Fed Governor Lisa Cook, citing alleged mortgage discrepancies on primary residence declarations.

Equities in motion

Several major firms made headlines with earnings reports, strategic shifts, and analyst updates affecting share prices.

Notable corporate movers

• Lowe’s: Shares ticked up after announcing the $8.8 billion acquisition of Foundation Building Materials and lifting sales forecasts to $84.5–$85.5 billion.
• Estee Lauder: Shares dropped 4% amid $100 million in tariff pressures and 2026 restructuring charges between $1.2–$1.6 billion.
• Baidu: Revenue fell 4% to 32.71 billion yuan ($4.56 billion) due to declining advertising, despite AI investments. Cloud revenue grew 27%.
• TJX Companies: Surged 6% on strong demand and improved margin outlook. Expects fiscal 2026 EPS of $4.52–$4.57.
• Intel: Fell 7% as it seeks additional equity after SoftBank’s $2 billion investment. Losses reached $18.8 billion in 2024.
• Sony: Raised PlayStation prices in the U.S., citing higher costs. The PS5 Pro will retail for $749.99.
• Applied Materials: Downgraded due to weaker demand from China and reduced 2025–2026 revenue guidance.
• Figma: Received a bullish outlook from Piper Sandler, citing 92% gross margins, AI potential, and near $1 billion ARR.
• Snowflake: Upgraded by Bank of America, citing strong AI momentum and expected Q2 product revenue of $1.06 billion.

What’s next – key economic data and earnings

Investors are turning to upcoming economic indicators and corporate results for clues on the market’s next move. Key items to watch:

• U.S. manufacturing and services PMI
• Initial jobless claims
• Existing home sales
• Philadelphia Fed manufacturing index
• Earnings from Walmart, Workday, and more

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