US stocks retreated on Tuesday as investors digested the latest wave of corporate earnings, economic data, and various tariff updates.

The benchmark S&P 500 (^GSPC) slid 0.5%, while the blue-chip Dow Jones Industrial Average (^DJI) fell a more modest 0.1%. The Nasdaq Composite (^IXIC) was down nearly 0.7%.

Palantir (PLTR) stock jumped roughly 7% after the company's earnings report beat expectations and revealed its revenue had topped $1 billion in a quarter for the first time.

On Monday, stocks sharply rebounded after tanking on Friday in the aftermath of a number of market-shaking events, including a weak jobs report, fresh tariffs, new signs of rising prices, and President Trump's firing of the commissioner of the Bureau of Labor Statistics.

Economic data released Tuesday morning showed the services sector unexpectedly flatlined in July. The Institute for Supply Management's (ISM) services PMI registered a reading of 50.1 in July, down from June's reading of 50.8, and below the 51.5 economists surveyed by Bloomberg.

Meanwhile, Trump continued to amp up pressure on trade after this week after threatening to hike tariffs on India. In an interview with CNBC on Tuesday morning, President Trump said pharmaceutical imports could see tariffs of up to 250%. He also ruled out Treasury Secretary Scott Bessent as a potential incoming Fed chair, but noted that Jerome Powell's successor could be named "soon."

Read more: The latest on Trump's tariffs

Wall Street is now focused on the continuation of earnings season. On Tuesday, AMD (AMD) and Rivian (RIVN) are set to report their results. McDonald's (MCD) and Disney (DIS) earnings land Wednesday.

Palantir (PLTR) stock rose more than 7% on Tuesday after notching a billion dollars in quarterly revenue for the first time.

The stock is now up more than 610% over the past year and is quickly becoming one of the largest stocks in the S&P 500 GSPC (^GSPC).

Since joining the S&P 500 in September 2024, Palantir has added about $321 billion to its market cap and is now a top 25 largest holding in the S&P 500. That makes Palantir larger than the likes of Bank of America (BAC), Chevron (CVX) and Coca-Cola (KO).

Yahoo Finance's Pras Subramanian reports:

Rivian (RIVN) will report second quarter earnings after the bell on Tuesday. The pure-play EV maker is building the case toward eventual profitability while navigating the minefields of President Trump's auto sector tariffs and removal of EV tax credits.

For the quarter, Rivian is expected to report revenue of $1.28 billion, per Bloomberg consensus estimates, higher than the $1.158 billion reported a year ago. The company is expected to post an adjusted EPS loss of $0.63, with an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $493 million.

Last quarter, the company reported its second consecutive quarter of gross profit, hitting $206 million. Despite this, issues like trade policy and tariffs meant Rivian maintained its 2025 full-year adjusted EBITDA loss projection in a range of $1.7 billion to $1.9 billion. Tariffs on auto parts currently stand at 25%, though USMCA-compliant parts are exempt.

Following Friday's weaker-than-expected July jobs report, the consensus debate surrounding Federal Reserve interest rate cuts is no longer whether the central bank will slash rates this year. Instead, it's all about how aggressive the cuts will be.

\\"I think a 25 basis points cut is a lock,\\" Queens' College, Cambridge president Mohamed El-Erian told Yahoo Finance. \\"A 50 basis point cut is a possibility, not yet a probability. It's a possibility.\\"

The economic team at Goldman Sachs agrees. In a Monday research note titled \\"on course for cuts,\\" Goldman Sachs chief economist Jan Hatzius projected the Fed will proceed with three 25 basis point interest rate cuts throughout its final three meetings of 2025. But Hatzius added that should the unemployment rate move higher from 4.2% in the August jobs report, a 50 basis point interest rate cut in September is \\"possible.\\"

For their part, markets are split on how far the Fed will bring down interest rates this year. As of Tuesday afternoon, investors are pricing in a 46% chance the Fed cuts rates by 75 basis points in 2025 and a 43% chance rates are lowered by 50 basis points by the end of the year, per the CME FedWatch Tool.

This will put upcoming monthly labor reports and weekly reports on unemployment claim filings, released on Thursdays, in particular focus for investors between now and the Sept. 17 monetary policy decision.

On a sector basis, Technology (XLK), Communication Services (XLC), and Utilities (XLU) were the clear winners during Monday's trade, each outperforming the S&P 500's 1.5% gain.

