Wall Street Pauses as PayPal Plunges and Tech Titans Brace for Earnings

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•  29 Jul 2025
 

•   AAPL  
   
  -1.11%
•   AMZN  
   
  -0.79%
•   LLY  
   
  +0.39%
•   META  
   
  -1.27%
•   MSFT  
   
  +0.10%

Wall Street opened the week on a positive note, but by Tuesday, the mood turned more cautious. The Dow slipped 0.5%, while the S&P 500 and Nasdaq both edged down 0.2%. The pullback comes just a day after markets reached fresh all-time highs for the 15th time this year—though those gains were modest and lacked conviction. It’s a familiar midsummer pattern. Trading desks are quieter, as many investors take a break from the steamy Fifth Avenue grind, swapping monitors for mountain cabins or beach chairs. But despite the slow pace, there’s plenty bubbling beneath the surface.

PayPal $PYPL was among the biggest stories of the day, plunging 9% and dragging fintech peers lower. Eli Lilly $LLY also slid 5%, contributing to the market’s red tint. Meanwhile, Spotify $SPOT shares dropped 11% after the company reported a $100 million loss, missing expectations despite adding 8 million new users. CEO Daniel Ek’s cautious pricing strategy stood in contrast to more aggressive moves by rivals, and the market didn’t hold back in its response.

While stocks digest these disappointments, attention is quickly shifting to Washington and overseas. The Federal Reserve is due to announce its latest interest rate decision this week. No surprises are expected—rates are likely to stay in the 4.25% to 4.5% range, but investors will be listening closely to every word Fed Chair Jerome Powell utters at the post-meeting press conference. His tone, word choice, even the pace of his speech could sway sentiment. If Powell signals a willingness to hold rates higher for longer, or sounds especially cautious on inflation, it could chill the market’s recent rally. On the other hand, even the faintest hint of openness to future cuts could be enough to spark another leg higher. For now, Powell appears unfazed by mounting political pressure from Donald Trump to ease policy, and there’s no indication that the Fed Chair’s job is at risk yet.

All this is happening alongside a crucial week in earnings season. Over 150 companies from the S&P 500 are reporting, including four of the “Magnificent Seven”: Microsoft $MSFT, Meta $META, Apple $AAPL and Amazon $AMZN. Expectations are sky-high, especially given that roughly 83% of the 170 companies that have reported so far have beat analyst forecasts. But with valuations stretched and macro uncertainty lingering, even solid results might not be enough to satisfy.

Microsoft is expected to report second-quarter revenue near $73.8 billion, with EPS around $3.38. Investors are watching closely to see if its cloud division, Azure, can maintain last quarter’s 33% growth pace, and whether artificial intelligence investments continue to pay off. A strong beat last quarter led to a 7.6% rally in the stock. Amazon is forecast to post $162 billion in revenue and $1.63 in EPS, with investors focused on AWS performance and improvements in retail profitability. In the last quarter, results met expectations and sent the stock up modestly, but concerns linger over rising logistics costs.

Apple will report on July 31, with projections of $88.9 billion in revenue and $1.42 in EPS. Services remain a bright spot, growing 14% last quarter, but a 1% drop in iPhone sales, especially in China, has investors on edge. The market will be looking for clarity on AI-related innovation and any commentary on supply chain pressures. Meta, which reports tomorrow, is expected to deliver $44.8 billion in revenue and $5.9 in EPS. While ad revenue continues to benefit from Reels, losses at Reality Labs remain a headwind. The company’s last earnings beat sparked a 6% rally, but investors are growing less tolerant of ongoing metaverse losses.

Complicating matters further are renewed trade tensions. Over the weekend, the U.S. and EU signed a deal imposing a 15% tariff on most European imports, including cars. Talks with China in Stockholm are aimed at extending temporary agreements made in Geneva, but time is running out. Without a deal by Friday, Trump-era tariffs could snap back into place, adding another layer of uncertainty for global businesses.

All of this leaves investors navigating a tightrope of risk and reward. On one side: strong earnings, soft inflation, and AI-fueled optimism. On the other: political pressure, tariffs, and a Fed that refuses to flinch.