US stocks were mixed on Tuesday as a new wave of earnings reports arrived. The Nasdaq fell 0.4%, while the S&P 500 dropped 0.1%, both showing some signs of cooling after reaching all-time highs on Monday. Meanwhile, the Dow climbed 0.1%, bolstered by solid performance in some sectors. Investors are weighing mixed earnings reports and tariff risks, especially following General Motors' (GM) warning about the impact of tariffs on its profits.
Market Movers:
- General Motors (GM): -6.90%: General Motors took a significant hit, falling nearly 7% after reporting a 32% drop in core profit for the second quarter, due to the impact of tariffs, which cost the company $1.1 billion. The company warned that the impact could worsen in the upcoming quarter, raising concerns over the broader effects of President Trump's trade policies on US manufacturers.
- Philip Morris (PM): -6.76%: Philip Morris steeply declined, dropping 6.76% after its quarterly results missed Wall Street's expectations. The company’s struggles were due to slower-than-expected growth in its heated tobacco product segment, raising questions about the future trajectory of its product diversification efforts.
- Nvidia (NVDA): -1.97%: Nvidia fell 2% on Tuesday, marking its third consecutive day of declines following a recent surge. The drop comes despite strong AI-driven growth, as the chipmaker faces increasing competition from a rising South Korean rival, FuriosaAI, which secured its first major customer. Still, Nvidia remains up 24% for the year, following a significant rebound earlier in 2025.
- Kohl’s (KSS): +31.33%: Kohl’s surged 31.33%, after a massive rally driven by retail investors, particularly from meme stock communities on Reddit’s WallStreetBets. The surge followed a period of volatility, with the stock briefly halted due to massive fluctuations earlier in the session, which fueled speculation and heightened interest among retail traders.
- Northrop Grumman (NOC): +8.53%: Shares rose by more than 8% following strong second-quarter earnings results and an upward revision to its full-year profit forecast. The aerospace and defense giant benefited from continued geopolitical tensions, sustaining demand for its defense products. Northrop is also in talks to support the development of a new missile system, further boosting investor confidence.
Earnings Season and Tariff Impact
As earnings season continues, many companies are facing mixed results, with some sectors benefiting from strong demand while others struggle with external challenges. General Motors, in particular, has been caught in the crossfire of ongoing trade tensions, which are affecting its bottom line. The company’s warning that tariff-related headwinds will continue to affect profits in the near term has added a layer of uncertainty to the market, particularly for US manufacturers who rely on global supply chains. Investors are now questioning how far the recent rally can go, given the potential for more tariff-related disruptions.
Meanwhile, major tech stocks like Alphabet (GOOGL) and Tesla (TSLA) are set to report their quarterly results tomorrow, and investors are eagerly awaiting these reports for signs of sustainable growth. With valuations at record highs, many are hoping for strong earnings to justify the optimism surrounding the AI boom. However, there are concerns that the AI hype may be driving stock prices higher than is justified by fundamentals.
Trade Talks and Geopolitical Tensions
The market is closely monitoring the ongoing trade negotiations ahead of President Trump’s August 1st tariff deadline. Reports suggest that US talks with both the EU and India are faltering, with little progress on reaching new trade agreements. The deadlock in US-India negotiations and the lack of significant movement in US-EU talks have added to concerns that the tariff wars could escalate, potentially leading to further market disruptions.
Additionally, geopolitical tensions, particularly in Eastern Europe and the Middle East, continue to influence the defense sector. Northrop Grumman’s strong earnings report reflects the ongoing demand for defense products, driven by the protracted Russia-Ukraine conflict and instability in the Middle East. As tensions persist, defense contractors like Northrop are likely to continue benefiting, while broader markets may remain under pressure from the uncertainty surrounding trade and international relations.
Looking Ahead
Moving forward, all eyes will be on the upcoming earnings reports from Alphabet and Tesla. These reports could provide crucial insight into the health of the tech sector, which has been a major driver of the recent rally. With market valuations already at elevated levels, any signs of slowdown or missed expectations could lead to volatility, particularly in the AI-driven tech stocks that have sparked investor interest.
At the same time, the ongoing uncertainty around tariffs and trade policies could continue to weigh on investor sentiment, especially for US manufacturers like General Motors that are directly affected by President Trump's trade policies. As trade negotiations move toward their critical deadline, the market will likely remain sensitive to any news or developments that could influence the direction of tariffs and trade agreements.
