STRAIGHT FROM THE TRADING FLOOR
by Michael P. Reinking, CFA - Sr. Market Strategist
Published on 8/25/26 (a/o 9:00 am)
Good morning,
Most major US indices closed modestly lower to start the week. Some negative news flow around frontier model pricing and demand weighed on the AI complex. Reports that Nvidia would raise prices caused some rotation within that complex as hyperscalers that have been working on their own solutions to ween off of Nvidia products moved modestly higher (GOOG - TPUs, AMZN - Trainium, META- MTIA, MSFT - Maia) while companies that are more dependent on the Nvidia ecosystem, like neoclouds, were under pressure. Other thematic momentum trades also sold off including quantum, rare earths, nuclear and vision/robotics on the heels of the 2026 World Humanoid Robot Games, though the MAC Desk can’t get enough of the robot folly videos. The S&P 500 tested last week’s low before bouncing to close down 0.3%, right around its 20d ma. The equal-weight version of the index and the Dow closed a touch higher with defensive/yield-oriented sectors and financials offsetting the tech weakness. Small caps underperformed with the Russell down 0.8%. Treasury Secretary Bessent’s press conference to discuss Operation Economic Outcast was the highlight of the day but didn’t elicit much of a market response. The new sanctions initiative would target countries and institutions that assist Iran as a way of adding further pressure on the Iranian regime and economy. Oil prices and yields both moved modestly lower. US-Canadian trade also made headlines after talks collapsed last week with tariffs set to be enacted in September, while President Trump threatened auto tariffs in January.
It remains quiet as the market awaits the week’s big catalysts starting tomorrow. US equity futures have moved modestly higher overnight as Pakistan said “significant”, progress was made in talks with Iran, which is knocking another 3% off of crude this morning, following yesterday’s decline. China said it would retaliate if new US sanctions hit Chinese firms linked to Iran. In the meantime, the US could impose 7.5% “overcapacity” tariffs on China to counter excess manufacturing, according to reports. Details are still being worked out. The other big story overnight was the WSJ op-ed by Treasury Secretary Bessent’s former boss, Stanley Druckenmiller, who criticized last week’s buyback announcement. That being said, the move lower in oil prices is helping Treasury yields pullback 2-4bps across the curve. Dick’s Sporting Goods is trading down >15% after missing earnings and cutting guidance. Management highlighted an increasingly promotional environment which weighed on its footwear/apparel business (NKE/LULU/UA/DECK/ONON all down ~2%). Semi/memory stocks are bouncing in the pre-market while software stocks are trading lower. S&P, Dow and R2k futures are just off overnight highs up ~0.4%.
The ADP weekly employment change increased to 11,750 from 9.5k last week. After the open consumer confidence and new home will be released. There is also a $69B 2yr auction at 1:00. The USD index is off the overnight high hovering around unchanged and just below its 200d ma.
Oil prices are extending to the downside near overnight lows trading off ~3%. Natural gas prices in both the US/Europe are down a similar amount. Precious metals are moving modestly lower though copper is holding on to small gains. Ag is also pulling back. Bitcoin broke above 80k overnight but couldn’t hold the gains, currently hovering ~79k. The rest of the crypto complex is pulling back.
Economic Data:
US:
Most major US indices closed modestly lower to start the week. Some negative news flow around frontier model pricing and demand weighed on the AI complex. Reports that Nvidia would raise prices caused some rotation within that complex as hyperscalers that have been working on their own solutions to ween off of Nvidia products moved modestly higher (GOOG - TPUs, AMZN - Trainium, META- MTIA, MSFT - Maia) while companies that are more dependent on the Nvidia ecosystem, like neoclouds, were under pressure. Other thematic momentum trades also sold off including quantum, rare earths, nuclear and vision/robotics on the heels of the 2026 World Humanoid Robot Games, though the MAC Desk can’t get enough of the robot folly videos. The S&P 500 tested last week’s low before bouncing to close down 0.3%, right around its 20d ma. The equal-weight version of the index and the Dow closed a touch higher with defensive/yield-oriented sectors and financials offsetting the tech weakness. Small caps underperformed with the Russell down 0.8%. Treasury Secretary Bessent’s press conference to discuss Operation Economic Outcast was the highlight of the day but didn’t elicit much of a market response. The new sanctions initiative would target countries and institutions that assist Iran as a way of adding further pressure on the Iranian regime and economy. Oil prices and yields both moved modestly lower. US-Canadian trade also made headlines after talks collapsed last week with tariffs set to be enacted in September, while President Trump threatened auto tariffs in January.
It remains quiet as the market awaits the week’s big catalysts starting tomorrow. US equity futures have moved modestly higher overnight as Pakistan said “significant”, progress was made in talks with Iran, which is knocking another 3% off of crude this morning, following yesterday’s decline. China said it would retaliate if new US sanctions hit Chinese firms linked to Iran. In the meantime, the US could impose 7.5% “overcapacity” tariffs on China to counter excess manufacturing, according to reports. Details are still being worked out. The other big story overnight was the WSJ op-ed by Treasury Secretary Bessent’s former boss, Stanley Druckenmiller, who criticized last week’s buyback announcement. That being said, the move lower in oil prices is helping Treasury yields pullback 2-4bps across the curve. Dick’s Sporting Goods is trading down >15% after missing earnings and cutting guidance. Management highlighted an increasingly promotional environment which weighed on its footwear/apparel business (NKE/LULU/UA/DECK/ONON all down ~2%). Semi/memory stocks are bouncing in the pre-market while software stocks are trading lower. S&P, Dow and R2k futures are just off overnight highs up ~0.4%.
The ADP weekly employment change increased to 11,750 from 9.5k last week. After the open consumer confidence and new home will be released. There is also a $69B 2yr auction at 1:00. The USD index is off the overnight high hovering around unchanged and just below its 200d ma.
- US 2yr -3bps to 4.21%, 5yr -4bps to 4.37%, 10yr -4bps to 4.66%, 30yr -4bps to 5.19%
- USD index: +$0.02 to $98.95
Oil prices are extending to the downside near overnight lows trading off ~3%. Natural gas prices in both the US/Europe are down a similar amount. Precious metals are moving modestly lower though copper is holding on to small gains. Ag is also pulling back. Bitcoin broke above 80k overnight but couldn’t hold the gains, currently hovering ~79k. The rest of the crypto complex is pulling back.
Economic Data:
US:
- ADP Weekly Employment Change: prior 9.5k
- S&P Case Shiller: vs. 1.7% cons., prior 1.6%
- 10:00 Consumer Confidence
- 10:00 New Home Sales
- 10:00 Richmond Fed Manufacturing
- 1:00 2Yr Auction
- 1:00 Money Supply
- 4:00 Fed Barkin
- 4:30 API Oil Inventories
- Spain PPI: 9.2% prior 7%
- Germany Q2 GDP: 0.3% revised from 0.2%
- Germany Ifo Business Climate: 88.8 vs 87.4 cons, prior 86.7
- Current Conditions: 88.5 vs 87.0 cons, prior 86.5
- Expectations: 89.1 vs 87.5 cons, prior 86.8
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