Stocks Pressured as Bond Yields Climb and Chip Makers Slide

The S&P 500 Index ($SPX) (SPY) today is down by -0.04%, the Dow Jones Industrials Index ($DOWI) (DIA) is up by +0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down by -0.32%.  September E-mini S&P futures (ESU25) are down -0.03%, and September E-mini Nasdaq futures (NQU25) are down -0.28%. 

Stock indexes are mostly lower today as bond yields rise on concerns about the Fed's independence following President Trump's push to fire Fed Governor Lisa Cook.  The 10-year T-note yield is up +2 bp to 4.28%.  Additionally, weakness in the semiconductor market is weighing on technology stocks and the broader market.  Trading activity is thin as the markets await Nvidia's earnings after the close for an update on the artificial intelligence boom.

Comments today from New York Fed President Williams were neutral, as he stated that the US economy is slowing, not stalling, and he remains optimistic about the economy's direction.  He added that every FOMC meeting is "live" for interest rates and that at some point, it will be appropriate for us to adjust rates downward as we remain in a "modestly restrictive" stance on policy.

US MBA mortgage applications fell -0.5% in the week ended August 22, with the purchase mortgage sub-index up +2.2% and the refinancing mortgage sub-index down -3.5%.  The average 30-year fixed rate mortgage rose +1 bp to 6.69% from 6.68% in the prior week.

Regarding tariffs, President Trump late Monday threatened to impose new tariffs and export restrictions on advanced technology and semiconductors in retaliation against other nations' digital services taxes that hit American companies.  Last week, Mr. Trump widened steel and aluminum tariffs to include more than 400 consumer items that contain the metals, such as motorcycles, auto parts, furniture components, and tableware.  The change went into effect last Monday and did not exclude goods already in transit.  

In other recent tariff news, Mr. Trump on August 13 extended the tariff truce with China for another 90 days until November.  On August 6, Mr. Trump announced that he will double tariffs on US imports from India to 50% from the current 25% tariff, due to India's purchases of Russian oil.  According to Bloomberg Economics, the average US tariff will rise to 15.2% if rates are implemented as announced, up from 13.3% earlier, and significantly higher than the 2.3% in 2024 before the tariffs were announced.

The markets this week will focus on any fresh tariff news or developments on ending the Ukraine-Russian war.  After today's close, Nvidia will release its quarterly earnings and guidance.  On Thursday, Q2 GDP is expected to be revised upward by +0.1 to 3.1% (q/q annualized). Also, weekly initial unemployment claims are expected to fall by -5,000 to 230,000.  On Friday, July personal spending is expected to climb +0.3% m/m, and July personal income is expected to rise +0.4% m/m.   Also, the July core PCE price index, the Fed's preferred inflation gauge, is expected to climb +0.2% m/m and +2.9% y/y.  In addition, the Aug MNI Chicago PMI is expected to fall -0.6 to 46.5.  Finally, the University of Michigan's final-Aug US consumer sentiment index is expected to be unrevised at 58.6.

Federal funds futures prices are discounting the chances for a -25 bp rate cut at 87% at the next FOMC meeting on September 16-17.  The markets are discounting the chances at 52% for a second -25 bp rate cut at the following meeting on October 28-29.

Earnings reports indicate that S&P 500 earnings for Q2 are on track to rise +9.1% y/y, much better than the pre-season expectations of +2.8% y/y and the most in four years, according to Bloomberg Intelligence.  With Q2 earnings season winding down, over 95% of S&P 500 firms having reported Q2 earnings, about 82% of companies exceeded profit estimates. 

Overseas stock markets today are mixed.  The Euro Stoxx 50 rebounded from a 2-week low and is up +0.28%.  China's Shanghai Composite closed down -1.76%. Japan's Nikkei Stock 225 closed up +0.30%.

Interest Rates

September 10-year T-notes (ZNU5) today are down -5 ticks, and the 10-year T-note yield is up +1.6 bp to 4.277%. 

