Stocks Supported by Signs the US Economy is Holding Up

The S&P 500 Index ($SPX) (SPY) today is up by +0.02%, the Dow Jones Industrials Index ($DOWI) (DIA) is down by -0.16%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up by +0.03%.  September E-mini S&P futures (ESU25) are up +0.02%, and September E-mini Nasdaq futures (NQU25) are up +0.02%. 

Stock index futures recovered from overnight losses and turned mixed, with the S&P 500 posting a new all-time high and the Nasdaq 100 posting a 1-week high on signs that the US economy is holding up.  US Q2 GDP was revised higher than expected, showing the economy expanded more than initially estimated.  Also, US weekly initial unemployment claims fell as expected, easing concerns about the labor market. 

Limiting gains in stocks is some weakness in technology stocks after Nvidia's sales forecast fell short of lofty expectations.  Nvidia is down more than -1% after reporting weaker-than-expected Q2 data center revenue and giving a revenue forecast that was seen as underwhelming. 

US Q2 GDP was revised upward to +3.3% (q/q annualized) from the previously reported +3.0%, stronger than expectations of +3.1%.

US weekly initial unemployment claims fell -5,000 to 229,000, close to expectations of 230,000.

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 are focusing on any fresh tariff news or developments on ending the Ukraine-Russian war.  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 85% at the next FOMC meeting on September 16-17.  The markets are discounting the chances at 50% 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 higher.  The Euro Stoxx 50 is up +0.19%.  China's Shanghai Composite closed up +1.14%.  Japan's Nikkei Stock 225 closed up +0.73%.

Interest Rates

September 10-year T-notes (ZNU5) today are down -2 ticks, and the 10-year T-note yield is up +0.6 bp to 4.240%. 

Sep T-notes fell from a 4-month nearest-futures high today, and the 10-year T-note yield moved up from a 2-week low of 4.211%.  T-notes gave up an early advance today after US Q2 GDP was revised higher than expected and after weekly jobless claims declined as expected, hawkish factors for Fed policy.  Also, supply pressures are weighing on T-notes as the Treasury will auction $44 billion of 7-year T-notes later today.  Losses in T-notes are limited due to positive carryover from Wednesday, when New York Fed President Williams said that at some point, it will be appropriate for us to move rates down, as we are still in a "modestly restrictive" stance on policy.

European government bond yields today are mixed.  The 10-year German bund rebounded from a 2-week low of 2.679% and is up +0.4 bp to 2.704%.  10-year UK gilt yield is down -1.9 bp to 4.717%.

The Eurozone's August economic confidence indicator unexpectedly fell -0.5 to 95.2, weaker than expectations of an increase to 96.0.

Eurozone July new car registrations rose 7.4% year-over-year to 914,680, the biggest increase in 15 months.

Swaps are discounting the chances at 3% for a -25 bp rate cut by the ECB at the September 11 policy meeting.

US Stock Movers

Chip makers are climbing today to provide support to the broader market.  Broadcom (AVGO), Marvell Technology (MRVL), and Micron Technology (MU) are up more than +2%.  Also, Advanced Micro Devices (AMD), GlobalFoundries (GFS), ON Semiconductor Corp (ON), NXP Semiconductors NV (NXPI), Lam Research (LRCX), and Microchip Technology (MCHP) are up more than +1%.   

Snowflake (SNOW) is up more than +13% to lead software stocks higher after reporting Q2 product revenue of $1.09 billion, better than the consensus of $1.04 billion, and raising its 2026 product revenue forecast to $4.40 billion from a previous estimate of $4.33 billion, stronger than the consensus of $4.34 billion.  Also, Datadog (DDOG) is up more than +4% to lead gainers in the S&P 500 and Nasdaq 100, and Cloudflare (NET) is up more than +2%.  In addition, Atlassian (TEAM) and MongoDB (MDB) are up more than +1%.  Finally, Salesforce (CRM) is up more than +2% to lead gainers in the Dow Jones Industrials.

Pure Storage (PSTG) is up more than +21% after reporting Q2 revenue of $861 million, above the consensus of $845.9 million, and raising its 2026 revenue forecast to $3.60 billion-$3.63 billion from a previous forecast of $3.52 billion, stronger than the consensus of $3.52 billion. 

Phibro Animal Health Corp (PAHC) is up more than +10% after forecasting 2026 net sales of $1.43 billion to $1.48 billion, above the consensus of $1.42 billion. 

Burlington Stores (BURL) is up more than +6% after reporting Q2 adjusted EPS of $1.59, well above the consensus of $1.27, and raising its full-year adjusted EPS forecast to $9.19-$9.59 from a previous forecast of $8.70-$9.30, the midpoint above the consensus of $9.26. 

Five Below (FIVE) is up more than +3% after reporting Q2 comparable sales rose +12.4%, stronger than the consensus of +9.14%, and raising its full-year net sales forecast to $4.44 billion-$4.52 billion from a previous forecast of $4.33 billion-$4.42 billion.   

HP Inc. (HPQ) is up more than +3% after reporting Q3 net revenue of $13.93 billion, better than the consensus of $13.74 billion.

Agilent Technologies (A) is up more than +2% after reporting Q3 net revenue of $1.74 billion, above the consensus of $1.67 billion, and raising its full-year revenue estimate to $6.91 billion-$6.93 billion from a previous estimate of $6.73 billion-$6.81billion. 

Hormel Foods (HRL) is down more than -14% to lead losers in the S&P 500 after reporting Q3 adjusted EPS of 35 cents, below the consensus of 40 cents, and forecasting Q4 adjusted EPS of 38 cents-40 cents, weaker than the consensus of 49 cents.

Nvidia (NVDA) is down more than -2% to lead losers in the Dow Jones Industrials and Nasdaq 100 after reporting Q2 data center revenue of $41.10 billion, below the consensus of $41.29 billion.   

Cooper Cos (COO) is down more than -13% after cutting its full-year revenue forecast to $4.08 billion-$4.10 billion from a previous forecast of $4.11 billion-$4.15 billion, weaker than the consensus of $4.12 billion. 

Nutanix (NTNX) is down more than -7% after forecasting Q1 revenue of $670 million-$680 million, the midpoint below the consensus of $677 million. 

Veeva Systems (VEEV) is down more than -5% after reporting Q2 adjusted gross margin of 77.5%, below the consensus of 78.2%. 

Best Buy (BBY) is down more than -2% despite reporting better-than-expected Q2 EPS after warning that tariffs continue to weigh on its business ahead of the crucial holiday season.

Earnings Reports(8/28/2025)

Affirm Holdings Inc (AFRM), Autodesk Inc (ADSK), Bath & Body Works Inc (BBWI), Best Buy Co Inc (BBY), Brown-Forman Corp (BF/B), Burlington Stores Inc (BURL), Dell Technologies Inc (DELL), Dick's Sporting Goods Inc (DKS), Dollar General Corp (DG), Elastic NV (ESTC), Gap Inc/The (GAP), Hormel Foods Corp (HRL), Marvell Technology Inc (MRVL), Ollie's Bargain Outlet Holding (OLLI), SentinelOne Inc (S), Ulta Beauty Inc (ULTA).