Morning in New York: Slowing Inflation Will Boost the "Bulls"

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

The main event on Wednesday will be the release of the Consumer Price Index (CPI) data for July. The consensus forecast calls for a 0.1% month-over-month increase in the headline index following a 0.4% decline in June, with the core index rising 0.2% after remaining flat the previous month. According to Freedom Broker analysts’ forecast, the headline and core CPI will rise by 0.03% and 0.16%, respectively. If the actual results align with these projections, it will have a positive impact on stocks and bond yields. However, a slowdown in price growth will not completely eliminate inflationary risks. The effects of the oil rally will be reflected primarily in the August CPI data. We expect headline inflation to accelerate to approximately 0.47% MoM, and core inflation to 0.25%.

In the technology sector, positive fundamental signals continue to emerge from companies involved in AI infrastructure. CoreWeave (CRWV), Super Micro Computer (SMCI), and Lumentum (LITE) have reported strong results or forecasts, confirming high demand for computing power, server systems, and optical solutions for data centers. At the same time, CoreWeave’s high capital intensity serves as a reminder that the market will continue to evaluate not only growth rates but also the cost of AI investments. Earlier, Nvidia (NVDA) announced that Goldman Sachs (GS), BlackRock (BLK), and KKR (KKR) had expressed their willingness to raise up to $500 billion in institutional capital to finance the construction of AI infrastructure.

Pakistani officials have stated that the U.S. and Iran are close to reaching certain agreements regarding the Strait of Hormuz; however, the two sides’ positions still diverge significantly, and Tehran continues to insist on the fulfillment of its conditions.

Before the main session begins, Nebius Group (NBIS), Brinker International (EAT), Performance Food Group (PFGC), Amcor (AMCR), Trimble (TRMB), Liquidia (LQDA), and WhiteFiber (WYFI) will report their quarterly results. After the market closes, Cisco Systems (CSCO), Coherent (COHR), Cerebras Systems (CBRS), Pan American Silver (PAAS), Infleqtion (INFQ), EnerSys (ENS), and EquipmentShare (EQPT) will report their earnings.

S&P 500 futures are showing positive momentum. We assess the risk outlook for the upcoming session as neutral, with elevated volatility. As noted above, slowing inflation will support stocks by driving down Treasury yields, and strong earnings reports from AI infrastructure providers will also provide a positive backdrop. However, if CPI growth exceeds forecasts, growth stocks will come under pressure.

— CoreWeave (CRWV) shares are up about 15% in response to strong second-quarter results and an upward revision of its full-year guidance. The company’s revenue reached $2.58 billion, exceeding expectations. The backlog grew to $104.2 billion amid sustained demand for AI computing. Moreover, orders totaling more than $25 billion were received early in the current quarter. The capital-intensive nature of the business remains a limiting factor. The CAPEX plan for 2026 has been revised upward to $35–39 billion.

— Super Micro Computer (SMCI) shares are up 9% as its management forecasts revenue for the current quarter in the range of $14.5–15.5 billion, and for the full 2027 fiscal year, it expects revenue in the range of $65–72 billion, compared to consensus estimates of approximately $12.1 billion and $53 billion, respectively. The company’s results confirm continued strong demand for AI server infrastructure.

— CAVA Group (CAVA) shares are rising by about 11% following the release of its second-quarter report. The company’s revenue increased by 31% year-over-year, comparable sales rose by 9% (consensus: +7.5%), and adjusted EBITDA climbed by 30%, also exceeding average expectations. This performance was driven by traffic growth and positive effects from pricing and product mix. For 2026, CAVA forecasts comparable sales growth of 4.5–6.5% and adjusted EBITDA in the range of $181–191 million.

— H&R Block (HRB) shares are up about 16% on quarterly results that beat market expectations, as well as an optimistic outlook for fiscal year 2027. The guidance projects EPS in the range of $6.04–6.24 and revenue of $4.11–4.16 billion, compared to consensus estimates of $5.86 and $4.05 billion, respectively. In addition, the company’s quarterly dividend was increased by 10%.

— Firefly Aerospace (FLY) shares rose by approximately 5% following the release of its second-quarter earnings report. During this period, the company’s revenue grew by more than 659% year-over-year to a record $117.7 million, significantly exceeding expectations, while the adjusted loss came in below forecasts. Management maintained its full-year revenue guidance in the range of $420 million to $450 million.

Trading on August 11 on U.S. stock markets ended mostly in the red. The S&P 500 fell 0.32%, the Nasdaq 100 declined 0.33%, and the Dow Jones dropped 0.34%; only the Russell 2000 gained 0.32%. The session lacked a clear driver: investors adopted a wait-and-see stance ahead of the release of CPI and PPI data. Semiconductor manufacturers, including memory chip makers, and companies related to data centers outperformed the market.

Shares of the largest technology companies mostly trended downward. Alphabet (GOOGL: −3.84%) and SpaceX (SPCX: −3.93%) posted the sharpest declines. Suppliers of cyclical consumer goods (XLY: +1.25%) led the gains. The real estate sector (XLRE: −0.72%) was among the underperformers.

Macroeconomic data sent mixed signals. The NFIB Small Business Optimism Index exceeded expectations and reached its highest level since last August. At the same time, weekly ADP data pointed to a further cooling of the labor market: employment over the past four weeks increased by only 8,250, marking the lowest level since January. This marks the sixth consecutive week of slowing growth in this indicator. Existing-home sales exceeded average estimates, although they were the weakest since April. Against this backdrop, the market estimates the probability of a Fed rate hike in September at approximately 50%.

WTI crude oil rose 1.3% following new reports of shipping restrictions in the Strait of Hormuz and statements from Tehran that the blockade would remain in place until its conditions were met. Treasury bond yields fell by 1–2 basis points. Fed officials maintained a hawkish tone. Chicago Fed President Ostin Goolsbee called inflation the main problem facing the U.S. economy. Cheryl Venable, acting president of the Federal Reserve Bank of Atlanta, noted that the situation in the Middle East remains one of the factors determining the scope for monetary policy easing.

— Fermi (FRMI: +21.1%) has entered into an agreement with TensorWave to expand its capacity to more than 650 MW. The first phase (222 MW) is scheduled to come online in the second half of 2027, which will generate approximately $6.5 billion in total contract revenue.

— Everpure (P: +11.7%) has signed a supply agreement as part of its second major contract with a hyperscaler. According to the company’s estimates, this project will begin to make a significant contribution to its revenue starting in fiscal year 2028.

— Aramark (ARMK: +8.5%) reported third-quarter earnings and revenue that exceeded market consensus estimates. Organic growth exceeded forecasts in both the U.S. and international markets. The company maintained its EPS guidance for 2026 and raised its organic revenue growth expectations.

— Plug Power (PLUG: +5.2%) reported a loss per share below expectations in the second quarter, while the company’s revenue exceeded the consensus estimate. Management expects margins to improve and maintains its goal of achieving positive EBITDA in the fourth quarter. Guidance for 2026 revenue came in above average market expectations.

— On Holding (ONON: −20.3%) reported weak performance in its wholesale segment. The company’s revenue fell short of forecasts. Guidance for sales growth in constant currency for 2026 was lowered to 20–23%. At the same time, direct sales volumes for the reporting quarter remained high, and management is sticking to its strategy of selling at full price.

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