T-notes are slightly lower today due to rising inflation expectations as the 10-year breakeven inflation expectations rate rose to a 5-week high today of 2.450%.  Supply pressures are also weighing on T-notes, as the Treasury will auction $28 billion in 2-year floating-rate notes and $70 billion in 5-year T-notes later today. In addition, T-notes are under pressure with President Trump's move to fire Fed Governor Cook, exacerbating investor concerns about the Fed's independence and fanning inflation fears if politics forces interest rates below the neutral rate. 

European government bond yields are moving lower today.  The 10-year German bund yield fell to a 1.5-week low of 2.695% and is down -1.6 bp to 2.707%.  10-year UK gilt yield is down -2.6 bp to 4.714%.

The German Sep GfK consumer confidence survey unexpectedly fell -1.9 to a 5-month low of -23.6, weaker than expectations of no change at -21.5.

Swaps are discounting the chances at 1% for a -25 bp rate cut by the ECB at the September 11 policy meeting.

US Stock Movers

Weakness in chip makers today is weighing on the broader market. Nvidia (NVDA) is down more than -1% to lead losers in the Dow Jones Industrials.  Also, Microchip Technology (MCHP) and Broadcom (AVGO) are down more than -1%.  In addition, Lam Research (LRCX) and Advanced Micro Devices (AMD) are down -0.65%, Texas Instruments (TXN) is down -0.60%, and Applied Materials (AMAT) and ARM Holdings Plc (ARM) are down -0.40%. 

J M Smucker (SJM) is down more than -5% to lead losers in the S&P 500 after reporting Q1 net sales of $2.11 billion, below the consensus of $2.12 billion. 

Abercrombie & Fitch (ANF) is down more than -7% after reporting Q2 net sales of $551.9 million, below the consensus of $580.6 million.

PayPal Holdings (PYPL) is down more than -1% after Suddeutsche Zeitung reported that several banks blocked direct debits in the wake of payments that appeared to be suspicious or fraudulent. 

SBA Communications (SBAC) is down more than -1% after Bank of America downgraded the stock to neutral from buy. 

MongoDB (MDB) is up more than +32% to lead software stocks higher after reporting Q2 adjusted EPS of $1.08, well above the consensus of 65 cents, and raising its 2026 adjusted EPS forecast to $3.64-$3.73 from a previous forecast of $2.94-$3.12, stronger than the consensus of $3.20.  Also, Datadog (DDOG) and Snowflake (SNOW) are up more than +2%, and Cloudflare (NET) is up more than +1%.

Kohl's (KSS) is up more than +19% after reporting Q2 EPS of $1.35, well above the consensus of 31 cents, and forecasting full-year EPS of 50 cents-80 cents, better than the consensus of 49 cents. 

nCino (NCNO) is up more than +13% after reporting Q2 subscription revenue of $130.8 million, better than the consensus of $125.6 million, and raising its 2026 subscription revenue estimate to $513.5 million-$517.5 million from $507 million-$511 million. 

Elanco Animal Health (ELAN) is up more than +4% after S&P Dow Jones Indices announced the company will replace Sarepta Therapeutics in the S&P MidCap 400 prior to the opening of trading on Tuesday.  September 2.

Okta (OKTA) is up more than +2% after reporting Q2 revenue of $728 million, stronger than the consensus of $696.9 million, and raising its full-year revenue estimate to $2.88 billion-$2.89 billion from a previous estimate of $2.85 billion-$2.86 billion, above the consensus of $2.86 billion. 

Dynatrace (DT) is up more than +2% after Oppenheimer initiated coverage of the stock with a recommendation of outperform and a price target of $65. 

Earnings Reports(8/27/2025)

Agilent Technologies Inc (A), BILL Holdings Inc (BILL), Cooper Cos Inc/The (COO), Crowdstrike Holdings Inc (CRWD), Donaldson Co Inc (DCI), Five Below Inc (FIVE), HP Inc (HPQ), J M Smucker Co/The (SJM), NetApp Inc (NTAP), Nutanix Inc (NTNX), NVIDIA Corp (NVDA), Pure Storage Inc (PSTG), Snowflake Inc (SNOW), Veeva Systems Inc (VEEV), Williams-Sonoma Inc (WSM).