On Tuesday, that action reversed. All three sectors were among the worst performers within the benchmark index.

Another Wall Street strategist has boosted their year-end S&P 500 target.

In a note to clients on Tuesday, HSBC head of equity strategy for the Americas Nicole Inui boosted her year-end S&P 500 target to 6,400 from 5,600.

Inui also detailed a bull-case scenario in which an \\"AI fueled rally\\" brings the benchmark index to 7,000 by year-end and a bear-case scenario in which tariff impacts drag the S&P 500 down to 5,700.

\\"We have more confidence in the sustainability of the AI trade than further easing on policy uncertainty,\\" Inui wrote.

In other words, the risks are more heavily weighted to the bull case outcome.

This reveals a key takeaway from how Wall Street is talking about the potential path higher for an S&P 500 that's already near record highs. The bull case for stocks isn't backed by a call for US economic growth to suddenly inflect higher or interest rate cuts from the Federal Reserve to suddenly spark a broad market rally. As we wrote in Tuesday's Yahoo Finance Morning Brief newsletter, the bull case in stocks is still being driven by AI investment and its ability to push corporate profits higher.

\\"For our bull case scenario to play out, tariff costs would shift mostly to the supplier having a negligible impact on US corporate profits,\\" Inui wrote. \\"At the same time, AI adoption accelerates and starts to have a real impact on profitability through efficiency gains.\\"

Yahoo Finance's Ben Wersckul reports:

A dizzying array of trade crosscurrents continued Tuesday with a push for last-minute deals, lingering fuzziness on previously announced trade commitments, and indications that a deal to delay tariffs on China is \\"close.\\"

It all comes as global importers brace for a first deadline coming Thursday morning, when President Trump promises to implement a central plank of his trade agenda in the form of a tiered approach to \\"reciprocal\\" tariffs from 10% to 50%.

The president has repeatedly said he's full-speed ahead on his plans and that no delays are likely — even teasing on CNBC Tuesday morning that he probably won't run for president again but that he'd like to, in part because, in his view, \\"people love the tariffs.\\" (Trump is, of course, barred by the Constitution from running for a third term, but he's often floated the idea.)

Some countries clearly aren't big fans at the moment and find themselves on the outside looking in — particularly Switzerland and India.

Read more here.

Yahoo Finance's Jake Conley reports:

Hims & Hers Health (HIMS) stock fell as much as 6% early Tuesday after the company reported revenue late Monday that fell shy of Wall Street forecasts while maintaining its full-year forecast.

The telehealth company posted revenue of $544.8 million in the second quarter, marking a 73% increase year over year but missing analyst estimates for $552 million, according to Bloomberg data. Hims & Hers maintained its full-year revenue guidance of $2.3 billion to $2.4 billion.

Earnings per share topped forecasts, coming in at $0.17 against expectations for $0.15.

Read more here.

Activity in the services continued to expand during the month of July, according to two data releases on Tuesday morning.

The Institute for Supply Management's (ISM) services PMI registered a reading of 50.1 in July, down from June's reading of 50.8, and below the 51.5 economists surveyed by Bloomberg had expected. Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate contraction. The manufacturing sector has been in contraction for most of the past two years.

\\"July’s PMI level continues to reflect slow growth, and survey respondents indicated that seasonal and weather factors had negative impacts on business,\\" Steve Miller, the chair of the Institute for Supply Management Services Business Survey committee, said in the release. \\"The most common topic among survey panelists remained tariff-related impacts, with a noticeable increase in commodities listed as up in price.\\"

Elsewhere on Tuesday, S&P Global's composite PMI, which combines both activity in the services and manufacturing sectors, registered a reading of 55.1 in July, up from 52.9 the month prior.

S&P Global chief business economist Chris Williamson said the data signals \\"encouragingly robust economic growth at the start of the third quarter.\\" Williamson added that the July PMI data points to the US economy growing at a 2.5% annualized pace in the third quarter, above the 1.25% pace seen in the first half.

Yahoo Finance's Jennifer Schonberger and Myles Udland report:

President Trump said Tuesday morning that the pool of potential nominees to succeed Federal Reserve Chair Jerome Powell is down to four people, and that Treasury Secretary Scott Bessent will not be nominated for the role.

