Big Caps, McDonald's, Disney Show Gains while Tech Stocks Take a Hit on AI Hype Under-Delivering

Stocks took a turn for the worse on Tuesday, reacting to somewhat conflicting data from the July Services ISM Report On Business.

The key data was:

• Business Activity Index: 52.6%
• New Orders Index: 50.3%
• Employment Index: 46.4%
• Supplier Deliveries Index: 51%

While the overall business activity was well beyond the breakeven of 50%, it was lower than the reading of 54.2 percent recorded in June. New orders and employment also suggested that contraction might be on the horizon, with employment in contraction territory for the second month in a row and the fourth time in the last five months.

The key take-away, delivered by Steve Miller, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee, was:

“July’s PMI® level continues to reflect slow growth, and survey respondents indicated that seasonal and weather factors had negative impacts on business. The Employment Index’s continued contraction and faster expansion of the Prices Index are worrisome developments. The New Exports (a 3.2-percentage point decrease in July) and Imports (a 5.8-point drop) indexes, which both moved from expansion to contraction, provided signals that tariff tensions are impacting global trade. However, continued expansion in the Business Activity and New Orders indexes, together with a slight improvement in the Backlog of Orders Index, highlight the resilience of the U.S. services sector. Some respondents noted increased transportation congestion that supported the ‘slower’ Supplier Deliveries Index reading, another sign that activity levels are expanding. The most common topic among survey panelists remained tariff-related impacts, with a noticeable increase in commodities listed as up in price.”

Since the ISM is not a government agency, Wall Street takes their surveys seriously, which, in this case, leaned negatively.

On the other hand, earnings from major companies continue to roll out, and they have been mostly bullish.

Disney (DIS), a Dow component, reported adjusted earnings per share of $1.61, beating the $1.46 expected by analysts polled by Bloomberg. Earnings increased from $1.39 from a year ago. Shares are flat heading into the open.

McDonald's (MCD), also a Dow 30 component, announced second quarter EPS of $3.19, better than estimates, sending shares higher by nearly four percent before the bell.

Shopify (SHOP) blew away analyst estimates, issued strong forward guidance, and is trading more then 18% higher in the pre-market.

UBER (UBER) announced earnings of 0.63 per share, narrowly beating estimates, and also announced a stock buyback, but shares are down slightly heading toward the cash open.

Snap Inc. (SNAP) continued to suffer, with a net loss of $263 million for the quarter, compared to $249 million in the prior year. Reporting after the close Tuesday, the company continues to struggle, losing 16 cents per share.

Advanced Micro Devices (AMD) is down five percent in the pre-market after beating on revenue but missing on EPS. Related, Super Micro Computer (SMC), is being absolutely slammed, down 16%, as cracks begin to widen in the AI narrative.

It appears, from these reports, that tech stocks are beginning to fade, while big cap, long-standing companies, as evidenced by the results from Disney and McDonald's, are better suited to navigate the current environment.

Futures are up for stocks. Gold and silver slightly lower. WTI crude hit $65.15 overnight, but is rallying back above $66, as President Trump’s deadline for Russia to make peace in Ukraine approaches, with more sanctions in the U.S. pipeline.

It's a very mixed bag, especially when factoring in the tariff situation and global politics.

At the Close, Tuesday, August 5, 2025:
Dow: 44,111.74, -61.90 (-0.14%)
NASDAQ: 20,916.55, -137.03 (-0.65%)
S&P 500: 6,299.19, -30.75 (-0.49%)
NYSE Composite: 20,457.10, -31.76 (-0.16%)