Indexes Diverge Amid Earnings and Trade Hopes
U.S. stocks traded mixed on Thursday, as investors balanced strong tech earnings with lingering uncertainty over trade policy and monetary leadership. The Dow Jones Industrial Average fell 0.3%, weighed down by a post-earnings drop in IBM shares. Meanwhile, the S&P 500 and Nasdaq Composite edged up 0.3% each, reaching fresh all-time closing highs thanks to gains in tech and AI-related stocks.
Alphabet led the rally after beating second-quarter earnings expectations and reaffirming its aggressive push into artificial intelligence. Shares of the Google parent rose, lifting other AI-linked names such as Nvidia and supporting overall momentum in the Nasdaq. However, Tesla dragged down broader sentiment among the “Magnificent Seven” after missing earnings estimates and warning of challenging quarters ahead.
Tesla Tumbles After Warning of Rough Road Ahead
Tesla stock declined following a disappointing earnings report that included a sharp decline in European sales and cautious guidance from CEO Elon Musk. The automaker also faces pressure from policy changes, as Trump’s recent budget proposal eliminates key electric vehicle tax credits. Musk’s remarks about “rough quarters” ahead added to investor caution, sending the stock lower despite ongoing interest in EVs.
Tesla’s performance contrasted sharply with Alphabet’s, highlighting a divergence within the mega-cap tech space. Alphabet’s continued investment in AI infrastructure reassured investors of its growth strategy, providing a bullish counterweight to Tesla’s challenges.
EU Tariff Talks Drive Trade Optimism
Expectations for a breakthrough in U.S.-EU trade negotiations also buoyed sentiment. Reports suggest the two sides are converging on a 15% tariff rate for most European imports, significantly lower than the previously threatened 30%. This potential agreement follows the successful U.S.-Japan trade pact announced earlier in the week and could avert a transatlantic tariff escalation scheduled to begin August 1.
President Trump’s comments hint that 15% may become the new baseline for his administration’s reciprocal tariffs, replacing the 10% floor set in April. Markets viewed the moderation as a positive sign for global trade stability, particularly for multinational firms reliant on transatlantic commerce.
Fed Under Fire as Trump Plans Surprise Visit
Adding to the day’s uncertainty, President Trump is set to visit the Federal Reserve headquarters, a rare move amid escalating tensions with Fed Chair Jerome Powell. The visit follows weeks of public criticism over the Fed’s $2.5 billion renovation and its recent policy stance. The administration’s criticism of interest rate levels and infrastructure spending at the central bank has become increasingly vocal, adding political pressure to monetary policy discussions.
Investors remain watchful as the standoff could influence future rate decisions or introduce new volatility. While the Fed has maintained its course despite external pressure, the optics of a presidential visit signal a new level of confrontation that could unsettle financial markets if it escalates.