\\"The two Kevins are doing well, and I have two other people that are doing well,\\" Trump said in an interview with CNBC on Tuesday. The \\"two Kevins\\" are in reference to former Fed governor Kevin Warsh and Kevin Hassett, director of the National Economic Council.

Asked about Fed Governor Chris Waller and Secretary Bessent, Trump didn't deny that Waller was among the four possible replacements for Powell, but did say that Bessent does not want the job.

\\"I love Scott, but he wants to stay where he is,\\" Trump said.

Read more here.

Companies reporting earnings topped Yahoo Finance's trending tickers list on Tuesday. Here's a look at how they're trading 30 minutes before the opening bell:

Pfizer (PFE) stock rose 2.4% after the pharmaceutical company beat on the top and bottom lines. CEO Albert Bourla said Pfizer remains focused on R&D and expanding margins after a cycle of right-sizing the company post-COVID.

Palantir (PLTR) shares surged around 7% on Tuesday morning. The company reported its first billion-dollar revenue quarter on Monday after the bell while CEO Alex Karp said the company sees \\"no reason to ... relent.\\"

Caterpillar (CAT) stock slipped 1% after the company reported a profit miss in the second quarter. What's more, the industrial machinery maker said it expects a $1.5 billion headwind for the full year due to tariffs.

Lemonade (LMND) stock popped 8% after reporting better-than-expected results and raising revenue guidance for the year.

Hims & Hers (HIMS) shares plunged 10%. The telehealth platform missed revenue estimates and is navigating the end of a partnership with Novo Nordisk (NVO) to sell brand-name weight-loss drugs.

Read more live coverage of corporate earnings here.

Palantir (PLTR) stock climbed 7% higher in premarket trading on Tuesday following the AI software company's blowout second quarter earnings report on Monday afternoon.

Palantir's revenue topped $1 billion in a quarter for the first time as the company dodged government contract spending cuts and reported beat-and-raise results.

Year to date, Palantir stock is up 112%.

Yahoo Finance's Jake Conley reports:

In another boon to the company's US government business, Palantir announced last week that it signed a deal rolling up contracts with the US Army for a value of up to $10 billion over the next decade.

Wedbush analyst Dan Ives, a noted Palantir bull, said the deal is “one of the largest ever DOD [Department of Defense] software contracts in US history.”

\\"Palantir remains one of our top tech names to own in 2025 and this deal represents another opportunity for PLTR to capitalize on while continuing to generate unprecedented traction for its entire portfolio across the federal and commercial landscapes,\\" Ives wrote in a note to investors on Monday after the company published its earnings.

Read more here.

Yahoo Finance's David Hollerith reports:

Prospects for bonuses across Wall Street this year are beginning to perk up. But not everyone will be happy.

Big banks, followed by traditional money managers, are on pace to dole out some of the most sizable pay increases, but the bonus pool for some Wall Street and Main Street bankers, as well as those given out by funds managing private assets or alternatives, may still disappoint, according to a report from compensation consulting firm Johnson Associates.

Bonuses for those working at stock trading desks at big banks should see as much as a 30% increase, the biggest jump from last year, according to the report. These workers have thrived on the fees earned from navigating client funds through what’s so far proved a volatile year.

That compares to an increase of as much as 20% in bonuses for stock trading specialists that Johnson Associates initially forecast at the end of last year — and the 25% jump it projected in May.

Next in line for large pay increases are other traders and dealmakers who underwrite bond market offerings. Those two professional groups could see as much as 20% and 15% increases, respectively, so long as interest rate volatility and demand from corporations looking to refinance debt remains strong.

Read more here.

Economic data: S&P Global US Services PMI (July final) S&P Global US Composite, (July final); ISM services index (July)

Earnings: AMD (AMD), BP (BP), Caterpillar (CAT), Duke Energy (DUK), Lucid Group (LCID), Opendoor (OPEN), Pfizer (PFE), Rivian (RIVN), Super Micro Computer (SMCI), Snap (SNAP), Upstart (UPST)

Here are some of the biggest stories you may have missed overnight and early this morning:

One key reason a slowing economy isn't shaking stock market bulls

Wall Street 2025 bonuses: Winners and losers so far

Big Tech is power-hungry, and America's aging grid can't keep up

Pfizer beats in Q2 earnings, reaffirms 2025 outlook

Trump's Fed pick could face resistance from colleagues on rates

Intel struggles with key manufacturing process for next chip

EU says it expects turbulence in trade relations with US

Jefferies sees crowded trade in Big Tech as Fed nears rate cuts

US rig decline outpaces efficiency, threatening oil output

Autopilot verdict deals Tesla a 'black eye'

Pfizer (PFE) stock rose 2% in premarket trading Tuesday after beating quarterly estimates on the top and bottom lines.

