STRAIGHT FROM THE TRADING FLOOR
by Michael P. Reinking, CFA - Sr. Market Strategist
Published on 8/6/26 (a/o 9:00 am)
Good morning,
Yesterday major US indices, ex-the Dow Jone Industrial Average, pulled back modestly after the very strong start in the month of August. It continued to be a very busy day of earnings which were broadly positive but tech stocks that reported were under pressure given the high expectations. Oil prices stabilized after a flare up in the Red Sea but that didn’t completely derail hopes for a deal to re-open the Strait. ISM services missed expectation with mixed underlying metrics; new orders increased, employment contracted and pricing pressure remained elevated. Treasury yields ended the day around unchanged levels. Probably the most notable price action yesterday happened in the metals complex which moved sharply higher amidst the recent USD weakness and easing rate hike expectations with the pullback in oil prices. Materials (commodity strength) and healthcare (LLY/AMGN/CRL earnings) were the only two sectors with meaningful gains. Energy and communication services were both down >2%. The latter got hit after another AI executive departure at Google while telecom stocks were under pressure after SpaceX executives said the company will go after their market share.
Futures are pointing to a mixed open. S&P futures have been trading in a tight range overnight on either of unchanged. Within tech, memory and software stocks are under pressure after earnings related weakness. The following are all down over 10% memory (SNDK/WDC) software (APP/DDOG/FIGS/HUBS). Google is back in the headlines again looking to raise up to $25B in a debt offering which could shift the focus back to credit markets again. Oil prices have stabilized while Treasury yields are modestly higher amidst some Fed related drama. SpaceX is trading slightly lower with the unlock of ~900ml shares today.
This morning’s initial and continuing claims were about in line with expectations continuing to hover around 200k and 1.8ml, respectively. Q2 productivity came in well ahead of estimates while unit labor costs fell. There is some drama building in social media and the press related to the Fed. There was a lot of focus on a Tweet from Treasury Secretary Bessent who took a shot at the WSJ’s Nick Timiraos. The WSJ had a story talking about repeated phone calls between the President and Chair Warsh and there was a FT story that people close to Warsh “acknowledged that he had made some mistakes in his first 10 weeks” and said that he would be prepared to raise rates in September should inflation data come in hot. So, it looks like there is a new Fed Whisperer. Since the FT story Treasury yields have moved up about 3bps across the curve.
It’s been a mixed overnight session in global markets. South Korea sold off nearly 5% with weakness in the memory stocks following the aftermarket US earnings updates. Japan ended modestly lower with banks, autos and retail offsetting some of the tech weakness. Local yields moved lower after comments from Finance Minister Katayama that new debt issuance will not make up for tax revenue shortfalls. China announced that it is launching a probe into Palo Alto (-1%) the most recent response escalation in the trade flare-up ahead of President Xi’s scheduled US visit in September. The Hang Seng fell 1.5% with weakness in tech stocks while mainland indices in China ended modestly higher. In Europe retail sales disappointed but Germany factory orders came in well ahead of expectations. It continues to be busy on the earnings front. WPP is a standout up >20% with the company highlighting turnaround efforts helping results. Deutsche Telekom is up ~5% after solid numbers while Siemens AG is selling off despite strong numbers. Most major indices are modestly higher back at all-time highs.
Oil prices are modestly higher as we continue to wait for an update out of the Middle East. Ahead of US inventory data US nat gas prices are modestly lower while prices in Europe recoup some of this week’s losses. The metals complex is mixed off of the best levels but holding on to the bulk of yesterday’s rally. Ag is a touch higher. Crypto is pulling back from overnight highs trading slightly lower.
