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US Services PMI shows slight expansion but indicates broad weakness, with tariffs significantly impacting trade.
The ISM non-manufacturing PMI in the US dropped to 50.1, slightly above the crucial 50 mark, showing only slight growth. Seven out of ten components declined, with imports and new export orders falling into contraction due to tariff issues.
Major US stock indices closed lower. The Dow Jones fell 0.14% to 44,111.74, the S&P dropped 0.49% to 6,299.19, and NASDAQ lost 0.65%, closing at 20,916.55. Crude oil futures ended at $65.16, while Citi forecasts gold to reach $3,500 per ounce within three months.
Elliott Wave analysis suggests that Dow futures are nearing a peak before a decline.
The Dow Futures cycle, which began its low in April 2025, is coming to an end. We may see a final surge to finish this impulsive cycle. The one-hour chart shows wave (3) reaching a peak of 45,312. It was followed by wave (4), which pulled back to 43,467 in a zigzag shape.
Currently, wave (5) is forming as a smaller impulse. It starts from wave (4), where wave ((i)) hit 43,864 and wave ((ii)) pulled back to 43,542. We expect more highs until wave 1 of (5) ends, followed by a possible wave 2 pullback. Staying above 43,467 should encourage buyers and support further gains.
Eur Usd And Gbp Usd Analysis
The EUR/USD is hovering close to 1.1550 amid US ISM data. The ISM Services PMI fell slightly in July. The GBP/USD is moving below 1.3300 due to talks of potential rate cuts by the Fed in September and upcoming policy updates from the BoE. Gold is holding steady around $3,370 per ounce, facing pressure from gains in the US dollar and rising US yields. DeFi is gaining popularity as investors shift from Bitcoin to Ethereum and other cryptocurrencies, which increases total locked value and user engagement. The Euro area shows strength thanks to a US-EU agreement, but concerns about a rate cut persist. We see the potential for one last rise in Dow Futures to wrap up the cycle that started in April 2025. Traders might look to buy on pullbacks, using call options or long futures positions as long as the index stays above the crucial support level of 43,467. This outlook is supported by last week’s strong US jobs report for July 2025, which indicated a gain of 250,000 non-farm payroll jobs, easing fears of a deep economic slowdown. For EUR/USD, we are closely watching the 1.1550 level as a key pivot. The recent drop in the US ISM Services PMI to 53.5 in July 2025, down from 54.1 in June, suggests a slight slowdown in the US economy. This could create short-term long opportunities for the pair, especially if upcoming inflation data confirms this trend.Market Expectations And Strategies
We anticipate continued fluctuations in GBP/USD below the 1.3300 level. The market is currently pricing a 60% chance of a Federal Reserve rate cut in September 2025 after shifting away from its earlier hawkish stance. Traders should prepare for increased volatility around the next Bank of England announcement and consider straddles or strangles to profit from significant price moves in either direction. Gold seems limited around $3,370, challenged by a strong US dollar. The 10-year Treasury yield, which climbed to 4.75% last week, is a significant obstacle for non-yielding gold. We recommend waiting for a clear breakout above this level or a drop in yields below 4.5% before taking major long positions in gold derivatives. There’s a noticeable change in risk appetite in the digital asset market, with money moving away from Bitcoin. Data from July 2025 reveals that Ethereum-based futures volumes rose by 30%, while Bitcoin’s dominance index slipped by 4% to its lowest this year. Traders should focus on potential opportunities in Ethereum and promising DeFi tokens, which are likely to perform well soon. The Euro area shows some strength, but we remain wary due to the ongoing risk of a European Central Bank rate cut. The trade agreement on essential minerals finalized in June 2025 has boosted industrial sentiment, especially in Germany. Therefore, we advise hedging any long European equity positions until the ECB provides clearer guidance in their next meeting. Create your live VT Markets account and start trading now.Trump narrows Federal Reserve Chair selection to four candidates, including two named Kevin, and will announce Kugler’s replacement soon.
Trump has narrowed his choices for the Federal Reserve Chair down to four candidates. This list includes two individuals named Kevin, along with two others whose names have not yet been disclosed.
