Good morning,

For the past few years, the Magnificent 7 — Nvidia, Apple, Tesla, Meta, Microsoft, Google, and Amazon — have been the driving force of the market.

They are responsible for more than half of stock market gains from last year and now make up just over a third of the S&P 500.

But not all Mag7 names are winning this year. While Nvidia, Meta, Amazon, Google, and Microsoft are on a tear (and largely outperforming the market), Tesla and Apple are down.

Elon Musk’s controversies make Tesla something of a black sheep in the group, but Apple’s underperformance is more striking.

Despite beating earnings, winning tariff exemptions, and securing a legal victory that got the DOJ off its back in the Google deal, Apple is lagging not just its Mag 7 peers but the broader market, too.

Yesterday’s releases didn't help either. Apple unveiled a new lineup of products, including the iPhone 17, but its stock fell flat. Why? 

Because Apple didn’t muster a single new thing about Apple Intelligence. And that silence sends a clear message about the real split inside the Mag 7.

In this rally, you AI or die. We might as well rename the Mag 7 to the Mag 5 (AI edition).

Quote of the day 

Five things to know before opening bell

⚖️ SCOTUS gives Trump a tariff fast-track

Trump’s trade war isn’t dead yet. After an appeals court declared most of his tariffs illegal, the Supreme Court stepped in late yesterday to fast-track the case. The justices will hear arguments in November and could issue a rapid ruling. Treasury Secretary Scott Bessent says if Trump loses, Uncle Sam may have to refund $1 trillion.

🏦 Wells Fargo says the consumer is fine

While half of Wall Street is screaming slowdown, Wells is waving the opposite flag. CFO Mike Santomassimo said spending is “quite strong” and credit “quite good.” Supply-chain exec Jeremy Jansen doubled down, arguing tariff costs are being split three ways — supplier, importer, shopper — but the U.S. consumer keeps pushing through. 

🍏 Apple’s big iPhone flop

Apple’s new iPhone Air landed with a thud. No real AI splash, just a slimmer device nobody asked for. Not only that, analysts warn that the Air will cannibalize existing models instead of sparking new demand. AAPL slid 1.5% after the event.

🌍 Middle East sparks another gold rush

Israel hit Hamas targets in Qatar, sending oil up and gold to a fresh all-time high. Pepperstone’s Michael Brown said the oil spike won’t last because there's too much supply sloshing around, but the reflex is clear: when bombs fly, money runs to gold.

₿ Bitcoin treasuries = bumpy ride ahead

Crypto’s “grown-up” phase isn't drama-free. NYDIG’s global head of research Greg Cipolaro warned that many Bitcoin treasuries still have unfinished financings and pending share registrations. Once those unlock, a flood of selling could hit the market, he said. That's a reminder that “mature” still doesn’t mean stable.

📉 The biggest downward jobs revision on record

The BLS payroll revision may cover data that’s six months old, but it still lands like a hammer. We already knew the jobs market wasn't in the best shape; now we know it's worse than we thought.

📉 What the numbers show 

The Bureau of Labor Statistics revised job growth for the 12 months ending in March, and the results are brutal:

• Nonfarm payrolls were revised down by 911,000

• Economists surveyed by Bloomberg expected a 682,000 correction

• It’s the biggest downward adjustment on record

This follows last year’s revision, which knocked 818,000 jobs off the books.

⏳ Why it stings now

The timing makes things worse. Last week’s BLS release showed just 22,000 jobs added in August, way below the 75,000 expected. 

And early estimates keep getting walked back: June’s 14,000 gain became a 13,000 loss, the first contraction in four and a half years.

After yesterday’s revision, average monthly job growth is now 71,000, less than half the 147,000 pace we thought we had. Retail trade, leisure and hospitality, and information all took deeper hits. 

Only transportation, warehousing, and utilities saw modest upward revisions.

💸 What it means for markets

Weak jobs aren’t new, but this revision rewrites the narrative.

“That means the labor market was weak even before the tariffs kicked in,” said Heather Long, chief economist at Navy Federal Credit Union. 

“The job market was mostly frozen in 2024, too.”

Friday’s dismal report had already sealed a Fed rate cut this month. Now traders are debating whether it could be bigger than the baked-in 25bp. 

CME FedWatch pegs the odds of a larger move at 10% and rising.

🤷 Main Street: “We’re fine”

Wall Street is clinging to any scrap of good news they can find. And the latest one is a small but notable uptick in confidence on Main Street.

📝 The numbers

The National Federation of Independent Business said its optimism index rose 0.5 points in August to 100.8. 

Chief economist Bill Dunkelberg credited “stronger sales expectations and improved earnings” for the lift. The share of owners expecting sales to rise jumped to 12%, up six points from July.

But it wasn’t all sunshine. The NFIB’s uncertainty index fell from July but still sat at an elevated 93. Dunkelberg also noted that “labor quality remained the top issue on Main Street.”

💼 The hiring squeeze 

While the jobs market looks like it’s falling off a cliff, small businesses — which BLS data show created over half of private-sector jobs from 2013 to 2023 — aren’t walking away from hiring. 

Quite the opposite, they can’t find workers.

With Trump’s immigration crackdown shrinking the labor pool, roughly one in three small businesses had open positions they couldn’t fill in August. 

The last time the number dipped below that level was the depths of Covid lockdowns in mid-2020.

📊 Why it matters

The jobs market feels like it’s spiraling, but Main Street optimism isn't gone yet. 

Whether that’s a real floor — or just a lag before reality hits — is the big question. For now, small biz owners are still upbeat and still taking applications.

Analysts are second-guessing rate cut benefits

On paper, a rate cut should be what markets want: a boost for the economy, a bump for hiring, and a little more inflation as collateral damage. 

But strategists are increasingly questioning whether the Fed’s expected 25–50bp trim will actually help or just make things worse.

🧐 What bears are saying

• Ed Yardeni of Yardeni Research said a cut now would be “stimulating an economy that doesn’t need easier monetary policy” and crucially, “won’t create more workers to address the undersupply that’s constraining the demand for labor.”
• Stuart Kaiser, Citi’s equity trading strategist, warned that the slowdown in last week’s jobs report is “more powerful than the benefit of rate cuts being priced in,” adding that soaring unemployment could make the Fed’s move to backfire.
• Chris Zaccarelli, CIO at Northlight Asset Management, argued aggressive cuts risk pushing the U.S. toward stagflation. “The bull market has been extremely resilient this year, but we could be approaching an inflection point where it is tested again,” he said.
• And Andrew Hollenhorst, Citi’s chief U.S. economist, said the Fed may have simply missed its shot. “Had Fed officials had that data available in real time, policy rates would be lower today,” he noted after yesterday’s payroll revisions.

📈 A bullish counterpoint

Not everyone’s losing faith. David Kostin, Goldman Sachs’ head of U.S. equity strategy, says as long as a full-blown recession is avoided, cuts should still be a net win for markets.

“As the economy moves through the worst of the tariff impacts, we expect imminent Fed rate cuts and re-acceleration of growth in 2026 will support further gains for U.S. equities,” Kostin said.