US stocks slip following the latest discouraging signal on the economy
[August 06, 2025] By
STAN CHOE
NEW YORK (AP) — U.S. stock indexes slipped on Tuesday following the
latest discouraging signal on the U.S. economy.
The S&P 500 fell 0.5%, coming off a whipsaw stretch where it went from
its worst day since May to its best since May. The Dow Jones Industrial
Average dropped 61 points, or 0.1%, and the Nasdaq composite fell 0.7%.
A weaker-than-expected report on activity for U.S. businesses in
services industries like transportation and retail added to worries that
President Donald Trump’s tariffs may be hurting the economy. But
increased hopes for coming cuts to interest rates by the Federal
Reserve, along with a stream of stronger-than-expected profit reports
from U.S. companies, helped to keep the losses in check. The S&P 500
remains within 1.4% of its record.
Edgewell Personal Care, the company behind the Schick, Playtex and
Banana Boat brands, fell 18.8% after reporting lower profit and revenue
for the latest quarter than analysts expected. CEO Rod Little said it
was a very weak season for sun care in North America, while tariffs are
acting as a drag on profits.
All kinds of companies have been telling investors how much they expect
tariffs to shave off their earnings this year, and trade policy was one
of the most common topics U.S. services businesses talked about in the
latest monthly survey compiled by the Institute for Supply Management
about their activity.
“Tariffs are causing additional costs as we continue to purchase
equipment and supplies,” one company in the health care and social
assistance business said, for example. “Though we need to continue with
these purchases, the cost is significant enough that we are postponing
other projects to accommodate these cost changes.”
Another business in the real estate, rental and leasing industry told
the institute that economic “uncertainty remains the dominant theme.
However, the tariff talk has turned out to be much more bluster than
actual policy, and businesses have seemed to tune out the noise.”
The threat of tariffs isn’t seeming to slow the juggernaut of investment
flowing into artificial-intelligence technology.
Palantir Technologies rose 7.8% after the AI-platform provider reported
a stronger profit for the latest quarter than analysts expected. The AI
darling also raised its forecast for revenue over the full year, and its
stock climbed further after it had already doubled for the year so far
coming into the day.
“We continue to see the astonishing impact of AI leverage,” CEO Alex
Karp said.
Axon Enterprise leaped 16.4% after the company, which sells Tasers, body
cameras and software to public safety departments, reported a much
stronger profit than analysts expected. It also cited growth in its AI
offerings, which can save time for transcriptions and other tasks, and
raised its forecast for revenue this year.
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A Trader works on the floor of the New York Stock Exchange, Friday,
Aug. 1, 2025, in New York. (AP Photo/Yuki Iwamura)
 On the losing side of Wall Street
was American Eagle Outfitters, which dropped 9.5% to give back some
of its 23.6% jump from the day before. That’s when Trump weighed in
on the debate surrounding the retailer’s advertisements, which
highlight actor Sydney Sweeney’s great jeans.
Some critics thought the ad’s reference to the blonde-haired and
blue-eyed actor’s “great genes” may be extolling a narrow set of
beauty standards, while Trump said that being “WOKE is for losers.”
Yum Brands fell 5.1% after the company behind KFC, Taco Bell and
Pizza Hut reported results for the latest quarter that came up just
short of analysts’ expectations.
All told, the S&P 500 sank 30.75 points to 6,299.19. The Dow Jones
Industrial Average dipped 61.90 to 44,111.74, and the Nasdaq
composite fell 137.03 to 20,916.55.
The pressure is on companies to report bigger profits after the U.S.
stock market surged to record after record from a low point in
April. The big rally fueled criticism that the broad market had
become too expensive.
For stock prices to look like better bargains, companies could
produce bigger profits, or interest rates could fall. The latter may
happen in September, when the Federal Reserve has its next meeting.
Expectations have built sharply for a rate cut at that meeting since
a report on the U.S. job market on Friday came in much weaker than
economists expected. Lower interest rates would make stocks look
less expensive, while also giving the overall economy a boost. The
potential downside is that they could push inflation higher.
Treasury yields sank sharply after Friday’s release of the jobs
report, and they haven’t recovered. The yield on the 10-year
Treasury eased to 4.19% from 4.22% late Monday and from 4.39% just
before the release of the jobs report. That’s a significant move for
the bond market.
In stock markets abroad, indexes rose across much of Europe and
Asia.
India’s Sensex was an outlier and dipped 0.4% on concerns about
trade tensions with the United States as the Trump administration
pushes for cutbacks in the country’s oil purchases from Russia.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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