Earnings:
After-Market: ACA, AGBK, AGL, AKA, ALB, ALL, APLE, ATEN, ATO, AWR, AXIA, BBDC, BGSF, BHR, BKH, BROS, CACI, CAPL, CDE, CDRE, CF, CMP, COOK, CPA, CPAY, CPS, CSV, CW, CWEN, CXT, CXW, DASH, DHT, DHX, DLX, EBS, EE, EHC, ELF, ETSY, EXPE, FG, FIG, FNF, GNK, GNL, GNW, GPMT, HBB, HCC, HHH, HLF, HMN, HP, HRTG, HUBS, INN, IONQ, JOBY, KMPR, KNTK, KRO, KVYO, LB, LEU, LTC, MATV, MCK, MET, MGY, MIAX, MLR, MSI, MTDR, MUR, MUSA, MWA, NC, NEXA, NL, NVST, O, OBDC, OEC, ONT, ORA, OTF, OUT, OXY, PAYC, PRI, PRSU, QGEN, RAMP, RCUS, RDN, RDW, RIG, RYN, SEG, SEI, SGU, SM, SMA, SMR, SNDK, SOLV, SRI, SST, STE, TNC, TPC, TPL, TPVG, TROX, TS, UGI, UHAL, UMH, USPH, UTI, UVV, VAL, VEL, WBI, WDC, WES, WTI, WTS, XPER, XRN, XYZ, ZIP, ZVIA
Pre-Market: ASPN, ATI, AVNT, BDX, BKSY, BKV, BOBS, BXSL, CARS, CEG, CHGG, CION, CNR, COLD, COP, DAN, DCO, DDOG, DNOW, ENOV, EPAM, ESAB, EVH, FOUR, FISV, FSK, FUN, FVR, GEL, GENI, GEO, GHM, GNE, GOLF, GSL, HAE, HWM, IBP, ITGR, ITT, KOP, KVUE, LCLN, LEG, LNG, LOAR, MAGN, MDU, MMI, MMS, NCDL, NREF, NUVB, ONIT, OPTU, OSCR, PH, PLNT, PR, QSR, RL, RXO, SDHC, SGI, SHO, SPH, SRE, SSTK, STWD, TAP, TDAY, TFX, TGLS, TIC, TRC, TRGP, TSQ, U, USFD, UWMC, VAC, VIA, VNT, WD, WMS, WRBY, ZTS
After-Market: ABX, AFL, ALTG, AHR, AIG, AMN, AMRZ, ARLO, ARNB, ARW, AORT, AGO, BARK, BLND, CABO, CTRE, CBL, CPK, CLPR, NET, CON, ED, CVSA, DV, DOCS, EFC, ESE, XZO, FIGS, G, GMED, GSBD, GRNT, GRND, GROV, GRDN, HASI, HG, HCI, KRMN, KWY, KGS, LION, MAIN, MTW, MBI, MSDL, MP, NGVC, NNI, NRDY, NOG, OSG, OFRM, ONTO, ONL, PBR, POST, RMAX, RGA, RSG, RMD, RLJ, RKT, RHP, SVV, SI, SARO, SG, TWLO, EGY, VHI, VTEX, WEAV, WHG, XPOF, YELP
Economic Data:
US:
Yesterday major US indices, ex-the Dow Jone Industrial Average, pulled back modestly after the very strong start in the month of August. It continued to be a very busy day of earnings which were broadly positive but tech stocks that reported were under pressure given the high expectations. Oil prices stabilized after a flare up in the Red Sea but that didn’t completely derail hopes for a deal to re-open the Strait. ISM services missed expectation with mixed underlying metrics; new orders increased, employment contracted and pricing pressure remained elevated. Treasury yields ended the day around unchanged levels. Probably the most notable price action yesterday happened in the metals complex which moved sharply higher amidst the recent USD weakness and easing rate hike expectations with the pullback in oil prices. Materials (commodity strength) and healthcare (LLY/AMGN/CRL earnings) were the only two sectors with meaningful gains. Energy and communication services were both down >2%. The latter got hit after another AI executive departure at Google while telecom stocks were under pressure after SpaceX executives said the company will go after their market share.
Futures are pointing to a mixed open. S&P futures have been trading in a tight range overnight on either of unchanged. Within tech, memory and software stocks are under pressure after earnings related weakness. The following are all down over 10% memory (SNDK/WDC) software (APP/DDOG/FIGS/HUBS). Google is back in the headlines again looking to raise up to $25B in a debt offering which could shift the focus back to credit markets again. Oil prices have stabilized while Treasury yields are modestly higher amidst some Fed related drama. SpaceX is trading slightly lower with the unlock of ~900ml shares today.
This morning’s initial and continuing claims were about in line with expectations continuing to hover around 200k and 1.8ml, respectively. Q2 productivity came in well ahead of estimates while unit labor costs fell. There is some drama building in social media and the press related to the Fed. There was a lot of focus on a Tweet from Treasury Secretary Bessent who took a shot at the WSJ’s Nick Timiraos. The WSJ had a story talking about repeated phone calls between the President and Chair Warsh and there was a FT story that people close to Warsh “acknowledged that he had made some mistakes in his first 10 weeks” and said that he would be prepared to raise rates in September should inflation data come in hot. So, it looks like there is a new Fed Whisperer. Since the FT story Treasury yields have moved up about 3bps across the curve.
