Morning in New York: The Stock Exchange Has Entered Standby Mode

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.

Today’s trading session will be shaped by two events occurring at different times. The July PCE deflator will be released one hour before the start of regular trading, and Nvidia’s (NVDA) quarterly earnings report will be released after the market closes. This may limit investor activity throughout the day, as the week’s main corporate catalyst will be priced in outside of regular trading hours.

The consensus forecast calls for the overall PCE price index to have risen 0.1% month-over-month in July, following a 0.1% decline the previous month, while growth in the core index (which excludes volatile food and energy prices) accelerated from 0.1% to 0.2% month-over-month. Personal income is forecast to have risen 0.2%, as in June, while spending increased by only 0.1% after a 0.3% gain. Also this Wednesday, a revised estimate of second-quarter GDP growth (consensus: 1.5%, no revision) and preliminary data on durable goods orders for July (+0.5% MoM) will be released.

The resurgence of inflation, as measured by the overall PCE, following the deflation recorded in June for this indicator—coupled with an acceleration in the growth of the core index—will keep the issue of Fed policy tightening on the agenda. This is a key risk for “growth” stocks, which served as a positive driver for the stock market on August 25. A comparison of spending with the deflator is also telling: nominal consumption rose by exactly the same amount as prices, meaning that in real terms, household spending remained virtually unchanged in July. Following retailers’ earnings reports, further confirmation of a contraction in consumption could intensify pressure on cyclical sectors. This release also sets the tone for the week’s main macroeconomic event—the speech by Fed Chair Kevin Warsh at the Jackson Hole symposium on August 28.

Before the market opens, Williams-Sonoma (WSM), Bath & Body Works (BBWI), Abercrombie & Fitch (ANF), and Kohl’s (KSS) will report earnings, which will help paint a clearer picture of consumer demand following Dick’s Sporting Goods’ (DKS) disappointing report. After the market closes, Nvidia (NVDA), Salesforce (CRM), CrowdStrike (CRWD), Synopsys (SNPS), HP (HPQ), Okta (OKTA), and Veeva Systems (VEEV) will report their quarterly results.

The consensus forecast calls for Nvidia's revenue to total $92.07 billion (+97% year-over-year) with adjusted EPS of $2.09, compared to $1.05 a year earlier. In its own May forecast, the company projected revenue of $91 billion ±2%. The key factors driving the market reaction will not be the results themselves, but rather the guidance for the current quarter (consensus revenue estimate: approximately $104 billion), the ability to maintain gross margin near 75%, sales trends for Blackwell and Rubin, and comments on China. The volume of shipments to China that have begun so far is significantly below licensing limits. Revenue from Chinese data centers is not included in Nvidia’s own forecast.

Oil prices continue to fall following yesterday's 3.1% drop in WTI, which is supporting the bond market but weighing on the energy sector.

S&P 500 futures are trading near zero. We assess the risk balance for the upcoming session as neutral with moderate volatility: falling oil prices and stabilizing Treasury yields are providing support to buyers. However, the release of the aforementioned set of macroeconomic data could trigger a rapid downturn, and the main corporate risk will materialize after the market closes.

— Intuit (INTU) shares are down about 12%. The company’s quarterly earnings report was strong: its revenue rose 14% to $4.35 billion. Investors were disappointed by the company’s own guidance for fiscal year 2027. It projects revenue growth to slow to 9–10%, to $23.28–23.51 billion. TurboTax’s revenue is expected to grow by 2–3%, while the forecast for Mailchimp suggests growth of −1% to 0%. The number of TurboTax returns in the U.S. fell by 2% year-over-year, heightening concerns about customers switching to cheaper services. Comparisons with the consensus were complicated by the transition to a new methodology. Effective August 1, stock-based compensation is accounted for in non-GAAP metrics, which lowers the projected EPS by $5.81, to $22.88–23.12.

— Zoom Communications (ZM) shares are down about 5%, despite the company beating expectations for revenue and adjusted EPS ($1.55 versus $1.48). Revenue from the corporate segment rose by 7.8%, the highest increase in three years, to $787.5 million. Revenue from the online segment increased by only 0.6%. For the current quarter, revenue is forecast to be in the range of $1.275–1.280 billion with EPS of $1.46–1.48, which is below consensus and does not imply growth compared to the same period last year.

