Tech Stocks Stumble as Consumer Spending Cracks Emerge

Technology Sell-Off Turns Into a Rout

Investor enthusiasm for the technology and AI sectors has evaporated, triggered by disappointing forecasts and a broader re-evaluation of sky-high valuations. The sell-off has now gathered significant pace, with pre-market futures suggesting Friday's session will bring further declines. The mood is so unforgiving that even companies beating earnings estimates, like Intuitive Surgical, have seen their shares slide on concerns over slowing growth or minor operational issues.

AI and Streaming Giants Under Pressure

The market's recent darlings, from streaming services to AI chipmakers, have faced sharp declines as investors question their future growth paths.

• Netflix's Growth Story Questioned: The streaming service saw its stock plunge more than 11% in extended trading after it issued disappointing guidance for its upcoming earnings. This overshadowed a report of higher profits and came after price increases earlier this year. With shares already down around 20% this year, the company unsettled investors further by announcing it will reduce the frequency of its viewership reports, a move seen as reducing transparency as streaming competition intensifies.
• AI Ambitions Hit Reality: Google has delayed its next-generation AI model, Gemini, after finding its coding capabilities lag behind rivals from OpenAI and Anthropic. This stumble is significant for a company planning to spend approximately $190 billion on AI this year and raises questions about its ability to compete in the high-stakes AI race. In a more unusual move, ChatGPT creator OpenAI has started selling physical merchandise, including a branded basketball, in a curious pivot to off-screen branding.
• AI Chip Stocks Approach Bear Market: The semiconductor sector remains under heavy pressure. The PHLX Semiconductor Index is down nearly 20% from its recent peak, while a key fund tracking the industry, the VanEck Semiconductor ETF, has fallen almost 7% this week alone. The sell-off, triggered by concerns over chip giant TSMC's massive spending plans, saw major players like Arm Holdings, Micron Technology and Advanced Micro Devices all lose more than 5% in Thursday's session. Despite this, some investors are still seeking entry points, evidenced by a record $1.1 billion single-day flood of money into an iShares South Korea ETF, largely to gain exposure to chipmaker SK Hynix.

Apple's Contrarian Strategy Shines

In a striking contrast to its peers, Apple has largely sat out the AI spending spree, a move that is currently being rewarded by the market. Its share price climbed to a new record high, standing out as Wall Street's 'anti-AI' trade.

This approach mirrors the playbook of historic titans like John D. Rockefeller, who avoided the risky and expensive work of oil drilling to focus on the more profitable refining and distribution stages. Similarly, Apple is letting its rivals fund costly AI research while it positions itself to integrate the best models into its dominant consumer device ecosystem. The company is also reportedly looking to acquire firms that can build AI server chips, reinforcing its focus on controlling the end-user experience rather than foundational research.

Trump Media Announces 'Truth API'

Blending politics and trading, Trump Media and Technology Group is launching a paid data feed called "Truth API". Scheduled for 1 August, this service aims to give high-speed access to posts from key Truth Social accounts, targeting firms that rely on automated, algorithm-based trading strategies.

SpaceX Shares Fall Below IPO Price Amid Supply Concerns

The initial excitement surrounding the public debut of SpaceX (SPCX) has faded, with its share price falling below the $135 offer price just five weeks after its launch. The stock, which peaked at over $225 in late June, has followed a predictable pattern for a high-profile Initial Public Offering (IPO), where early demand from index funds and retail investors gives way to concerns about future share supply.

With initial trading restrictions now lapsing, the market is bracing for a wave of new shares to become available for sale. A published schedule shows that hundreds of billions of dollars worth of insider-owned stock will be unlocked in stages over the coming months, with significant releases timed around the company's earnings reports in August and November. This looming supply is putting pressure on the price, as the company is still reporting quarterly losses of around $4 billion.

Corporate News Roundup

Away from the tech sector, other corporate giants are making defensive moves to protect profitability and return cash to shareholders, reflecting a cautious outlook on the broader economy.