- US 2yr +3bps to 4.22%, 5yr +3bps to 4.36%, 10yr +2bps to 4.64%, 30yr +2bps to 5.19%
- USD index: +$0.13 to $99.68
It’s been a mixed overnight session in global markets. South Korea sold off nearly 5% with weakness in the memory stocks following the aftermarket US earnings updates. Japan ended modestly lower with banks, autos and retail offsetting some of the tech weakness. Local yields moved lower after comments from Finance Minister Katayama that new debt issuance will not make up for tax revenue shortfalls. China announced that it is launching a probe into Palo Alto (-1%) the most recent response escalation in the trade flare-up ahead of President Xi’s scheduled US visit in September. The Hang Seng fell 1.5% with weakness in tech stocks while mainland indices in China ended modestly higher. In Europe retail sales disappointed but Germany factory orders came in well ahead of expectations. It continues to be busy on the earnings front. WPP is a standout up >20% with the company highlighting turnaround efforts helping results. Deutsche Telekom is up ~5% after solid numbers while Siemens AG is selling off despite strong numbers. Most major indices are modestly higher back at all-time highs.
Oil prices are modestly higher as we continue to wait for an update out of the Middle East. Ahead of US inventory data US nat gas prices are modestly lower while prices in Europe recoup some of this week’s losses. The metals complex is mixed off of the best levels but holding on to the bulk of yesterday’s rally. Ag is a touch higher. Crypto is pulling back from overnight highs trading slightly lower.
Earnings:
After-Market: ACA, AGBK, AGL, AKA, ALB, ALL, APLE, ATEN, ATO, AWR, AXIA, BBDC, BGSF, BHR, BKH, BROS, CACI, CAPL, CDE, CDRE, CF, CMP, COOK, CPA, CPAY, CPS, CSV, CW, CWEN, CXT, CXW, DASH, DHT, DHX, DLX, EBS, EE, EHC, ELF, ETSY, EXPE, FG, FIG, FNF, GNK, GNL, GNW, GPMT, HBB, HCC, HHH, HLF, HMN, HP, HRTG, HUBS, INN, IONQ, JOBY, KMPR, KNTK, KRO, KVYO, LB, LEU, LTC, MATV, MCK, MET, MGY, MIAX, MLR, MSI, MTDR, MUR, MUSA, MWA, NC, NEXA, NL, NVST, O, OBDC, OEC, ONT, ORA, OTF, OUT, OXY, PAYC, PRI, PRSU, QGEN, RAMP, RCUS, RDN, RDW, RIG, RYN, SEG, SEI, SGU, SM, SMA, SMR, SNDK, SOLV, SRI, SST, STE, TNC, TPC, TPL, TPVG, TROX, TS, UGI, UHAL, UMH, USPH, UTI, UVV, VAL, VEL, WBI, WDC, WES, WTI, WTS, XPER, XRN, XYZ, ZIP, ZVIA
Pre-Market: ASPN, ATI, AVNT, BDX, BKSY, BKV, BOBS, BXSL, CARS, CEG, CHGG, CION, CNR, COLD, COP, DAN, DCO, DDOG, DNOW, ENOV, EPAM, ESAB, EVH, FOUR, FISV, FSK, FUN, FVR, GEL, GENI, GEO, GHM, GNE, GOLF, GSL, HAE, HWM, IBP, ITGR, ITT, KOP, KVUE, LCLN, LEG, LNG, LOAR, MAGN, MDU, MMI, MMS, NCDL, NREF, NUVB, ONIT, OPTU, OSCR, PH, PLNT, PR, QSR, RL, RXO, SDHC, SGI, SHO, SPH, SRE, SSTK, STWD, TAP, TDAY, TFX, TGLS, TIC, TRC, TRGP, TSQ, U, USFD, UWMC, VAC, VIA, VNT, WD, WMS, WRBY, ZTS
After-Market: ABX, AFL, ALTG, AHR, AIG, AMN, AMRZ, ARLO, ARNB, ARW, AORT, AGO, BARK, BLND, CABO, CTRE, CBL, CPK, CLPR, NET, CON, ED, CVSA, DV, DOCS, EFC, ESE, XZO, FIGS, G, GMED, GSBD, GRNT, GRND, GROV, GRDN, HASI, HG, HCI, KRMN, KWY, KGS, LION, MAIN, MTW, MBI, MSDL, MP, NGVC, NNI, NRDY, NOG, OSG, OFRM, ONTO, ONL, PBR, POST, RMAX, RGA, RSG, RMD, RLJ, RKT, RHP, SVV, SI, SARO, SG, TWLO, EGY, VHI, VTEX, WEAV, WHG, XPOF, YELP
Economic Data:
US:
- Challenger Job Cuts: 33.43k prior 44.85k
- Initial Claims: 199k vs. 202k cons., prior 197k
- Continuing Claims: 1.80ml vs. 1.79ml cons., prior 1.782ml
- Productivity Q/Q: 1.4% vs. 0.6% cons., prior 0.3%
- Unit Labor Costs: 1.3% vs. 2.1% cons., prior 1.8%
- 10:00 Wholesale Inventories: vs. 0.3% cons., prior 0.3%
- 10:30 Natural Gas Inventories
- Germany factory orders: 3.1% vs. 0.3% cons., prior 0.3%
- EU Retail Sales: -0.3%/0.7% m.m/y.y vs. 0.1%/1.0% cons., prior 0.4%/1.9%