The company posted earnings per share of $0.78, versus estimates of $0.58 per share, on revenue of $14.7 billion, compared to Wall Street expectations of $13.5 billion.

Yahoo Finance's Anjalee Khemlani reports:

CEO Albert Bourla said the company is proving out its business development strategy with Tuesday's beat, as investors have waited for strong performance post-COVID.

\\"Pfizer had another strong quarter of focused execution and we’re pleased with our progress in advancing our R&D pipeline, driving our commercial performance and expanding our margins,\\" he said in a statement. \\"We continue to strengthen our company for the future and we’re confident in our ability to create further value for patients and our shareholders.\\"

Pfizer has been in a cycle of right-sizing its business after the outsized COVID-19 profits boosted the company's coffers and stock for several quarters. Since the pandemic waned and with recent signals from US health leaders that could result in even fewer vaccinations moving forward, investors have been waiting to see if its multibillion-dollar acquisitions will result in new blockbusters to fill an anticipated revenue decline toward the end of the decade, as Pfizer will face a number of patent expirations.

Read more here.

Yahoo finance's senior reporter Josh Schafer looks at why softening economic data may not be as important for stocks as AI:

Last week, fears over the US economy slowing more than initially thought took center focus as the major indexes experienced the worst single-day drop of the summer.

That was the headline takeaway from the busiest week of data releases slated for the summer of 2025.

But underneath the surface, there are still plenty of reasons to feel confident in the path higher for the S&P 500 (^GSPC), according to Wall Street strategists — a confidence that seemed to roar back on Monday as the S&P 500 jumped 1.5%.

Besides the dour jobs report, investors also learned that the S&P 500 is pacing for year-over-year earnings growth of 10.3%, well above the 5% expected entering the reporting period, per FactSet data.

On top of that, we heard Big Tech giants say they're set to spend another $364 billion in AI investments during 2026, and third quarter earnings estimates for the S&P 500 weren't slashed during the first month of the quarter for the first time in over a year.

Read more here.

Nvidia's (NVDA) main server assembly partner Hon Hai Precision (2317.TW) saw its Taiwan stock close 2% higher on Tuesday despite reporting a sales slowdown for July.

Bloomberg News reports:

July’s sales growth slowed compared to previous months, reflecting tariff-related uncertainties dampening electronics demand.

Sales rose 7.25% to NT$613.8 billion ($20.5 billion), its slowest growth since January. Analysts were looking for a 12.2% increase in third-quarter revenue. Hon Hai, which also assembles Apple Inc.’s iPhones, previously said it expects third-quarter sales to grow sequentially and year-on-year.

Last week, President Donald Trump set a 20% levy on Taiwan exports to the US. While electronics are exempt, they may be affected by the outcome of a US investigation, under Section 232 of the Trade Expansion Act, which includes probes into sectors such as semiconductor products.

Read more here.

Oil prices steadied from a three-day decline following a ramping up of threats from Trump to India over the Asian nation's continued use of Russian crude.

Bloomberg reports:

Brent (BZ=F) traded below $69 a barrel after shedding more than 6% over the previous three sessions, while West Texas Intermediate (CL=F) was near $66. Trump said he would be “substantially raising” the tariff on Indian exports to the US over the nation’s purchases of Russian oil as part of a bid to force Moscow to agree a truce in Ukraine. New Delhi slammed the move as unjustified.

Oil has trended lower in recent sessions following a three-month increase. The weakness has been driven by signs that the world’s largest economy was slowing amid Trump’s broader trade measures, endangering energy demand, as well as moves by OPEC+ to relax supply curbs. Taken together, that’s spurred concerns that a crude glut will form this half, weighing on prices.

“The fundamental outlook for the oil market is bearish: OPEC+ supply increases should ensure the market is in surplus from the fourth quarter,” said Warren Patterson, head of commodities strategy at ING Groep NV. “However, a key and very real risk to this view is the potential of secondary tariffs on buyers of Russian oil.”

Read more here.