| | | Market Snapshot
| Dow | 44911.26 | -11.01 | (-0.02%) | | Nasdaq | 21709.28 | -2.47 | (-0.01%) | | SP 500 | 6468.54 | +1.96 | (0.03%) | | 10-yr Note |
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| | NYSE | Adv 714 | Dec 2008 | Vol 983.36 mln | | Nasdaq | Adv 1457 | Dec 3046 | Vol 9.19 bln |
Industry Watch
| Strong: Communication Services, Consumer Discretionary, Health Care, Financials |
| | Weak: Real Estate, Materials, Energy, Industrials, Consumer Staples, Utilities, Information Technology, Financials |
Moving the Market
July PPI shows hotter-than-anticipated inflation across goods and services, which could show up in the PCE Price Index and lower the probability of cuts to the Fed Funds Rate
Rotation back into key mega-cap names
| Market shows resilience following July PPI
14-Aug-25 16:30 ET
Dow -11.01 at 44911.26, Nasdaq -2.47 at 21709.28, S&P +1.96 at 6468.54
[BRIEFING.COM] The stock market opened to broad-based retreats following the July PPI report (up 0.9% month-over-month; Briefing.com consensus 0.2%), though the market's reaction was muted in comparison to Tuesday's advance that followed a friendlier CPI report for July (up 0.2%; Briefing.com consensus 0.2%), with the major averages ultimately finishing on their flatlines.
While the S&P 500 spent the majority of the session in negative territory, a slight gain of 0.03% saw the index capture a new record high of 6,468.54.
Tuesday's CPI report boosted the probability of a 25 basis-point September rate cut to 99.9%. Today's data lessened that probability to 92.6%, according to the CME FedWatch tool.
While a September rate cut is still highly likely, the July PPI report threw a serious wrench into recent arguments for a 50 basis-point cut. St. Louis Fed President Musalem (FOMC voter) and San Francisco Fed President Daly (non-voter) both stated today that the current data does not reflect the need for a 50 basis-point cut, with Musalem remarking that he will go into the September meeting with an open mind.
Losses were especially broad-based in the early going, with all eleven S&P 500 sectors opening in negative territory, though the market would finish much improved from session lows.
The communication services (+0.4%) sector benefitted from modest gains in its mega-cap constituents, Meta Platforms (META 782.13, +2.05, +0.26%) and Alphabet (GOOG 203.82, +0.79, +0.39%), while a strong performance in Amazon (AMZN 230.98, +6.42, +2.86%) propped up an otherwise weak consumer discretionary sector (+0.5%).
Investors continued to do some bargain hunting in the health care sector (+0.5%), and the financials sector (+0.6%) also notched a nice gain, rounding out the four S&P 500 sectors that advanced today. The information technology sector finished flat.
The other six sectors would see losses that ranged from 0.2% to 0.9%, as breadth figures denoted broad-based selling activity, with decliners outpacing advancers by a nearly 3-to-1 margin on the NYSE and a greater than 2-to-1 ratio on the Nasdaq.
Despite the broad-based retreat, a rotation back into several mega-cap names kept the losses modest. The Vanguard Mega Cap Growth ETF advanced 0.3% today, and the market-weighted S&P 500 (flat) noticeably outperformed the S&P 500 Equal Weighted Index (-0.6%).
Meanwhile, the Russell 2000 (-1.2%) and S&P Mid Cap 400 (-1.2%) gave back a good chunk of their advances from earlier in the week, with rising market rates and a re-think of the policy outlook tempering some of the rotational excitement that followed the CPI report
U.S. Treasuries retreated on Thursday, sending yields from their lowest levels of the week back toward highs from Tuesday. The 2-year note yield settled up five basis points at 3.74%, and the 10-year note yield settled up six basis points at 4.29%.