He plans to announce the new Federal Reserve Governor by the end of this week. This appointment will fill the role once held by Kugler.
Impact on Market Volatility
With the selection for the next Federal Reserve Chair down to four individuals, we expect a significant increase in market volatility. The uncertainty about future monetary policy will likely drive the VIX index, a measure of expected volatility, higher in the upcoming weeks. Traders should prepare by considering long positions in VIX futures or buying call options on volatility ETFs. The VIX has already risen to 18, up from a July 2025 average of 15. The potential candidates, including Kevin Warsh and Kevin Hassett from the 2020s, offer very different approaches to interest rates. A more hawkish choice could challenge the market’s current expectation of a 25-basis-point rate cut by the end of the year, as indicated by SOFR futures contracts. Traders are already using options to bet on significant market movements, purchasing straddles on Treasury bond ETFs like TLT, which will profit if bond prices change sharply in either direction. This uncertainty also affects equity and currency markets. A hawkish appointment could strengthen the dollar and put pressure on stock prices, making protective put options on the S&P 500 a wise choice. The options market reflects this concern, with the put-to-call ratio on major indices rising above 1.2, the highest level since the inflation scare in spring 2025.Reactions to the Announcement
The upcoming announcement of a new Fed Governor this week will be a crucial indicator of the administration’s outlook. The nominee’s perceived leanings as either a hawk or a dove will likely lead to immediate changes in short-term interest rate futures. We observed similar short-term market reactions to personnel changes during the 2017-2018 period, often signaling longer-term policy shifts. Create your live VT Markets account and start trading now.AMD’s stock rises about 2% thanks to mixed earnings and strong revenue
AMD’s earnings report showed mixed results. The adjusted earnings per share (EPS) was $0.48, slightly below the expected $0.49. However, revenue was strong at $7.69 billion, beating forecasts of $7.40 billion.
The company faced $800 million in inventory and related charges because of U.S. export controls. For the third quarter, AMD predicts revenue will reach $8.7 billion, higher than the anticipated $8.31 billion. They expect a GAAP gross margin of about 54%.
This revenue outlook does not factor in potential earnings from MI308 AI chip shipments to China due to regulatory issues. Following this announcement, AMD’s shares rose by about 2%.
Looking back at late 2022, AMD’s earnings report showed both challenges and strengths. The company faced significant inventory costs due to new U.S. export laws but gave strong guidance for the future. This created uncertainty, which can be leveraged by traders.
After such reports, implied volatility often drops as immediate earnings risks fade. This is a good time for traders to buy options at lower prices for upcoming weeks. The market is now processing this news and looking for the next big event.
The strong guidance back then hinted at an AI boom that boosted AMD’s stock throughout 2023 and 2024. Recent reports as of mid-2025 indicate AMD has captured nearly 35% of the data center AI accelerator market. Traders may consider buying call options to take advantage of this positive trend. The cautious forecast excluding MI308 sales to China turned out to be a smart choice.
Nonetheless, the inventory charge related to China highlights ongoing geopolitical risks. Given the tech tensions since the early 2020s, buying put options could be a wise move to guard against unexpected regulatory changes. This risk is crucial for the stock’s future performance.
For those wanting to minimize risk, a bull call spread could be a useful strategy. This involves buying a call option at a lower strike price and selling another at a higher strike price. This strategy limits potential profits but also lowers initial costs, making it a way to bet on moderate upward movement in the coming weeks.
The modest 2% increase in share price after the 2022 report indicates that the market was balancing both positives and negatives. Today, there’s considerable optimism about AI already priced into the stock after its significant rise. Any positive news in the coming weeks will need to be substantial to provoke another big move, as high expectations have become the norm.
US Dollar Index holds steady above 98.50 despite mixed signals from US PMI
The US Dollar Index (DXY) is holding above 98.50 after a drop last week, currently sitting at about 98.96. This comes after mixed results from US Purchasing Managers Index (PMI) data.
The S&P Global Services PMI for July is at 55.7, slightly better than the expected 55.2. The Composite PMI also improved, rising to 55.1 from 54.6. However, the ISM Services PMI dropped to 50.1, lower than the forecast of 51.5, with falls in both new orders and employment. The Prices Paid Index, however, increased to 69.9 from 67.5, showing ongoing cost pressures.