Belt-Tightening and Shareholder Returns

• Verizon Slashes Jobs: Verizon Communications is set to cut 3,000 jobs as its new CEO pushes to reduce expenses. The layoffs will affect 2,500 retail workers and 500 corporate staff, and the firm also plans to sell 274 stores to franchisees. This is part of a larger programme to achieve $5 billion in savings by 2026.
• Berkshire Hathaway Ramps Up Buybacks: Warren Buffett's Berkshire Hathaway appears to have significantly increased its share repurchases, with analysis suggesting between $5 billion and $11 billion of its own stock was bought back in the second quarter. This returns a portion of its vast $400 billion cash pile to shareholders.
• UnitedHealth Beats Expectations: Healthcare giant UnitedHealth delivered a strong earnings report that comfortably beat forecasts, raising its full-year profit outlook. Crucially, its medical care ratio—a key measure of costs—improved, easing sector-wide concerns about rising expenses and sending its shares up around 8%.

Global Expansion and Takeover Bids

• 7-Eleven Eyes Poland: The Japanese owner of 7-Eleven is reportedly in talks to acquire a stake in Zabka, Poland's largest convenience store chain. The move reflects a strategy to expand its global footprint to 30 countries by 2030 as its home market in Japan becomes saturated.
• GameStop Pursues eBay: Video game retailer GameStop has signalled its serious intent to take over online marketplace eBay, with its CEO stating they are "coming for eBay one way or another."

Consumer Spending Shows Widespread Strain

The optimism seen in parts of the stock market is not reflected on the high street or in household spending. A new survey has found that roughly 60% of Americans hold a negative view of the economy and its future prospects, the most pessimistic reading since late 2023. Data reveals a consumer who is increasingly cautious, cutting back on big purchases and everyday items alike. Underscoring this trend, a separate report shows 42% of adults in the United States still rely on their parents for financial support, a clear indicator of widespread economic pressure.

The Pool Industry's Deep Dive

The boom in backyard upgrades has officially ended. The pool industry is facing a sharp slowdown as consumers delay large, discretionary purchases.

• Pentair Slashes Forecast: Pool equipment firm Pentair shocked the market by cutting its full-year revenue guidance. It now expects sales to fall by as much as 7%, a stark reversal from its previous forecast of 2-4% growth. This news sent its shares plunging, dragging competitors like Leslie's and Pool Corp down with it.
• Underlying Pressures: Analysts point to a combination of factors. A stagnant housing market means fewer people are moving and renovating. Furthermore, existing pool owners are experiencing "price fatigue" from years of rising maintenance and component costs.

Grocery Sales Fall as Shoppers Cut Back

The pressure is also visible in essential spending. UK grocery unit sales fell by 1.8% in June, a clear sign that shoppers are buying less to manage budgets. Although headline inflation has eased, food prices remain significantly higher than they were a few years ago. This has led to a noticeable shift, with shoppers opting for cheaper own-brand labels and frozen goods over more expensive fresh items.

A Divided Retail Sector

The spending slowdown is creating a two-tier retail environment. While lower-income households are clearly cutting back, high-earning consumers continue to spend, supporting specific areas of the market. This has led investors to favour companies that offer clear value, such as Costco and Ross Stores, which are seen as resilient in this climate.

Crypto Markets Navigate Turbulence and Innovation

The digital asset space is experiencing a period of intense activity, marked by sharp price movements tied to economic data, scrutiny of corporate strategies, and significant technological developments.

Bitcoin's Volatile Ride on Inflation News

Bitcoin's price jumped to approximately $65,000 following the release of US inflation figures that were softer than anticipated. The Consumer Price Index (CPI) came in at 3.5% for June, below the 3.8% consensus, which temporarily weakened the US dollar. However, analysts were quick to pour cold water on the excitement, noting the figure was heavily influenced by a 10% fall in petrol prices that has already reversed. On-chain data revealed two distinct seller groups reacting to the rally: long-term holders who bought at higher prices in 2025 were selling at smaller losses, while short-term holders who bought at recent lows were taking profits.

Corporate Crypto Strategies Under Strain

The software company Strategy, known for its massive Bitcoin holdings, is facing pressure. CEO Phong Le asserted the firm's finances are secure unless Bitcoin's price collapses to the $8,000-$10,000 range. Despite this confidence, warning signs are flashing. The company's preferred stock is trading well below its issue price, hindering its ability to raise money to buy more Bitcoin. Furthermore, the premium that its shares once held over its net assets has all but disappeared, weakening the core mechanism of its accumulation strategy.

