US stocks close mostly lower after weak Treasury auction pushes rates up

Show Caption

U.S. stocks reversed course to close mostly lower after yields rose on a weak $25 billion Treasury bond auction.

Fewer buyers came out to purchase 30-year bonds, which meant that buyers who were present demanded a higher yield to hold them. Hgher yields dent stocks. Since Treasury yields are benchmark interest rates, that can mean higher rates for businesses and consumers.

The blue-chip Dow dropped 0.51%, or 224.48 points, to 43,968.64; the broad S&P 500 lost 0.08%, or 5.06 points, to 6,340.00 and the tech-heavy Nasdaq shed 0.35%, or 73.27 points, to 21,242.70. The benchmark 10-year yield rose to 4.242%.

Earlier, investors found relief in an exemption for semiconductors in Trump's latest tariff. Trump said semiconductors would face a 100% tax unless the companies "are building in the United States."

The carveout helps companies like Apple that invest in the United States. Apple just said it plans to spend an additional $100 billion on U.S. companies and suppliers over the next four years, in addition to a $500 billion investment announced in February. 

Taiwan said TSMC is exempted from the tax, and South Korea said chips from Samsung Electronics and SK Hynix won’t be subject to the 100% tariff either.

Trump's comments come on the heels of an earlier announcement of an additional 25% tax on India to bring the total levy to 50%. Trump said the additional tariff is because India continues to buy Russian oil.

Other countries that failed to strike a deal with Trump by the Aug. 7 deadline are facing new tariffs, but investors are shrugging that off with deals already made for major trading partners like the European Union and others like Switzerland still working on a deal. The Swiss government is having an emergency meeting, after President Karin Keller-Sutter failed in her attempt to talk down 39% duties in a meeting in Washington Aug. 6.

Investors are also eyeing corporate earnings, which have been mostly positive. About 80% of reports are beating analysts' earnings expectations, above the 76% average of the last four quarters, according to data provider LSEG. Data also showed earnings growth for the quarter is estimated at 12.1%, up from 5.8% at the beginning of July.

Who will take the helm at the Fed?

Federal Reserve Governor Christopher Waller reportedly is President Donald Trump's top pick to replace Fed Chair Jerome Powell when Powell's term expires in May.

Former Fed official Kevin Warsh and National Economic Council director Kevin Hassett also remain in contention for the job, Bloomberg said, citing sources. All of these candidates have agreed with Trump that interest rates should be cut. Waller was one of two governors at the Fed's last policy meeting who did not want to keep rates steady.

Trump also named Stephen Miran, chair of the Council of Economic Advisors, as the interim replacement for Fed Governor Adriana Kugler. Kugler unexpectedly resigned last week. His term is expected to end in January.

Miran, like Waller, is expected to favor lowering rates. The CME FedWatch tool that tracks the odds the market places on a rate move on upcoimg Fed meetings shows a 93.2% chance of a Fed rate cut in September.

Miran has been critical of the Fed, saying it's made policy mistakes because of groupthink and acted beyond its scope.

Corporate news

• Applovin topped second-quarter forecasts and issued better-than-expected current quarter guidance. Shares rallied about 12%.
• DoorDash's second-quarter results topped analysts' estimates. The stock added 5.05%.
• Crocs' quarterly results beat forecasts but the shoe maker declined to give annual guidance. It also  warned sales would decline this quarter and forecast an annual tariff hit of about $90 million. Shares tumbeld 29.24%.
• MetLife's second-quarter results fell on less favorable underwriting and lower investment margins. Shares shed 3%.
• Ralph Lauren raised its annual outlook but warned tariffs could be inflationary. The clothes maker's stock dropped 6.5%.
• Intel's stock fell more than 3% after Trump called on the company's chief executive to resign due to business ties to China.
• Duolingo reported better-than-expected second-quarter results and guided third-quarter sales above Street views. Shares soared 13.75%.
• Airbnb beat second-quarter forecasts and issued third-quarter sales guidance that straddled analysts' estimates. It also revealed margin pressures. Shares slid 8%.
• Corning inked an expanded partnership with Apple said it would expand its partnership with the company as part of its plans to increase manufacturing in the United States. Shares edged up 1.22%.
• Eli Lilly said people lost more weight in a trial with one of its drugs but some experts were concerned about the high number of people on the maximum dose who dropped out due to side effects. Shares slid more than 14%.
• DraftKings said it expects full-year sales at the top end of its guidance. Shares dipped.
• Rogers shares shares gained 2.38% after the Wall Street Journal said investor Starboard Value has accumulated a more than 9% stake in the engineering-materials maker and plans to seek more changes to boost shares.
• United Airlines encountered a technical issue that grounded hundreds of flights and caused massive delays. Shares fell 1%.
• Datadog beat estimates for second-quarter results. Shares dipped.
• Peloton's sales in the last three months of its fiscal quarter topped forecasts. Shares edged up.
• Dating app Bumble said the number of paid subscribers sank from year-ago levels. Shares tumbled almost 16%.
• E.l.f. Beauty saw a 30% decline in fiscal first-quarter profits, mostly due to tariffs. Shares slid 9.5%.
• Ride-share company Lyft reported revenues just shy of forecasts, and its stock rose 1.25%.

Cryptocurrency

Actelis Networks said its board approved a cryptocurrency treasury strategy to help it diversify its balance sheet.

Separately, Trump plans to sign an executive order that would allow private assets and crypto into 401(k)s.

Bitcoin was last up 2.11% at $117,343.80.

This story was updated with new information.

Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and  subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.