The DXY is settling after a two-month peak of 100.26, attributed to a weaker-than-expected US Nonfarm Payrolls report. The economy added only 73,000 jobs, below the 110,000 predicted, with job numbers for May and June revised down by 258,000. Now, there’s a 92% chance the Federal Reserve will cut rates by 25 basis points at its next meeting.
Adding to market uncertainty, the US has introduced new tariffs of 10% to 41% on imports from 70 countries, including India and Canada. US-China trade talks remain unresolved as the August 12 truce deadline approaches. There are also concerns about political interference in economic institutions, especially after President Trump’s dismissal of the Bureau of Labor Statistics Commissioner following the July jobs report.
Overall, the outlook for the US Dollar seems bearish due to weak labor data, possible rate cuts, and geopolitical risks. Federal Reserve comments in the coming weeks will be closely watched for hints about future policy changes ahead of September’s meeting.
Currently, the US Dollar Index is stabilizing around the 104.50 level after a strong performance last month. The market is reacting to mixed signals from the latest jobs report, which fell short of expectations, creating uncertainty for traders.
The July Nonfarm Payrolls report showed that 185,000 jobs were added, below the expected 200,000, raising concerns about economic strength. Additionally, the most recent ISM Services report showed the Prices Paid component rose to 58.6, indicating that inflation pressures are still present. This puts the Federal Reserve in a tough spot before the September meeting.
Due to this uncertainty, there is rising demand for options contracts on currency futures as traders prepare for possible volatility. The market now anticipates a 65% chance of a 25 basis point rate cut by the fourth quarter, suggesting a growing interest in betting on a weaker dollar.
We recall the market fluctuations during the US-China trade disputes of 2019, which similarly raised concerns about the dollar. Today’s tensions are different, focusing more on global supply chain shifts and new tech export regulations. These issues are adding risk and keeping dollar volatility higher.
The dollar is at a pivotal point, supported by ongoing inflation but challenged by signs of a slowing labor market and potential rate cuts. Upcoming comments from Federal Reserve officials will be crucial for shaping expectations, and traders will closely analyze their words for clues about the next policy change.
W&T Offshore reports Q2 loss of $0.08 per share, better than expected but down from last year’s results
W&T Offshore Inc. reported a loss of 8 cents per share in Q2 2025, which is better than the expected 14 cents loss but worse than last year’s 5 cents loss. Quarterly revenues fell to $122.4 million, below the estimated $137 million and down from $143 million last year. The improved earnings came from lower operating expenses, but these were countered by reduced production and lower oil-equivalent prices.
Production for the quarter averaged 33.5 MBoe/d, down from 34.9 MBoe/d last year and below the expected 34.5 MBoe/d. Oil production dropped to 1,259 MBbls from 1,382 MBbls, missing the estimate of 1,427 MBbls. Natural gas liquids output was 245 MBbls, down from 334 MBbls but above the estimate of 226 MBbls. Natural gas production rose to 9,285 MMcf, higher than last year’s 8,769 MMcf and the estimated 8,897 MMcf.
The average realized oil price was $63.55 per barrel, a decline from last year’s $80.29 and below the estimate of $65.57. NGL prices fell to $19.24, while natural gas prices rose to $3.75. Lease operating expenses increased to $25.20 per Boe. Net cash from operations reached $27.9 million, down from $37.4 million. Free cash flow also fell to $3.6 million.
W&T Offshore invested $10.4 million in resources and had $120.7 million in cash, with net long-term debt at $350.1 million as of June 30, 2025. The company expects production levels to remain unchanged for Q3 and the entire year. Operating expenses for Q3 are projected to be between $71.5 million and $79.3 million, with total annual expenses estimated at $280 million to $310 million. Capital expenditures are forecasted at $34 million to $42 million.
Currently, W&T Offshore has a sell recommendation. Other energy sector options, such as Antero Midstream and Enbridge Inc., are rated more favorably with buy recommendations.
Today is August 5, 2025.
