August 5th Market Overview

Happy Wednesday

It looks like the Dow will close out another record day while the Nasdaq and tech sold off from this mornings hype. Nvidia carried the Dow after Elon Musk said SpaceX will buy chips from them exclusively.

Money has been rotating from AI names and spreading across the board, today it went to gold, defense, and Europe.

Let’s dig in...

Today's Big Picture

Money Left AI And Stayed In Stocks

Gold futures got back above $4,300 an ounce after the World Gold Council reported central banks resumed buying last quarter. The aerospace and defense fund hit its highest level since it launched in 2006. Europe's benchmarks closed at records with banks and industrials doing the lifting, and Barclays strategist Julian Lafargue called Europe the anti-AI trade. Selling the AI names is not the same as selling stocks, and today made that difference obvious.

Google's AI Brain Trust Walks Out

Jeff Dean is leaving Alphabet after 27 years and taking senior fellow Sanjay Ghemawat with him to start a new research company. Demis Hassabis is stepping back from running Google DeepMind day to day and moving up to chairman. Google will fund the startup as a founding investor and sell it cloud service. Shareholders voted on that arrangement immediately.

Hiring Cools While Prices Do Not

Private employers added 44,000 jobs in July, roughly half of June's revised number and short of forecasts, which ran between 65,000 and 75,000. The services survey told the same story from both ends, with its hiring gauge at the weakest reading since March and its prices gauge at the hottest 12 month average since spring 2023. That mix is exactly what Neel Kashkari spent the morning pointing at. Friday's jobs report is now the most important number of the week.

Market Overview

Index Performance

Stock spotlight

Nvidia $NVDA ( ▲ 4.61% )  
got the endorsement of the year. Musk said SpaceX will build with Nvidia chips and nothing else, calling the Vera Rubin design the best AI computer available.

Advanced Micro Devices $AMD ( ▼ 6.01% )  
doubled its data center revenue and posted record sales, and none of it counted once Musk said SpaceX is done buying its chips. CEO Lisa Su said the market for data center AI chips is growing faster than she projected six months ago and reaches $1.4 trillion by 2030.

SpaceX $SPCX ( ▼ 13.28% )  
spent $18.4 billion on capital projects last quarter against $2.8 billion a year ago, and the stock paid for it. Finance chief Bret Johnsen told analysts the next two quarters look about the same.

Big name updates

Eli Lilly $LLY ( ▲ 4.91% )  
grew revenue by close to half from a year ago on Mounjaro and Zepbound and raised full year guidance. Foundayo, the new once a day weight loss pill, came in at $98 million and slightly short.

The Walt Disney Company $DIS ( ▲ 3.03% )  
earned $2.06 a share against $1.86 expected, with the parks and "Toy Story 5" carrying the quarter. The $1.2 billion from selling its A+E Global Media stake is going into buybacks, taking this year's total to $9 billion.

CVS Health $CVS ( ▼ 4.06% )  
beat on both lines and raised 2026 guidance, then started talking about 2027 and lost the room. Membership in its Caremark pharmacy benefits arm shrinks next year as contracts get rewritten.

Goldman Sachs $GS ( ▲ 1.71% )  
closed above $1,052 on Tuesday, double where it sat the day after last year's tariff announcement. Volatile markets fed the trading desks and the reopened IPO window did the rest.

Other notable company news

Phillips 66 $PSX ( ▼ 1.81% )  
earned $9.41 a share against $7.30 expected as refining margins hit records during the war.

Shake Shack $SHAK ( ▲ 11.92% )  
rose after Starboard Value said it built a stake worth several hundred million dollars.

New York Times $NYT ( ▼ 13.29% )  
added about 280,000 digital subscribers, down from 310,000 the quarter before, and had its worst day in more than a year.

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Sector Watch

Bond market

Treasury said again it has no plans to grow note and bond auction sizes for at least the next several quarters. That is the same guidance it has given for 11 straight quarters, and most desks still expect the sizes to go up sometime next year.

Policy watch

Fed

Neel Kashkari wants rates higher and he is not being quiet about it. He told CNBC that earnings are strong, the consumer is holding up, and he sees no evidence policy is restrictive right now.

• He was one of three votes for a hike last week, alongside Lorie Logan and Beth Hammack.

• He said he is open minded about cutting the Fed to six meetings a year.

International

Trump said a deal to reopen the Strait of Hormuz could come tomorrow or the day after, and Qatar says a proposal has been drafted. The details are where this gets interesting.

• Reuters reports Iran and Oman are negotiating terms that would hand Tehran control over inbound ship traffic.

• Regional officials told Reuters the important parts are still unsettled, which cuts against the idea this lands in the next 48 hours.

• Houthi forces claimed a strike on a Saudi tanker in the Red Sea today. Oil still finished lower for a third straight session.

Fiscal and trade

The administration is drafting rules to block imports of new Chinese optical transceiver models, the parts that move data inside data centers. Chinese suppliers Zhongji Innolight and Eoptolink sold off on the report. This is the chip export playbook applied one layer down the stack.

What to Watch

The AI company quietly automating every Walmart distribution center. 
23 billion in orders on the book.

It's just one of seven names in this free MarketBeat report.

Tonight's earnings

Western Digital $WDC, Sandisk $SNDK, DoorDash $DASH, eBay $EBAY and Expedia $EXPE report after the close. Memory pricing and consumer spending are the two reads worth having.

The SpaceX unlock

About a fifth of SpaceX shares become tradable this week. That is a lot of new supply arriving in a stock that already had a rough day.

- John

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