Finance·Stocks leap on Palantir earnings but Goldman warns the U.S.
‘is near stall speed’ — where the economy ‘weakens in a self-reinforcing fashion’By Jim EdwardsBy Jim EdwardsExecutive Editor, Global NewsJim EdwardsExecutive Editor, Global NewsJim Edwards is the executive editor for global news at Fortune.
He was previously the editor-in-chief of Insider's news division and the founding editor of Insider UK. His investigative journalism has changed the law in two U.S. federal districts and two states.
The U.S. Supreme Court cited his work on the death penalty in the concurrence to Baze v. Rees, the ruling on whether lethal injection is cruel or unusual.
He also won the Neal award for an investigation of bribes and kickbacks on Madison Avenue.SEE FULL BIO Things are looking up, at least in the short termPhoto by Thomas Barwick via Getty Images.Palantir’s blowout earnings, with revenue up nearly 50% and net income up 144%, are sparking a rally as investors bet on AI-driven headcount reductions.
Broader show gains, buoyed by expectations of early Fed rate cuts and a decent Q2 earnings season. However, Goldman Sachs warns the U.S.
economy is “near stall speed” due to sharply declining job growth. Lurking in the background: Trump’s war on the BRICS.
company earnings appear to be driving the stock upward today after Palantir dered a massive quarter after the closed in the U.S. last night. S&P 500 futures were up 0.27% this morning, premarket.
Europe and Asia were broadly up this morning, too. But lurking in the background, as always, are the big macro questions whether President Trump’s tariff deals have hobbled the U.S.
economy in the long run. Palantir first: Revenues were up almost 50% to nearly $1 billion, beating expectations. Net income was $327 million, up 144%. CEO Alex Karp lifted guidance for Q3.
The stock closed up 4% yesterday and rose another 5% in overnight trading. “We’re planning to grow our revenue … while decreasing our number of people,” CEO Alex Karp told CNBC.
“This is a crazy, efficient revolution. The goal is to get 10x revenue and have 3,600 people.
We have now 4,100.” That spect—the idea that companies can grow by replacing employees with AI—appears to have energized investors in stocks broadly.
Palantir’s call was “eye-popping,” Wedbush’s Daniel Ives said this morning. Look at the closing prices of this selection of darlings: Credit: Google Finance.
Goldman Sachs reported that its Risk Appetite Indicator was above zero for July, indicating a general risk-on attitude for equities. Investors are also assuming that the U.S.
Federal Reserve’s next interest rate cut will come in September and not December, as previously assumed.
The CME’s Fed Funds futures market is showing an 88% lihood of a cut in September and a 60% lihood of a cut in October. Cheaper money = higher stock prices, of course.
“The mood has been helped by a decent Q2 earnings season so far,” Jim Reid’s team at Deutsche Bank said this morning. In the long-term, there are obvious blems ahead.
Goldman Sachs said today that new job creation—yes, the jobs number that was so controversial on Friday—is now so meager that the U.S. economy is in danger of stalling.
“Friday’s jobs numbers reinforced our view that US growth is near stall speed—a pace below which the labor market weakens in a self-reinforcing fashion.
So far, the unemployment rate has only risen modestly, from an average of 4.1% in Q1 to 4.248% in July.
But our estimate of underlying monthly job growth—which is based on moving averages of real-time gains in the establishment survey and the household survey—has plummeted from 206k in Q1 to just 28k in July, well below our 90k estimate of the current breakeven pace,” chief economist Jan Hatzius told clients.
DOGE cuts knocked 0.3 percentage points from GDP growth in Q2, according to Pantheon Macroeconomics’ Samuel Tombs and Or Allen.
Their estimate for GDP growth was dragged down by “an enormous 11.2% drop in federal nondefense spending, dragging down headline GDP growth by 0.3 percentage points,” they told clients.
Coming down the pipe: More tariff deadlines. The average effective tariff rate for the U.S. is now around 19%, according to Piper Sandler, a rate that matches the 1930s: Credit: Piper Sandler.
Trump has specifically targeted the BRICS countries for high tariffs (Brazil, Russia, India, China, South Africa, and allied regimes).
The China tariff deal—not yet done—is the big kahuna in all of this. If China also gets a high percentage rate, investors will downrate stocks, Chris Turner’s team at ING told clients.
“An early extension of the currently benign trading conditions would very much be welcomed by the market.
If not and the US does ratchet up pressure on China again, then it would look President Trump was opening up a new campaign on the BRICs nations after all,” they said.
Here’s a snapshot of the action prior to the opening bell in New York: S&P 500 futures were up 0.27% this morning, premarket, after the index closed up 1.47% yesterday.
STOXX Europe 600 was up 0.3% in early trading. The U.K.’s FTSE 100 was up 0.35% in early trading. Japan’s Nikkei 225 was up 0.65%. China’s CSI 300 was up 0.8%. The South Korea KOSPI was up 1.6%.
India’s Nifty 50 was down 0.46%. Bitcoin remains above $114K.Introducing the 2025 Fortune 500, the definitive ranking of the biggest companies in America. Explore this year's list.