The Memecoin Dilemma for Trading Platforms

Robinhood's new blockchain, Robinhood Chain, has shown impressive early growth, attracting over 300,000 daily active users and generating over $1 billion in daily trading volume. However, the vast majority of this activity is driven by memecoins—highly speculative tokens with little underlying value. This focus threatens the chain's long-term reputation, drawing comparisons to the GameStop-era speculative frenzy and undermining its potential as credible financial infrastructure.

Regulatory and Legal Headwinds

• US Regulation Stalls: A significant US bill to regulate the cryptocurrency industry, the 'Clarity Act', is facing major obstacles as it moves to the Senate. Its progress is complicated by concerns over potential conflicts of interest related to President Trump's own crypto investments, with analysts giving it less than a 30% chance of passing this year.
• Prediction Market Scrutiny: The US Securities and Exchange Commission (SEC) is set to join the Commodity Futures Trading Commission (CFTC) in regulating prediction markets. As many of these platforms use crypto for placing bets and paying out winnings, this increased oversight will have a direct impact on the digital asset space. It has also emerged that the CFTC is investigating President Trump's teleprompter operator for allegedly making bets on one such platform.
• No Pardon for SBF: In a rare display of unity, the US Senate passed a unanimous resolution stating that Sam Bankman-Fried, the disgraced founder of FTX, should not receive a presidential pardon or any form of clemency.

Innovations in Trading and Payments

• Visa Enters Stablecoins: Payments giant Visa is launching a platform enabling banks to issue and manage their own stablecoins. This move is seen as a major validation of the technology but sent shares in existing stablecoin issuer Circle lower on fears of new competition.
• Combating Front-Running: Circle has developed a new protocol named Arc that aims to eliminate the public 'mempool', a waiting area for transactions that can be exploited by bots to see and profit from trades before they are confirmed. By handing transactions directly to validators, the system is designed to create a fairer trading environment.
• Privacy Tokens Gain Ground: Despite being delisted from many exchanges, privacy-focused tokens have been the best-performing crypto sector over the past year, rising 127%. These tokens use technology like zero-knowledge proofs to hide transaction details, a feature that is gaining appeal.

Geopolitical and Macroeconomic Headwinds

Beyond corporate earnings and consumer health, broader economic and political risks are adding to market uncertainty.

Resilient US Labour Market and Consumer

Recent data from the US shows an economy that refuses to slow down, giving the central bank little reason to consider cutting interest rates. June retail sales rose 0.2% month-on-month, and a solid 6.7% from a year earlier. At the same time, the number of people filing for unemployment benefits fell to 208,000, lower than expected. While a strong economy is good news, for markets it means the cost of borrowing is likely to stay high for longer.

Oil Prices Climb Amid Middle East Tensions

Crude oil prices have pushed higher, with Brent crude trading near $85 a barrel, following a sixth consecutive night of US strikes on Iran. The conflict has raised fears about potential disruption to supply through the Strait of Hormuz, a critical channel for global oil shipments. Higher oil prices feed directly into petrol costs and general inflation, complicating the outlook for central banks.

Gold Falters as Rate Fears Outweigh Geopolitical Risk

Gold experienced its largest weekly drop in three months, falling to around $3,983. Typically, gold acts as a 'safe haven' asset during geopolitical uncertainty. However, the prospect of stickier inflation, fuelled by rising oil prices, may force the US central bank to raise interest rates again in 2026. Higher rates make interest-paying government bonds more attractive than gold, which pays no income, causing investors to rotate out of the precious metal.

Trump Accusations and New Tariffs

US President Donald Trump has heightened geopolitical tensions by accusing China of interfering in the 2020 election. These claims could jeopardise a delicate trade truce. Separately, the administration has imposed a new 25% tariff on Brazilian goods, re-igniting fears of a global trade war.

US Housing Market Cools

High mortgage rates and record house prices are beginning to bite. The number of signed contracts for home purchases fell 5.4% in June. Compounding the issue, a key confidence index from the National Association of Home Builders dropped to 34, matching its low for the year, as builders grapple with expensive land and materials. The market was described as "tepid," with first-time buyers finding it especially difficult to enter.

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NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).