— Semtech (SMTC) shares are rising by about 3.5% in response to the quarterly report. The company’s revenue reached a record $341.9 million (+33% year-over-year), beating the consensus estimate of $328.6 million, while adjusted EPS came in at $0.71, compared to average expectations of $0.61. The main reason for investors’ positive reaction to the earnings release was the guidance for the current quarter, which projects revenue of $405–415 million. This is nearly 14% above the consensus. The company’s own forecast for the adjusted operating margin is 31%, compared to the market consensus of 24.4%. The company notes a record order backlog and strong demand for 800G and 1.6T optical components.

— HEICO (HEI) shares rose 2.3% as the company’s sales in the third fiscal quarter reached a record $1,413.1 million (+23% year-over-year) with organic growth of 14%, the operating margin increased from 23.1% to 25.1%, and EPS came in at $1.67 versus a consensus estimate of $1.51. In addition, operating profit for the electronics segment rose by 55%.

— Spyre Therapeutics (SYRE) shares are down about 11.6% following the release of Phase 2 SKYWAY data on SPY072, a drug for rheumatoid arthritis. Both dosages statistically significantly outperformed the placebo on at least one endpoint; however, the magnitude of the effect did not meet the company’s internal threshold for prioritizing monotherapy.

Trading on August 25 on U.S. stock exchanges ended in positive territory. The S&P 500 gained 0.32%, the Nasdaq-100 rose 0.64%, and the Dow Jones increased 0.3%, marking its third consecutive session in positive territory; and the Russell 2000 rose 0.5%. The IT sector (XLK: +0.94%) and telecommunications (XLC: +0.77%) led the gains, while the energy sector (XLE: −1.66%)—due to a correction in oil prices—and consumer staples (XLP: −1.06%).

The breadth of gains within the broad-market index remained negative, and the equally weighted benchmark closed with a symbolic loss. This means that a narrow group of stocks drove the positive momentum. Of the S&P 500’s 32 basis points of daily gain, Nvidia (NVDA: +2.19%), while AMD (AMD) and Microsoft (MSFT) each contributed 5 basis points, and Micron (MU) and Meta Platforms (META) each contributed 4 basis points. ExxonMobil (XOM), Eli Lilly (LLY), and Amazon (AMZN), which posted declines, each subtracted 2 basis points from the overall result. Meanwhile, ExxonMobil and Chevron (CVX) collectively dragged the index down by 3 basis points amid falling oil prices.

The rebound in the AI sector following the sell-off earlier this week occurred without any specific news catalyst. Demand returned to stocks of computing infrastructure and optical solutions providers. Among the leaders here were Super Micro Computer (SMCI: +9.4%) and Lumentum (LITE: +6.7%). The largest technology companies traded in mixed directions. This suggests a rebound from oversold levels rather than a shift in sentiment toward the sector.

The decline in Treasury yields by 5–8 basis points provided support for the "growth" stocks. Specifically, the yield on 2-year Treasuries fell to 4.18%, on 10-year Treasuries to 4.63%, and on 30-year Treasuries to 5.16%. Weak economic data served as an additional positive driver. The Conference Board’s Consumer Confidence Index for August fell to 89.4 points, below the consensus estimate of 90.2, while the July reading was revised downward from 90.8 to 90.2. New home sales in July totaled 607,000, compared with market expectations of 620,000. The Richmond Fed Index fell from 5 to 4 points, as the new orders and employment components deteriorated while price indicators rose. The overall picture was tempered by weekly ADP data: the four-week average employment gain increased from 9,500 to 11,750, ending a seven-week streak of declines.

Market participants are reacting positively to the weak data, as it reduces the risk of the Fed tightening policy. In particular, the cooling of demand is seen as an argument against raising interest rates. For the same reason, a comment by Susan Collins, president of the Federal Reserve Bank of Boston (who does not have a vote this year), regarding the advisability of tightening monetary policy in the absence of sustained disinflation went largely unnoticed. WTI crude oil fell 3.1%, closing above intraday lows, which laid the groundwork for a rally in the bond market. Investors focused on signs of de-escalation in the Middle East conflict following Donald Trump’s announcement that the U.S. Navy would clear a key shipping lane in the Strait of Hormuz and Iran and Oman’s proposal for a temporary jointroute for ships.

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