- Russell 2000: +3.6% WTD
- S&P Mid Cap 400: +2.1% WTD
- DJIA: +1.7% WTD
- S&P 500: +1.2% WTD
- Nasdaq Composite: +1.2% WTD
Reviewing today's data:
- The index for final demand jumped 0.9% month-over-month in July (Briefing.com consensus: 0.2%) following an unchanged reading in June. The index for final demand, excluding food and energy, also increased 0.9% month-over-month (Briefing.com consensus: 0.2%) following an unchanged reading in June. With these readings, the index for final demand is up 3.3% year-over-year, versus 2.4% in June, while the index for final demand, excluding food and energy, is up 3.7%, versus 2.6% in June.
- The key takeaway from the report, other than that it completely flies in the face of the relatively friendly CPI report, is that wholesale prices rose appreciably across all stages of production and for both goods and services. The concern will be that this inflation will register in the PCE Price Index and keep the Fed from being as aggressive with its rate cut approach as had been envisioned following the CPI data.
- Initial jobless claims for the week ending August 9 decreased by 3,000 to 224,000 (Briefing.com consensus: 228,000), while continuing jobless claims for the week ending August 2 decreased by 15,000 to 1.953 million.
- The key takeaway from the report is still the same. Layoffs are low, but finding a new job, if laid off, is taking longer. Weekly natural gas inventories increased by 56 bcf after increasing by 7 bcf a week ago.
Major averages seek positive finish
14-Aug-25 15:25 ET
Dow +18.45 at 44940.72, Nasdaq +2.77 at 21714.52, S&P +3.94 at 6470.52
[BRIEFING.COM] The S&P 500 (+0.1%), Nasdaq Composite (flat), and DJIA (+0.1%) look to finish in positive territory as the market enters the final half hour of trading.
Today's disappointing July CPI report sent stocks retreating at the open, and a lack of further developments kept the major averages within a relatively tight range throughout the session.
The market will navigate several more key economic data releases tomorrow, including the Retail Sales report for July, the Industrial Production report for July, and the preliminary August University of Michigan Consumer Sentiment Index.
Major averages little changed from prior levels
14-Aug-25 15:00 ET
Dow -72.06 at 44850.21, Nasdaq -9.97 at 21701.78, S&P -3.76 at 6462.82
[BRIEFING.COM] The S&P 500 (-0.1%) and Nasdaq Composite (-0.1%) trade with modest losses for the day after a brief stint in positive territory earlier this afternoon, while the DJIA (-0.2%) has yet to surface above its flatline.
As a cohort, the three indices are well above their session lows, while the Russell 2000 (-1.5%) and S&P Mid Cap 400 (-1.4%) have traded in a much tighter range with considerably wider losses.
The consumer discretionary (+0.6%) and communication services (+0.6%) sectors continue to outperform by way of their mega-cap components.
Meanwhile, the health care sector (+0.4%) widens its gain for the day following a steady climb from Eli Lilly (LLY 683.50, +23.01, +3.48%), which now holds a week-to-date gain of 9.3%.
S&P 500 flat as Tapestry, Enphase, Trade Desk sink on guidance, regulatory, and client loss woes
14-Aug-25 14:30 ET
Dow -98.04 at 44824.23, Nasdaq -32.97 at 21678.78, S&P -7.12 at 6459.46
[BRIEFING.COM] The S&P 500 (-0.11%) is tied with the Nasdaq Composite for first place on Thursday afternoon, down about 7 points.
Briefly, S&P 500 constituents Tapestry (TPR 97.99, -15.54, -13.69%), Enphase Energy (ENPH 31.83, -2.39, -6.98%), and The Trade Desk (TTD 50.67, -3.69, -6.79%) are some of the worst laggards in the average. TPR slides after issuing FY26 guidance that called for stronger Coach growth but continued Kate Spade weakness and significant profit headwinds from tariffs, surprising investors who had grown accustomed to upbeat outlooks, ENPH's weakness is driven by mounting regulatory uncertainty -- specifically, the expected tightening of tax credit eligibility that could strip key subsidies from many planned solar projects, while TTD falls after reports that Walmart (WMT 101.12, +0.13, +0.13%) ended its exclusive ad-buying tech arrangement with the company, opening the door for rivals and potentially eroding one of Trade Desk's key advantages against Amazon (AMZN 232.70, +8.14, +3.62%), amid concerns over Walmart's dissatisfaction with its fees.
