Morning in New York: The Spotlight Is on Consumption Statistics

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.

Investors’ attention this Wednesday will be drawn to the release of the minutes from the Fed’s July meeting. This document may reflect a shift toward a more hawkish stance by some members of the Federal Open Market Committee (FOMC). Nevertheless, the release’s impact on stock market dynamics is likely to be limited, as investors are already focusing on more recent macroeconomic data. Another factor is the high yield on long-term Treasury bonds, which persists due to concerns about the budget deficit and the volume of debt financing. A potential catalyst will be the auction of $16 billion in 20-year Treasuries. Weak demand at the auction could spur further growth in yields on long-duration bonds, which would increase pressure on growth stocks.

The focus is shifting to the consumer sector. Following an unexpected 0.6% month-over-month decline in retail sales in July, earnings reports from Target (TGT), Lowe’s (LOW), and TJX Companies ( TJX) will help gauge the extent of the slowdown in consumer demand. If TJX’s results are strong, while Target’s and Lowe’s are weaker, this would indicate a shift in spending toward more affordable goods. If, however, all three of these retailers report results below expectations, this will heighten concerns about a general slowdown in consumer spending. Home Depot (HD) exceeded sales and earnings expectations yesterday thanks to demand for home improvement and maintenance products, despite weakness in the residential real estate sector.

Geopolitics remains a source of heightened risk. Negotiations between the U.S. and Iran regarding the Strait of Hormuz have effectively stalled, and restricted shipping is propping up oil prices. Additional uncertainty stems from the U.S. reevaluation of its approach to nuclear deterrence for its allies, which is fueling the debate over strengthening their strategic autonomy and the need to increase defense spending.

The market will be supported by the U.S. decision to postpone the imposition of 50% tariffs on some Canadian imports for three days, following Donald Trump’s announcement that a preliminary agreement had been reached with Ottawa. This temporarily reduces trade risks, although the final terms of the agreement have not yet been finalized.

Before the start of the main trading session, Analog Devices (ADI), TJX Companies (TJX), Lowe’s (LOW), Target (TGT), Viking Holdings (VIK), Estée Lauder (EL), and Full Truck Alliance (YMM) will report their quarterly results. After the market closes, Wolfspeed (WOLF), BILL Holdings (BILL), Nordson (NDSN), Ionic Digital (IOND), and Webull (BULL) will report their earnings.

S&P 500 futures are trading near flat. We assess the risk balance for the upcoming session as neutral, with moderate volatility. Buyers will be supported by the aforementioned signs of easing trade tensions and strong earnings reports from select retailers. High oil prices and long-term Treasury yields will continue to hold back gains.

— WhiteFiber (WYFI) shares are down by about 20% following the announcement of a $250 million offering of convertible bonds maturing in 2032, with a $37.5 million option for buyers. Part of the proceeds will be used to refinance existing debt, with the remainder going primarily toward expanding data centers and purchasing GPU servers.

— La-Z-Boy (LZB) shares are down about 18% in response to the release of weak earnings and cautious forecasts. The company’s adjusted EPS came in at $0.43, compared to a consensus estimate of $0.49, while revenue fell 3% to $475.7 million, which also fell short of market expectations. For the current quarter, the company forecasts sales in the range of $500–520 million, compared to a consensus estimate of $537 million. Margins will come under pressure from investments in new stores, advertising, and digital initiatives.

— Mercury Systems’ market capitalization (MRCY) is down about 12%, despite record booking volumes reported in its fourth-quarter financial results, which rose 93% year-over-year to $660 million, with a backlog of $1.95 billion. The company also generated strong revenue, but its adjusted EPS of $0.37 came in slightly below expectations.

— Keysight Technologies (KEYS) shares are up about 2% following the release of a strong earnings report and optimistic guidance. The company’s revenue for the third fiscal quarter rose 36.5% to $1.85 billion, with adjusted EPS of $3.07 versus a consensus estimate of $2.48. The company’s own guidance for EPS ($3.34–3.4) and revenue ($1.93–1.95 billion) for the current quarter significantly exceeds market consensus, supported by steady demand from AI data centers.

— Jack Henry & Associates (JKHY) are up about 1%, as its EPS for the reporting quarter came in at $1.57 against a consensus estimate of $1.46, and revenue came in at around $644 million against average forecasts of $630.8 million. The growth in these metrics was driven by banking and payment solutions: processing revenue increased by 7.5% year-over-year. Management remains confident in continued sales growth and margin expansion in fiscal year 2027.

Trading on August 18 on U.S. stock markets once again closed near intraday lows. The S&P 500 lost 0.69%, the Nasdaq-100 fell 1.68%, the Dow Jones dropped 0.22%, and the Russell 2000 declined 1.3%. The negative trend was driven by a correction in the semiconductor sector, including memory chip manufacturers, due to lingering concerns about rising capital expenditures, debt financing, and the cost of investing in AI infrastructure. However, the decline was more rotational in nature than a broad-based sell-off. The number of advancing S&P 500 components exceeded the number of declining ones, and the equal-weighted index outperformed the market-cap-weighted index. Among the “Magnificent Seven,” Meta Platforms (META: −4.45%) and Nvidia (NVDA: −2.34%) saw the heaviest selling pressure. The energy sector (XLE: +1.76%) led the gains, while the IT sector (XLK: −2.47%) was the underperformer.

Macroeconomic data sent mixed signals. In July, 1.239 million housing units were started, compared with the consensus estimate of 1.35 million. At the same time, the number of building permits rose to 1.443 million, the highest level since February, exceeding expectations. Pending home sales unexpectedly fell to their lowest level since January. The weekly ADP report showed an average increase in private-sector employment of 9,500 over four weeks. This marks the first acceleration since June, although the pace remains significantly below levels seen at the beginning of the year. Import prices fell 0.4% month-over-month, contrary to expectations of a 0.3% increase, while export prices rose 1.3%. Industrial production came in weaker than forecast.

Yields on long-term Treasury bonds fell by 1–2 basis points after 30-year Treasuries recently hit their highest level since 2007, however, concerns about rising government debt, the budget deficit, and large-scale corporate financing of AI infrastructure persist. WTI crude oil rose 0.4% amid ongoing tensions surrounding the Strait of Hormuz. Donald Trump stated that no talks with Iran were planned, while reports of attacks on ships continue to support the geopolitical premium in oil prices.

— KKR & Co. (KKR: −1.51%) is prepared to acquire UGI (UGI: +9.5%) for approximately $9 billion, or $42.50 per share, which represents a premium of about 21% over the previous closing price.

— Targa Resources (TRGP: +7.1%) has entered into (XOM: +2.54%) and announced the construction of three new natural gas processing plants in the Delaware Basin, which are scheduled to come online in the first half of 2028.

— Amer Sports (AS: +3.3%) reported a 32% increase in revenue for the second quarter, which, like EPS, significantly exceeded market expectations. Positive revenue growth was recorded across all business segments, but management specifically highlighted Salomon Softgoods and Arc'teryx. The company has raised its annual sales and profit forecasts.

— Baidu’s (BIDU: −12.7%) revenue for April–June fell short of consensus estimates, and online advertising revenue dropped by 19%. At the same time, the AI segment continued to improve, with revenue in that area rising 25%. The company’s significant investments in AI and infrastructure also heightened concerns about margins.

— Haemonetics (HAE: +15.9%) has signed a contract with CSL Plasma to supply NexSys PCS systems featuring Persona PLUS technology to the United States, expanding the commercial prospects for the use of blood plasma in the treatment of various diseases. Guidance for fiscal year 2027 remains unchanged.

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