S&P 500 Posts a New Record High on a Resilient US Economy

The S&P 500 Index ($SPX) (SPY) on Thursday closed up by +0.32%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up by +0.16%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up by +0.58%.  September E-mini S&P futures (ESU25) rose +0.32%, and September E-mini Nasdaq futures (NQU25) rose +0.56%. 

Stock indexes rallied on Thursday, with the S&P 500 posting a new all-time high and the Nasdaq 100 posting a 1.5-week high.  Signs that the US economy is holding up pushed stock prices higher on Thursday after 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.  Strength in software stocks and chip makers led the overall market higher on Thursday.

Limiting gains in stocks on Thursday was some disappointing earnings news.  Hormel Foods fell more than -13% after reporting weaker-than-expected Q3 adjusted EPS and forecasting Q4 adjusted EPS below consensus.  Additionally, there's some weakness in AI stocks following Nvidia's sales forecast, which fell short of lofty expectations.  Nvidia fell -0.79% 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.

US Jul pending home sales fell -0.4% m/m, weaker than expectations of -0.2% m/m.

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 86% at the next FOMC meeting on September 16-17.  The markets are discounting the chances at 53% 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 on Thursday settled higher.  The Euro Stoxx 50 closed up +0.07%.  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) on Thursday closed up +4 ticks, and the 10-year T-note yield fell -2.3 bp to 4.209%. 

Sep T-notes climbed to a 4-month nearest-futures high on Thursday, and the 10-year T-note yield fell to a 2-week low of 4.201%.  T-notes moved higher on Thursday, benefiting from positive carryover from Wednesday, when New York Fed President Williams stated that at some point, it will be appropriate for the Fed to move rates down, as it is still in a "modestly restrictive" stance on policy.

Gains in T-notes are limited after the US Q2 GDP was revised higher than expected and after weekly jobless claims declined as expected, which are hawkish factors for Fed policy.  Also, weak demand for the Treasury's $44 billion auction of 7-year T-notes was bearish for T-note prices as the auction had a bid-to-cover ratio of 2.49, weaker than the 10-auction average of 2.66. 

European government bond yields on Thursday moved lower.  The 10-year German bund yield fell to a 2-week low of 2.679% and finished down -0.5 bp to 2.695%.  10-year UK gilt yield fell -3.6 bp to 4.699%.

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.

The summary of the July 23-24 ECB meeting showed that policymakers deemed the risks to inflation to be "broadly balanced" and that the Eurozone economy has so far remained resilient to headwinds ranging from tariffs to wars.

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

Chipmakers rallied on Thursday to provide support to the broader market.  Marvell Technology (MRVL) closed up more than +4%, and Micron Technology (MU) and Broadcom (AVGO) closed up more than +3%.  Also, Advanced Micro Devices (AMD), Applied Materials (AMAT), and NXP Semiconductors NV (NXPI) closed up more than +1%.   

Snowflake (SNOW) closed up more than +18% 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) closed up more than +6% to lead gainers in the S&P 500 and Nasdaq 100, and MongoDB (MDB) closed up more than +7%.  In addition, Cloudflare (NET) closed up more than +3% and Atlassian (TEAM) closed up more than +2%.  Finally, Salesforce (CRM) closed up more than +1% to lead the gainers in the Dow Jones Industrials.

Pure Storage (PSTG) closed up more than +31% 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) closed up more than +18% after forecasting 2026 net sales of $1.43 billion to $1.48 billion, above the consensus of $1.42 billion. 

Agilent Technologies (A) closed up more than +5% 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. 

HP Inc. (HPQ) closed up more than +4% after reporting Q3 net revenue of $13.93 billion, better than the consensus of $13.74 billion.

Burlington Stores (BURL) closed up more than +4% 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) closed 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.   

Hormel Foods (HRL) closed down more than -13% 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) closed down -0.79% after reporting Q2 data center revenue of $41.10 billion, below the consensus of $41.29 billion.   

Cooper Cos (COO) closed down more than -12% 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. 

Veeva Systems (VEEV) closed down more than -7% after reporting Q2 adjusted gross margin of 77.5%, below the consensus of 78.2%.

Nutanix (NTNX) closed down more than -5% after forecasting Q1 revenue of $670 million-$680 million, the midpoint below the consensus of $677 million. 

Brown-Forman (BF.B) closed down more than -4% after reporting Q1 EPS of 36 cents, below the consensus of 37 cents.

Best Buy (BBY) closed down more than -3% 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(8/29/2025)

Lionsgate Studios Corp (LION).