Although W&T Offshore’s loss was smaller than expected, we are concerned about missed revenue and oil production targets. The company’s struggle to meet top-line goals and declining production points to fundamental weaknesses. Any short-term price increase from the better-than-expected earnings should be viewed with caution, as the overall business performance is declining.
The realized oil price of $63.55 per barrel is particularly worrying. As of today, WTI crude futures for September delivery are trading around $68 per barrel, which means W&T is receiving much lower prices than the market benchmark. This could indicate issues with their hedging program or the quality of their crude oil, worsening the effects of falling commodity prices compared to the $80.29 they received last year.
Looking ahead, the forecast for stable production does not suggest any immediate improvement. This stagnation follows a decline in production over the past year, highlighting a troubling operational trend. Combined with rising lease operating expenses, we see a clear path toward continued margin pressure.
Given this situation, we think that buying put options is a sensible strategy for the coming weeks. The stock has underperformed relative to the broader energy sector since early 2024, and this report doesn’t change that outlook. We are considering put options that expire in October and November 2025 to allow our bearish forecast to develop.
We also expect the stock’s implied volatility to decrease now that the earnings report is behind us. This creates an opportunity to sell option premiums, like through bear call spreads. The flat production guidance suggests a low likelihood of sudden positive surprises, making strategies that benefit from stagnant or slowly declining stock prices appealing.
Private inventory survey shows larger-than-expected decline in crude oil supplies
The American Petroleum Institute (API) recently did a private survey. They expect a drop in crude oil stocks by 0.6 million barrels, an increase in distillates by 0.8 million barrels, and a decrease in gasoline stocks by 0.4 million barrels. This information helps oil storage facilities and companies get ready for the official government data release.
The official report comes from the U.S. Energy Information Administration (EIA) and is set to be released on Wednesday morning, U.S. time. The EIA report offers a more in-depth analysis. While the API report shows total crude oil storage levels and weekly changes, the EIA includes data from the Department of Energy and other agencies. It also covers inputs and outputs from refineries, as well as storage levels for different types of crude oil, giving a complete picture of the oil market’s condition.
Market Reactions
We see the API survey data arriving just before the official government numbers come out tomorrow. This often leads to a brief spike in market activity, but the official EIA report is the one that counts the most. If there’s a big difference between the two reports, it could lead to a sharp price change on Wednesday morning. Given the chance for mismatched reports, traders might explore options strategies to benefit from the anticipated price swing. The CBOE Crude Oil Volatility Index (OVX) has recently risen to around 35, indicating the market is preparing for surprises in tomorrow’s EIA data. This suggests that hedging against sudden movements, rather than picking a direction, could be a savvy short-term strategy. Looking ahead, we’re nearing the end of the summer driving season. In July 2025, U.S. gasoline demand averaged a modest 9.1 million barrels per day, slightly below expectations and lower than the 9.3 million bpd in July 2024. This trend could put pressure on crude prices as we head into autumn.Supply Concerns
One major factor affecting supply in the coming weeks is the Atlantic hurricane season, which is currently at its peak. Any storm moving into the Gulf of Mexico could disrupt a significant portion of the nearly 1.9 million barrels of daily offshore production. This risk of supply disruption is a key reason prices have stabilized despite mixed demand signals. Globally, we are closely monitoring OPEC+ policy after their June 2025 decision to keep output levels steady. This places greater importance on U.S. inventory reports as a primary indicator of global demand health. Any signs of reduced consumption in the official figures could boost confidence for bearish traders in the weeks ahead. Create your live VT Markets account and start trading now.Super Micro Computer (SMCI) results missed forecasts, leading to a drop in after-hours shares
Super Micro Computer reported an adjusted earnings per share (EPS) of $0.41. This was lower than the Wall Street estimate of $0.45 and down from $0.63 a year ago. Their revenue was $5.8 billion, which was less than the $6.0 billion forecast but showed an 8% increase from last year.
The company’s gross margin was about 9.6%, missing the expected 10%. For future projections, Super Micro expects a non-GAAP EPS between $0.40 and $0.52, which is lower than the average estimate of $0.59.
