Stock Market Review: SPY and QQQ Decline Amid Trump's Pharma Warning and Tariff Deadline Looms

The S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ) fell on Thursday ahead of the August 1 tariff deadline. June's core Personal Consumption Expenditures (PCE) index rose 2.8% YoY, and the Fed's preferred gauge of inflation, spooking the market. The odds of a 25-bps rate cut during the September FOMC have plummeted to 39.2%. President Trump announced a 90-day trade deal extension with Mexico and warned pharmaceutical companies to lower drug prices within 60 days.

The S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ) closed Thursday's trading session in negative territory, with both indices feeling the pressure of the impending August 1 tariff deadline. The market's unease was exacerbated by the June core Personal Consumption Expenditures (PCE) index, which rose 2.8% year-over-year, exceeding analysts' expectations of 2.7% [1].

The Federal Reserve's preferred gauge of inflation, the PCE index, also saw a 0.3% month-over-month increase, further fueling concerns about inflationary pressures. This data has led to a significant drop in the odds of a 25-bps rate cut during the September 16-17 Federal Open Market Committee (FOMC) meeting, now standing at 39.2% compared to 46.7% the previous day [1].

President Trump's recent announcements have added to the market's uncertainty. He extended the 90-day trade deal with Mexico, granting more time for negotiations and imposing a 25% penalty tariff on fentanyl, a 25% tariff on cars, and a 50% tariff on steel, aluminum, and copper. Additionally, Mexico agreed to remove all trade barriers against the U.S. [1].

Trump also issued letters to 17 pharmaceutical companies, warning them to lower drug prices within 60 days. He demanded most-favored-nation (MFN) prices for Medicaid patients and newly-released drugs, threatening severe consequences if they refuse [1].

Gold prices rose 1% on Thursday as traders sought the safe haven asset amid ongoing tariff uncertainty. Spot gold GOLD was up 1% at $3,308.07 per ounce, while U.S. gold futures GOLD gained 0.3% to $3,306.10 [2]. The dollar index (DXY00) also rose by +0.14% and posted a fresh 2-month high, supported by a resilient labor market and sticky price pressures [3].

The market's cautious optimism was bolstered by the in-line inflation data, which cooled concerns about surprise moves from the Federal Reserve. The S&P 500 futures rose 0.9%, and the Nasdaq climbed 1.3%, with tech stocks leading the rebound [3].

The Federal Reserve is likely to keep policy changes gradual and measured, meaning global markets can stay relatively on course. Mixed signals from Asia, particularly weakness in China, put some lingering risks in focus, but Europe's steady performance suggests investors are growing more comfortable [3].

References:
[1] https://www.tipranks.com/news/stock-market-news-review-spy-qqq-stumble-as-trump-targets-pharma-kingpins-aug-1-tariff-deadline-looms
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3TS0LU:0-safe-haven-gold-gains-on-tariff-uncertainty-ahead-of-august-1-deadline/
[3] https://finimize.com/content/markets-find-their-footing-as-inflation-data-lands-in-line