Morning in New York: S&P 500 Awaits Retail Sales Data to Consolidate Near Record Highs

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Capital Markets Research at Freedom Broker.

The situation in the Middle East remains a key external risk. The U.S. has stated that it may maintain the naval blockade of Iran for as long as necessary and has announced additional economic pressure following the breakdown of ceasefire negotiations. The prospects for reopening the Strait of Hormuz remain uncertain. Continued attacks on merchant ships passing through the strait limit the scope for further declines in oil prices.

This Friday’s key economic release is the July retail sales data. The consensus forecast calls for a 0.1% month-over-month increase in the overall index and a 0.2% increase in the core index (excluding automobiles); sales of goods in the reference group are projected to rise by 0.3%. Analysts at Freedom Broker expect the total index to decline by 0.11%, driven by weak sales of automobiles and fuel. Our forecast for the core index is +0.33%, and for the benchmark group index, +0.29%. With consumer and producer price indices showing a slowdown in inflation, the probability that the Fed will raise rates as early as September has decreased significantly. If sales data for the benchmark group of goods exceed forecasts, this will contribute to a rise in Treasury yields. The opposite scenario would be favorable for stock performance.

The University of Michigan will release a preliminary estimate of the Consumer Sentiment Index for August today (consensus: 55 points; July: 55.2 points). For market participants, the most important component of this indicator will be the trend in inflation expectations.

In the technology sector, Apple (AAPL) may attract attention; according to Reuters, the company has developed an AI model for the Chinese market in collaboration with Alibaba (BABA). This will strengthen Apple’s competitive position in China and confirm the value of Alibaba’s AI platform.

No major earnings reports from large U.S. companies are scheduled for today.

S&P 500 futures are trading near zero. We assess the risk balance for the upcoming session as neutral, with moderate volatility. Inflation data and continued strong demand in the AI sector are supporting buying. However, market movement will depend on consumer sentiment and how bond yields react to this data.

— Applied Materials (AMAT) shares are down 5%, even though its revenue for the third fiscal quarter rose 25% year-over-year to $9.12 billion, and its fourth-quarter forecast calls for $10.25 billion, compared with a consensus estimate of $9.54 billion. The pressure on the stock stems from inflated expectations that triggered a rally ahead of the earnings release.

— Eton Pharmaceuticals (ETON) shares rose 23% in response to its quarterly earnings report, which came in significantly above expectations. Revenue nearly doubled year-over-year, reaching $37.6 million, while adjusted EPS came in at $0.43, compared to a consensus estimate of $0.15. The annual sales forecast is set at over $145 million.

— Heartflow (HTFL) shares soared 25% on the back of accelerated business growth. The company’s revenue rose 48% year-over-year to $64.1 million, and its loss was smaller than the market’s average estimates. Management once again raised its full-year revenue guidance, this time to $246–250 million.

— Globant (GLOB) shares are down 13% due to weak performance in its core IT services segment. The company’s quarterly revenue remained virtually unchanged from last year’s results, while its adjusted operating margin fell to 13.2%. The rapid growth of the AI segment has not yet offset the weakness of the core business.

— Reddit (RDDT) shares are rising by about 11% on news of its inclusion in the S&P 500, which will take place before the market opens on August 18. This could lead to the closing of the gap that formed on July 31 following the release of disappointing earnings.

Trading on August 13 on U.S. stock exchanges ended in positive territory. The S&P 500 and Russell 2000 hit new all-time highs, rising 0.65% and 0.24%, respectively. The Nasdaq 100 rose 1.15%, and the Dow Jones gained 0.13%.

This positive momentum was driven by producer price index (PPI) data, which showed a smaller-than-expected increase, triggering a rally in the bond market. An additional driver was the continued strong demand for securities of software companies, semiconductor manufacturers, and AI infrastructure providers.

Stocks in the “Magnificent Seven” remained in positive territory thanks to increased risk appetite. Telecom stocks led the gains (XLC: +2.07%), while materials and commodities producers lagged (XLB: −0.51%), coming under pressure due to a correction in the commodities market.

The Core Producer Price Index (Core PPI) rose 0.2% month-over-month in July, compared with a consensus estimate of 0.3%, although the June figure was revised upward from 0.2% to 0.4%. On a year-over-year basis, core producer inflation slowed by 0.5 percentage points to 4.2%, its lowest level since March.

Labor market data was mixed. Initial jobless claims rose to 209,000 (consensus: 202,000), while continuing claims fell more sharply than expected. These statistics reinforced confidence that inflation is slowing, leading to a 4–7 bps decline in Treasury yields across the curve. The market currently estimates the probability of a Fed rate hike in September at just 34%.

At the same time, Fed officials are maintaining a hawkish tone. Beth Hammack, president of the Federal Reserve Bank of Cleveland, emphasized that the central bank must act now to prevent the economy from overheating, even if further tightening of monetary policy leads to painful consequences. Richmond Fed President Thomas Barkin noted that the question of whether a rate hike is necessary to bring inflation back to target remains open.

— Investment firm Silver Lake is in talks to acquire enterprise software developer Workday (WDAY: +17.8%). If the talks are successful, the deal will be one of the largest LBOs in the history of the software sector.

— SanDisk (SNDK: +13.7%) forecasts average annual revenue growth of 15–19% for fiscal years 2028–2030 and expects to maintain an adjusted gross margin of around 80%. Management’s optimism stems from sustained demand for memory chips from the AI infrastructure sector and an increase in the share of multi-year contracts.

— Birkenstock (BIRK: +11.6%) reported third-quarter financial results that exceeded consensus estimates. The company’s DTC sales increased by 14%, and its revenue growth forecast for 2026 in constant currency was revised upward from 13–15% to 15%.

— Tapestry (TPR: −16.5%) issued a cautious outlook for fiscal year 2027, even though its earnings for the most recent quarter exceeded consensus estimates. Sales in the Coach segment rose 14%, while sales in the Kate Spade segment fell 7%. Revenue growth in North America slowed from approximately 20% in the previous quarter to 7%. This heightened concerns among investors regarding the sustainability of the company’s expansion.

— Accelerant Holdings (ARX: +43.4%) is set to be acquired by the investment firm Thoma Bravo for more than $4 billion. Shareholders will receive $20.25 per share, which is approximately 49% higher than the previous session’s closing price. The transaction is scheduled to close in the first half of 2027.

This article was AI-translated and verified by a human editor