Meanwhile, Texas Pacific Land Trust (TPL 920.37, +37.98, +4.30%) is today's top performer.
Gold pulls back as dollar firms, profit-taking eases recent Fed-cut rally
14-Aug-25 14:00 ET
Dow -100.03 at 44822.24, Nasdaq -0.11 at 21711.64, S&P -3.55 at 6463.03
[BRIEFING.COM] The Nasdaq Composite (flat) is down less than a point on Thursday afternoon.
Gold futures settled $25.10 lower (-0.7%) at $3,383.20/oz, as the dollar steadied and traders took profits after recent gains fueled by expectations for a September Fed rate cut. Lower trading volume and a drop in open interest on COMEX suggested waning speculative momentum, with some investors stepping to the sidelines despite the still supportive backdrop of easing prospects.
Meanwhile, the U.S. Dollar Index is up +0.5% to $98.29.
Birkenstock trades lower despite modest EPS beat as revenue was a bit on the soft side
Birkenstock (BIRK -4%) is trading lower today after reporting its Q3 (Jun) results last night. This German footwear company, known for its cork-footbed sandals, reported a slight EPS beat, continuing a trend seen over the past three quarters. Revenue was a bit shy of consensus estimates, growing 12.4% yr/yr to €635 mln on a reported basis. Additionally, revenue growth was its lowest in the last 7 quarters.
- Revenue was impacted by a significant FX-related headwind, which management noted was the largest it has seen since going public. FX caused a 330-bps drag on revenue growth, lowered gross margin by 60 bps, and adjusted EBITDA margin by 70 bps. That said, the company significantly improved its profitability despite the headwind. Gross margin was up 100 bps to 60.5%, and EBITDA margin was up 140 bps to 34.4%, its best third quarter margin, driven by better selling prices and cost absorption related to its facility.
- Management noted that it continues to see a shift towards in-person shopping, which is important as it benefits its B2B channels. B2B was up 15% yr/yr on a reported basis, and BIRK now expects B2B growth to outpace DTC in Q4 (Sep) and for FY25. Notably, within its B2B channel, over 90% of the growth came from existing doors.
- In the Americas, revenue was up 10% yr/yr on a reported basis. Management noted that B2B was particularly strong and, importantly, saw no pushbacks or cancellations following its July 1 price increases. In EMEA, revenue increased 13% yr/yr on a reported basis with its channels both having double digit growth. BIRK noted its online business was slower than planned in April and May, but in June saw a reacceleration. Notably, it saw healthy growth in its own retail, with same-store sales up in the mid-teens. Finally, APAC continues to be its fastest growing region, with 21% yr/yr revenue growth on a reported basis. China was particularly strong, accounting for 20% of APAC revenue. It is important to note that while double-digit growth is encouraging, revenue growth decelerated in every region compared to Q2.
- Regarding tariffs, management said it can manage the baseline 15% EU rate through price actions and other levers, particularly because of its vertical integration. Importantly, the demand in Q3 exceeded BIRK's expectations, and looking ahead, BIRK noted that demand accelerated through July and into the second week of August as back-to-school shopping picks up. This is important as it has not seen a slowdown in consumer demand and is not seeing an impact from its price increases. BIRK, however, does seem to have a capacity issue, noting that it is a current struggle and doesn't always have the capacity to meet demand.
Overall, there are plenty of positives in BIRK's report, including resilient demand despite price increases and encouraging early reads on back-to-school shopping. So why is the stock lower today? Revenue was a bit on the soft side, which is partly due to FX headwinds. Also, BIRK saw a deceleration in growth across the regions it serves. Additionally, while demand remains resilient, we think the capacity constraints could limit BIRK's ability to capitalize on the back-to-school season. Despite these negatives, we're a little surprised the stock is lower on this report because much of the revenue miss was FX-related and its customer held up pretty well considering the macro headwinds.
Advance Auto's turnaround shifts into reverse after company cuts FY25 EPS outlook (AAP)
Advance Auto Parts (AAP) delivered Q2 EPS of $0.69, surpassing consensus estimates, marking its second consecutive quarter of beating expectations after eight straight misses. Comparable store sales turned positive at +0.1%, driven by sustained strength in the Pro business, a notable improvement after multiple quarters of declines. However, this positive performance was largely anticipated, as the company had issued upbeat Q2 revenue guidance on July 24, projecting comp growth of 0.0-0.1%, which aligned closely with results.