Super Micro anticipates revenue between $6 billion and $7 billion. Analysts expected $6.55 billion. However, the company is forecasting a total revenue outlook of at least $33 billion, much higher than previous estimates of around $20 billion.
After these announcements, Super Micro’s stock fell about 10-11% in after-hours trading. Concerns included the lower-than-expected EPS, weaker margins, and increased competition in the AI-server market.
Investors reacted negatively to the earnings report, significantly dropping the stock price after hours. The misses in EPS, revenue, and gross margin contributed to this sentiment, indicating worries about the company’s profitability.
Pressures from rising competition are impacting margins. Recent news about major cloud service providers developing their own AI hardware supports these concerns. This suggests that while demand for servers remains strong, the ability to charge higher prices is decreasing.
The contrast between disappointing current results and optimistic future projections has led to a spike in implied volatility above 85%. Such high volatility can create opportunities for sellers who think the fear is overblown. On the other hand, traders who expect more significant price movements may buy options to take advantage of the uncertainty.
Considering the soft guidance for the upcoming quarter, we anticipate ongoing downward pressure in the following weeks. There has already been a surge in put option volume, exceeding three times the daily average, as many traders prepare for further declines. Strategies like buying protective puts or initiating bear put spreads are likely to be popular for hedging or speculating.
Nonetheless, the full-year revenue projection of at least $33 billion contrasts sharply with the short-term outlook. This signals a strategy to prioritize market share over current margins. The company appears to be aggressively scaling up to meet long-term demands for AI infrastructure.
Reflecting on the impressive growth of 2024, this might be a shift towards focusing on volume rather than immediate profits. For those who believe in the company’s long-term growth potential, the recent price drop could be a good buying opportunity. Traders might consider selling cash-secured puts at lower strike prices or purchasing long-dated call options to position for a recovery later this year.
US economic optimism reaches 50.9 in August, surpassing the expected 49.2
The RealClearMarkets/TIPP Economic Optimism index for August in the United States reached 50.9, beating the expected 49.2. This monthly number shows that people feel better about the economy than previously thought.
Potential Risks and Uncertainties
All the information provided carries potential risks and uncertainties linked to market activities. It’s essential to do thorough research before making investment decisions, as the details shared may contain errors or inaccuracies. The financial instruments discussed here are meant for informational purposes only and do not serve as trading advice. Investing in open markets comes with significant risks, including the possibility of losing your entire investment. Each individual is fully responsible for their investment choices. It’s important to recognize that there are no guarantees regarding how timely or accurate the information is, and any related risks or expenses are your responsibility. The August economic optimism index at 50.9 reflects slightly more positive feelings among consumers, which could help support the market. More importantly, this figure exceeded forecasts, indicating that the economy is more robust than many expected. This might help corporate earnings and stock indexes in the near future.Market Environment of 2023
We need to consider this in the context of Federal Reserve policy, as strong consumer data could delay potential interest rate cuts. The Consumer Price Index data from July 2025 shows inflation at 3.1%, above the Fed’s target. This likely means policymakers will continue to be cautious, creating a challenging environment where positive economic news could limit market growth by keeping borrowing costs high for longer. Given this, the CBOE Volatility Index (VIX) has been fairly low, recently trading below 15, which shows a level of market complacency. This situation could favor strategies that benefit from stable price movements or slow increases, like selling premium on major indices. However, traders should stay vigilant for the next inflation report and communications from the Fed, as these could quickly change the scenario. Looking back at the 2023 market environment, we remember that strong economic data used to be bearish for stocks because of worries about rate hikes. Although we seem to have moved past that phase in 2025, we should keep this memory in mind. The current optimism is fragile and heavily relies on inflation continuing to decline gradually. Create your live VT Markets account and start trading now.In July, the Services PMI dropped to 50.1, falling short of analyst predictions and decreasing from 50.8.
The US ISM Services PMI dropped to 50.1 in July, down from 50.8 in June, and fell short of the expected 51.5. This indicates a slowdown in the US service sector.
The Prices Paid Index, which measures inflation, rose to 69.9. Meanwhile, the Employment Index fell to 46.4, and the New Orders Index dropped to 50.3. These changes highlight ongoing inflation pressures and a decline in employment.
