August 12th Market Overview

Happy Thursday

Stocks hit a record today after a second straight report showing prices are cooling. Wholesale prices came in flat for July.

Small companies and chipmakers led the market, and they are the two groups that gain the most when borrowing gets cheaper.

Let’s dig in...

Today's Big Picture

1. Records, And The Fastest Chip Recovery Since 2020

The S&P 500 crossed $7,800 for the first time, the Russell 2000 set an all time high, and chip stocks did most of the lifting. The Philadelphia semiconductor index is about a fifth above its July 29 low and back on the edge of a bull market. Downturns in that index normally run 54 trading days. This one ran nineteen.

2. Private Equity Is Bidding For Public Companies Again

Reuters says Silver Lake has spent months in talks to take Workday private, and the stock was halted for volatility before erasing its loss for the year. Thoma Bravo agreed to buy Accelerant for more than four billion dollars, a 49 percent premium to Wednesday's close. Workday spent this year in the red on the worry that AI would eat enterprise software. Buyout firms read the books before they bid, and today they paid up for the business the market had marked down.

3. Lower Income Wages Are Growing Fastest Again

Bank of America found that after-tax wage growth for lower income households beat higher income households in July, the first time since December 2024. The share of households paying their credit card in full each month went up in every income group. Wall Street has spent two years describing a K shaped economy where the top pulls away from the bottom. July is the first month those two lines moved back toward each other.

Market Overview

Index Performance

Stock Spotlight

Super Micro Computer $SMCI ( ▲ 4.64% )  
added to Wednesday's gain after guiding current quarter revenue to between 14.5 and 15.5 billion dollars. Analysts wanted 11.82 billion.

Netflix $NFLX ( ▲ 5.2% )  
rose after Bill Ackman's Pershing Square disclosed a new stake. He owned it once before, in early 2022, and sold three months later when subscribers fell for the first time in a decade.

Coherent $COHR ( ▼ 8.48% )  
slipped even with current quarter guidance above estimates, because fourth quarter margins landed about where analysts expected. That is the bar for anything attached to AI optics right now.

Big Name Updates

Pershing Square USA $PSUS ( ▲ 2.94% )  
trades at a 22 percent discount to what it owns, which Ackman called absurd on his first earnings call as a public company. He also plans to launch a venture fund.

Cheesecake Factory $CAKE ( ▼ 4.26% )  
and the other established sit-down chains have gained about 62 percent at the median over the past sixty trading sessions, while Chipotle $CMG and the fast growth names have gone nowhere. That gap is the widest in a decade.

Brinker International $EAT ( ▼ 2.3% )  
got a price target raise to 285 dollars from UBS, which pointed to same store sales at Chili's speeding up from July into early August.

Other Notable Company News

Samsonite $1910.HK is buying 85 percent of travel brand BEIS for 178.5 million dollars. BEIS did around 210 million in sales last year.

Delta Air Lines $DAL ( ▲ 1.71% )  
will fly Austin to Paris next summer, the only US carrier flying from Austin to Europe.

Yeti Holdings $YETI ( ▼ 10.78% )  
beat on earnings, but revenue only just cleared estimates and the stock finished lower.

Bending Spoons $BSP ( ▼ 17.64% )  
dropped hard after reporting before the bell.

Blue Chip Stocks
MarketBeat names and lists “7 Blue-Chip Stocks to Add To Your Forever Portfolio”

Today’s Sponsor

Invest alongside a $12B AUM real estate owner/operator with 20%+ Lightstone co-investment in every offering. Our capital, right alongside yours.

Learn More

Sector Watch

Bond Market

Yields eased after the wholesale inflation report, with the ten year near 4.65 and the two year near 4.15. Treasury sold thirty year bonds this afternoon and the long end held near 5.21.

Policy Watch

Fed

Cleveland Fed President Beth Hammack said again today that the Fed should raise rates now, arguing that the longer inflation sits above target the harder it is to pull back down. She has dissented for a hike before, so the position is not new. It is a reminder that the hold everyone expects is not unanimous inside the building.

• Bank of America still looks for three quarter point hikes this year and warns that skipping them lifts long term yields anyway.

• Traders are going the other way. Odds of no hike at all in 2026 are near one in four, up from about one in ten a month ago.

Oil And Iran

• The White House says the US has total control of the Strait of Hormuz. Private shipping data still shows very little traffic, and shippers are not buying the claim.

• Oil fell today as the administration moved from military action toward economic pressure. Brent settled back near 87 dollars.

• Iran will join the development bank run by Brazil, Russia, India, China and other members, with the war close to six months old.

International

UK growth came in at 0.4 percent for the second quarter, and business investment rose 1.7 percent when economists looked for a drop. The Bank of England's chief economist, outvoted six to three on hikes, said the data makes him more comfortable pushing for one.

Rabobank flagged a shift worth filing away. The old rule that a strong dollar means weaker oil has flipped now that the US exports energy, so while Hormuz stays disrupted the dollar keeps a safety premium it would not have had ten years ago.

What to Watch

The AI Infrastructure's Backbone
10 Stocks Powering the AI Buildout

Applied Materials Earnings

Applied Materials $AMAT reports after the close. It sells the equipment that fills new fabs, so the order book is the cleanest read anyone gets on whether the memory buildout is funded or just talked about.

Friday Morning Data

July retail sales and the University of Michigan consumer survey both land before the open. Retail sales tell you if spending held up through July. In the survey, the inflation expectations line matters more than the headline mood.

Small Caps At A Record

The Russell 2000 hit an all time high today and is up 23 percent this year. Small companies live on borrowing costs, so this record is really a bet the Fed is done hiking. Watch whether it holds into the September meeting.

Thanks for reading - you are now the more informed 🙂

- John

Today’s Sponsor

Blu Dot surpasses 2,000% ROAS with self-serve CTV ads

Home furniture brand Blu Dot blew up on CTV with help from Roku Ads Manager. Here’s how:

After a test campaign reached 211,000 households and achieved 1,010% ROAS, the brand went all in to promote its annual sales event. It removed age and income constraints to expand reach and shifted budget to custom audiences and retargeting, where intent was strongest.

The results speak for themselves. As Blu Dot increased their investment by 10x, ROAS jumped to 2,308% and more page-view conversions surpassed 50,000.

“For CTV campaigns, Roku has been a top performer,” said Claire Folkestad, Paid Media Strategist, Blu Dot. “Comping to our other platforms, we have seen really strong ROAS… and highly efficient CPMs, lower than any other CTV partner we've worked with.”

Using Roku Ads Manager, the campaign moved from a pilot to a permanent performance engine for the brand.

Learn More