August 26th Market Overview

Happy Wednesday

Nobody wanted to commit ahead of Nvidia after the close. Inflation ran a touch warm this morning and spending held up fine, so the economy is doing its job. It just isn't giving the Fed much help.

On Nvidia….they've beaten and raised three quarters running and the stock still closed lower the next day every time. High bar, but a good problem to have. It’s been in this range for awhile so wouldn’t surprise me if a big move happens on either side.

Let’s dig in...

Today's Big Picture

1. Nvidia has to clear a bar it set itself

Nvidia reports after the close. Wall Street wants about $92 billion in revenue and guidance near $104 billion for the current quarter. It has beaten and raised three quarters running, and the stock still closed lower the next day each time. Bank of America told clients the beat is priced and the balance sheet is the debate.

2. Meta pays to make the teen case go away

Meta settled with state attorneys general over claims its apps harmed young users. CNBC and Yahoo put it at $16.7 billion across 29 states, the Journal at $18 billion across 48, so the final number is still moving. Meta denied wrongdoing and agreed to daily time limits, overnight blocks for teens and real age checks. Meta rose while Snap and Roblox fell, which tells you who investors think pays for this.

3. Inflation is stuck and the economy is fine

The Fed's preferred gauge held at June's pace in July, a hair above forecast and still well above the two percent target. Spending and income both beat, so there is no soft patch to force anyone's hand. Ellen Zentner at Morgan Stanley Wealth Management said it was not enough to shift the balance for September. Watch where the conversation has drifted: traders are now arguing about a hike, not a cut.

Market Overview

Index Performance

Stock spotlight

Abercrombie & Fitch $ANF ( ▲ 34.65% )  
raised full year earnings guidance to $13.10 to $13.60 a share, up from $10.20 to $11.00. The company said it did not have to discount as much as it planned, which almost nobody in retail can say right now.

Boston Scientific $BSX ( ▼ 3.15% )  
said a cyberattack knocked out part of its network and left it unable to process and ship orders. Evercore noted the same kind of attack cost Stryker about three weeks in March.

Intuit $INTU ( ▼ 3.17% )  
guided fiscal 2027 revenue below estimates even after a strong fourth quarter. CFO Sandeep Aujla said some TurboTax customers are not getting the value for the price, and a free version is on the table.

Big name updates

Nike $NKE ( ▼ 2.05% )  
traded at its lowest level since August 2014 after Truist cut it to hold. Truist figures Nike is well over a third of what Dick's buys, so weak guidance there lands on Nike too.

Boeing $BA ( ▲ 0.43% )  
held flat after the FAA ordered engineering inspections on some Dreamliners. Boeing's own review found gaps wide enough for fatigue cracks to start at fastener holes in the wing.

Charles Schwab $SCHW ( ▼ 1.83% )  
fell after Vanguard agreed to buy Altruist, which holds assets for financial advisers and sells them planning tools. LPL Financial dropped with it.

Alibaba $BABA ( ▲ 0.65% )  
rose in Hong Kong after Chairman Joe Tsai bought 720,000 shares on Monday and again on Tuesday. CEO Eddie Wu bought 350,000, days after the company sold 80 billion Hong Kong dollars of new stock.

Zoom Communications $ZM ( ▼ 6.57% )  
guided the current quarter to roughly $1.28 billion, just under estimates. Enterprise growth was the best in years, which nobody cared about today.

Other notable company news

Dick's Sporting Goods $DKS ( ▲ 4.33% )  
kept its buy rating at Goldman after Tuesday's drop, though the price target came down to $170 from $271.

GoDaddy $GDDY ( ▼ 4.21% )  
was cut to underweight at Wells Fargo, which says AI search summaries now steer buyers to cheaper domain sellers.

SAP $SAP ( ▼ 2.59% )  
was downgraded to neutral at UBS, which counted 17 ready made AI agents against a target of 200 by year end.

J.M. Smucker $SJM ( ▲ 5.28% )  
beat first quarter estimates and improved its outlook for the year.

Fidelity has started taking payment for order flow on stock trades, reversing the stance it held since 2015.

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Sector Watch

Bond market

Yields drifted back up today after yesterdays rally, when the 10 year gave back almost eight basis points. The long end is still the sore spot, with the 30 year near levels last seen almost twenty years ago.

Policy watch

Fed

Kevin Warsh still has not added his own forecasts to the quarterly projections the rest of the committee turns in. His colleagues are split on whether the next move is a hike, and he has not said which side he is on. We head into Friday knowing less about this chairman's thinking than we usually would.

Fiscal and trade

Canada matched Washington's new duties dollar for dollar, covering more than 700 American goods worth about $20 billion. Industry Minister Melanie Joly said the targets were picked with November's midterms in mind.

• Maine lobster, where half the catch goes to Canada, and dairy out of Wisconsin and New England

• Harley-Davidson motorcycles, which sold 6,400 units in Canada last year, and John Deere equipment out of the Midwest

• Appliances built in Ohio and Kentucky

• Steel and aluminum, where the trade already runs Canada's way, so the hit should be small

International

Iran and Oman said they agreed to split revenue from the Strait of Hormuz. No transit fee was named, though sharing revenue suggests one is coming. Brent has given back roughly a tenth of its price in three days on that alone. Supply helped too, with the industry's weekly count showing a build of 4.2 million barrels against expectations near 1.8 million.

What to Watch

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

Nvidia's call at five

The numbers land first, the answers come on the call. Listen for the split between the handful of big cloud buyers and everyone else, and for networking, which ran near $15 billion last quarter and is growing faster than the chip business. Salesforce $CRM and CrowdStrike $CRWD also report tonight and will get ignored.

Kevin Warsh at Jackson Hole

Friday at 10 a.m. Eastern, his first major policy speech as chairman. Traders want one thing: any hint on September.

Thanks for reading - you are now the more informed 🙂

- John

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