Markets Morning Overview – July 8, 2025: Wall Street Pulls Back Sharply as Volatility Rises, Europe and Asia Stay Firm

The trading week began with a jolt as Wall Street reversed course, ending Monday with broad declines across major indices. Meanwhile, European and Asian markets displayed resilience with mostly positive sessions. In Israel, Tel Aviv followed the global sentiment but with more moderate losses. Volatility is climbing again, signaling investors are turning cautious ahead of key economic data expected later this week.

U.S. Markets: Broad Sell-Off as VIX Rises

U.S. equities closed lower across the board:

• The Dow Jones fell 0.94%
• The S&P 500 lost 0.79%
• The Nasdaq dropped 0.92%

Small-cap stocks were hit even harder, with the Russell 2000 down 1.55%. The VIX, Wall Street’s “fear gauge,” surged 1.77% to 17.79, reflecting growing uncertainty.

Weakness was seen across most sectors, including tech and consumer cyclicals. Energy stocks also retreated as Brent crude declined 0.43% and WTI crude shed 0.47%, signaling softer demand expectations.

Europe: DAX and STOXX Climb Despite Global Nervousness

Contrary to U.S. markets, European indices enjoyed a green session:

• The DAX rose 1.20%
• The EURO STOXX 50 added 1.00%
• France’s CAC 40 gained 0.35%

The rebound was driven by strong performance in industrial and automotive stocks. The MSCI Europe index edged up 0.11%, even as the euro and British pound weakened against the dollar, likely due to rate differentials and sluggish growth outlooks.

Asia: Markets Advance on Regional Optimism

Asian equity markets performed positively on Monday:

• KOSPI (South Korea) jumped 1.18%
• Hang Seng (Hong Kong) advanced 0.78%
• Shanghai Composite climbed 0.58%

Japan’s Nikkei 225 added 0.21%, even as the yen dropped 0.70%, reflecting the Bank of Japan’s continued dovish tone. Investors appeared optimistic about regional earnings and signs of macroeconomic stabilization.

Israel: Moderate Losses in Tel Aviv, Bonds Under Pressure

The Tel Aviv Stock Exchange ended Monday with moderate declines:

• TA-35 fell 0.43% to 3,028.22 points
• TA-125 dropped 0.51%
• TA-90 slid 0.72%

Out of the TA-125 index, 77 stocks declined and 46 advanced. Trading volumes were strong, with ₪3.85 billion in equities and over ₪5 billion in the bond market.

Bond indices also declined slightly, with the All-Bond Index down 0.09%, and Tel-Bond 60 CPI-linked off 0.07%. U.S. Treasury yields climbed sharply, with the 10-year yield up to 4.395%, putting global bond markets under pressure.

Sector & Stock Highlights

Year-to-date sector performance remains uneven:

• Industrials lead the pack with +11.51% YTD
• Tech remains dominant by weight (30%) but has returned +7.51%
• Healthcare and Consumer Cyclical sectors are still underperforming

Top stock movers included:

• Mustang Bio (MBIO) up +180.67%
• Wolfspeed (WOLF) up +95.76%
• Core Scientific (CORZ) down -17.61%
• Enovix (ENVX) up +14.40%

Outlook: Volatility Returns as Markets Await Data

The sharp U.S. pullback appears to be a combination of profit-taking and rising macro concerns. The jump in the VIX implies rising caution ahead of upcoming inflation data and the next Fed decision.

While Europe and Asia are showing resilience, the strengthening U.S. dollar and rising bond yields could limit upside potential. In Israel, markets are correcting gradually with strong institutional trading volumes.

For now, a neutral stance remains the most prudent, with investors holding cash on the sidelines until more clarity emerges. With global volatility ticking up, this week’s economic indicators could set the tone for the rest of July.