August 22nd Market Overview

Happy Friday (enjoy your weekend)

So alot happened today.

Powell opened the door on rate cuts at Jackson Hole and September odds jumped above 90% causing Smallcaps to have their best day since November.

The Intel news is pretty odd, government taking a 10% stake in a major tech company. That's never happened before and feels like a bigger deal than people realize.

Let's dig in...

Today's Big Picture

Powell signals policy shift 
September cut odds jumped above 90% as the Fed Chair acknowledged shifting economic risks for the first time since March. Rate-sensitive assets responded immediately.

Small-caps outperform on rate relief 
The Russell 2000 ( $IWM ( ▲ 3.93% )) posted its best day since November as lower-rate expectations favor higher-beta names over large-caps.

Government takes Intel stake 
Washington announced a nearly 10% equity position in Intel $INTC ( ▲ 7.32% ) - the first direct government ownership in a major tech company in decades.

Broad risk-on momentum builds
VIX collapsed while market breadth reached 15-to-1 positive, suggesting this rally has room to run beyond just rate-cut hopes.

Market Overview

U.S. Stock Indexes

Stock Spotlight

Intel $INTC ( ▲ 7.32% ) climbed after Washington announced a nearly 10% equity stake. First direct government ownership in a major tech company signals new industrial policy era.

Apple $AAPL ( ▲ 1.41% ) gained on reports of talks with Alphabet $GOOGL ( ▲ 3.26% ) about using Gemini for Siri overhaul. Would give Google deeper iPhone integration while accelerating Apple's AI timeline.

Nvidia $NVDA ( ▲ 1.66% ) traded mixed as China tensions escalate. Company halted H20 chip production following Beijing security concerns but continues talks on new Blackwell variant for the market.

Meta $META ( ▲ 2.08% ) advanced on news of a six-year, $10 billion cloud contract with Google $GOOGL. Deal underscores massive infrastructure spending required for AI leadership.

Intuit $INTU ( ▼ 5.0% ) fell despite beating earnings. Q1 revenue guidance of mid-teens growth missed Street's expectations, suggesting tax software momentum slowing.

Big Name Updates

Zoom $ZM ( ▲ 12.63% ) raised full-year outlook after beating quarterly expectations. Results contrast sharply with recent tech earnings disappointments, suggesting video conferencing demand remains solid.

Tesla $TSLA ( ▲ 5.82% ) gained 5% without company news, benefiting from Powell's dovish tilt and renewed appetite for high-beta tech names.

Other Notable Company News

Workday $WDAY ( ▼ 3.38% ) declined after margin guidance disappointed and company warned of challenges in government and education segments.

Goldman Sachs $GS ( ▲ 3.56% ) and American Express $AXP ( ▲ 3.56% ) led financial gains as traders positioned for steeper yield curve benefiting lending margins.

Builders FirstSource $BLDR ( ▲ 8.78% ) and Mohawk Industries $MHK rallied with housing complex as rate cut hopes brightened construction outlook.

Paramount $PARAA ( ▼ 5.37% ) fell as Guggenheim downgraded to neutral, warning recent gains disconnect from fundamental streaming/linear TV challenges.

Sector Watch

Bond Market

Treasury markets led the rally as Powell's speech triggered aggressive positioning for rate cuts. The 2-year yield's sharp decline to 3.70% signals traders expect the Fed to move quickly.

• Futures markets now price 37% odds of three quarter-point cuts by year-end

• The curve steepening benefits banks while pressuring dividend-focused utilities

• Corporate credit spreads tightened as funding cost prospects improved

Policy Watch

Fed officials can't agree on what to do next month. Cleveland's Beth Hammack thinks rates should stay high because inflation keeps climbing. Boston's Susan Collins wants to cut rates because the job market looks shaky.

• Canada dropped its 25% tariffs on $21 billion worth of American goods starting September 1st

• The White House said it's about time Canada made this move

• The Intel deal might be the first of many government stakes in tech companies

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What to Watch

Nvidia earnings Next Wednesday
The AI giant reports results while dealing with China chip problems. Key question: can they maintain growth if Chinese sales get cut off? Watch what they say about Blackwell chip demand.

PCE inflation data next Friday 
The Fed's favorite inflation number comes out Friday. If it shows cooling prices, that backs up Powell's rate cut hints. If it runs hot, September cuts get harder to justify.

Durable goods orders Monday
This shows whether businesses are still spending money on equipment. Weak numbers would support Powell's view that the economy needs help.

Small-cap rally legs 
Can smaller companies keep outpacing big stocks? This only works if rate cuts actually happen and the economy stays strong. Regional banks and homebuilders will show us first.

Thanks for reading 🙂

- John