Within the S&P 500 5 of 11 sectors are trading higher. Earnings/news headlines in a couple of large cap companies are impacting some of that movement. After moving sharply higher over the last week tech is still outperforming but today the gains are primarily coming from Nvidia and Micron which are both up ~3%. The companies that reported earnings overnight are struggling given the high expectations. Arista Networks is an upside standout though it has given up about half of the initial gains. AMD is down >5% despite strong numbers, it is hard to argue with revenue growth up 50% y/y and double that for its data center business. Also weighing on sentiment were comments from Elon Musk that SpaceX would build infrastructure exclusively with Nvidia hardware. SpaceX is down ~10% giving up yesterday’s gains after its first earnings report as a public company. Earnings and revenue both came in ahead of expectations, but markets are focused on the heavy Capex spending and the looming shareholder unlocks. Optical stocks are holding on to most of yesterday’s gains.
Communication Services is the worst performing sector down ~2.5%. Telecom stocks are under pressure after SpaceX said it will be going after their market share. This is also weighing on the tower stocks within REITs. Alphabet moved sharply lower during the session after the most recent AI executive departure. Disney is pretty much the lone upside standout up ~2% after beating EPS estimates and reaffirming guidance.
Healthcare is one of the best performing sectors currently up ~1% with mixed earnings across the sector. Eli Lilly, the sole $1T healthcare company, is up >3% after strong top and bottom-line beats. Amgen (+5%) Charles River (+>10%) are two positive earnings standouts with the latter helping life science and tools stocks. AstraZeneca is recouping some of this week’s losses amidst reports that there are no merger discussions. Equipment and services are under pressure a couple of earnings disappointments (PODD, DVA, CVS).
The materials sector is the best performing with miners driving the upside as the metals complex rallies. On the flipside, energy continues to be under pressure given the commodity weakness.
Markets in Asia rallied overnight following in the US markets footsteps. Tech heavy indices led to the upside. South Korea and the Nikkei were both up >3% while Taiwan was up >2%. In Japan final services PMI was revised a touch lower. Tech stocks led to the upside with Softbank up 14% following earnings. Financials moved higher while retail underperformed. The Yen has held most of the intervention rally while JGB yields were down a couple bps overnight. In China economic data continues to disappoint, services PMI missed estimates. China’s Commerce Ministry retaliated after the recent trade actions taken by Washington (robots/optical). Export restrictions will be placed on drone components and related technologies which will require a case-by-case review. It is initiating a security review of imports of printing, copying, and office equipment. It also sanctioned Compliance Testing for its role in the recent FCC decision and announced sanctions against six additional companies. Overnight the Hang Seng ended slightly higher while the Shanghai Comp was up ~1.5%.
In Europe after opening higher most major indices closed on either side of unchanged. Services PMIs across the region were revised a touch higher. Earnings continue to be busy in Europe as well. Infineon was down ~5% after its results failed to meet high expectations. Novo Nordisk was down >5% on disappointing Wegovy sales (results were out after European close yesterday so ADRs got hit during US trading +1% today). Siemens closed around unchanged despite strong results.
Oil prices are down ~1% back near overnight lows with the Iran deal still in limbo. API and DOE inventories both showed a surprise increase in crude though there were product draws. US nat gas prices retested recent lows before bouncing back to unchanged levels while prices in Europe continue to be under pressure. The metals complex is well bid with the USD weakness and rate hike expectations moderating. Over the last couple of weeks, we’ve highlighted the positive divergence between gold price/RSI today prices there was finally a release with gold up nearly 4% breaking above its 50d ma and hitting the highest levels since early June. Silver is up a similar amount platinum/palladium which rally sharply yesterday are holding on to the bulk of those gains. Copper is pushing to fresh highs. Ag is mixed. Crypto is moving modestly higher but the Clarity Act continues to dampen the enthusiasm.
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