- Consequently, investor focus shifted to AAP’s sharply lowered FY25 EPS guidance of $1.20-$2.20, down from $1.50-$2.50, despite maintaining revenue guidance of $8.40-$8.60 bln and comparable store sales growth of +0.5-1.5%. The downward revision in EPS outlook was primarily driven by approximately $0.30 of incremental net interest expense from a recent $1.95 bln senior notes offering, coupled with ongoing cost pressures from higher labor expenses and persistent softness in the DIY segment, which offset gains from footprint optimization and supply chain enhancements.
- Under CEO Shane O’Kelly, who took the helm in 2023, AAP has been executing a turnaround strategy centered on supply chain optimization, cost reduction, and store footprint rationalization. Last quarter’s significant EPS beat fueled optimism, as early benefits from streamlined operations and reduced SG&A expenses demonstrated progress. However, the reduced FY25 EPS guidance has dampened investor enthusiasm, signaling that the turnaround is facing headwinds.
- AAP, alongside competitors like O’Reilly Auto Parts (ORLY) and AutoZone (AZO), continues to grapple with softness in the DIY business, particularly in discretionary categories like accessories and maintenance items, as consumers prioritize essential repairs amid economic uncertainty. CEO O’Kelly highlighted early signs of stabilization in the DIY segment, but the Pro business remains the primary growth driver, with strength in core categories such as brakes, filters, and batteries fueling the modest +0.1% comp sales growth.
- In contrast, ORLY reported a +4.1% comp sales increase in Q2, and AZO posted +5.4% (cc) in 3Q25, underscoring AAP’s lag in capturing market share. The Pro segment’s resilience reflects AAP’s strategic focus on professional installers, supported by an optimized distribution network, but the weaker DIY performance continues to weigh on overall results.
AAP’s turnaround momentum stalled with the significant FY25 EPS guidance cut, driven by higher interest expenses and ongoing DIY market challenges, undermining investor confidence. The company struggles to regain competitive ground against ORLY and AZO, which have demonstrated stronger comp sales growth in a tough retail environment. While supply chain improvements and Pro business strength provide some optimism, AAP faces an uphill battle to restore profitability and market share in the automotive aftermarket sector.
Cisco trading roughly flat as Q4 upside was more muted than usual; record AI Infrastructure (CSCO)
Cisco Systems (CSCO) is trading modestly lower after reporting modest EPS upside for Q4 (Jul) last night. Revenue grew 7.6% yr/yr to $14.67 bln, which was slightly above analyst expectations. The Q1 (Oct) guidance was pretty good with upside revs and in-line EPS. We also got our first look at FY26 guidance, which was in-line. Cisco described Q4 as a solid quarter, driven by strong order growth and margins.
- Cisco noted that clients are moving into the next phase of AI with agents autonomously conducting tasks alongside humans. As a result, the capacity requirements of the network will need to accommodate both unprecedented levels of network traffic and an increasing threat landscape. Most businesses believe they need to upgrade their networks to successfully deploy AI.
- In terms of demand in Q4, Cisco saw record AI Infrastructure orders from webscale customers. These orders exceeded $800 mln in Q4 alone, bringing the total for FY25 to over $2 bln. The product mix of these orders was more than two-thirds in systems, with the remainder in optics. Recall that this is more than double its original $1 bln target announced in Q4 of last year.
- Overall, total product orders in Q4 grew 7% yr/yr, with solid growth across all geographies. Of note, Cisco closed several very large deals with major enterprises in Q4. Cisco noted that demand from telco and cable customers was also strong in Q4, with orders growing more than 20% yr/yr. Briefing.com thinks this bodes well for Ciena (CIEN), which has a lot of exposure with those customers.
- Turning to its core Networking and Security offerings, networking product orders grew double digits in Q4. Cisco says there is strong interest from customers for its new family of Cisco CAT 9K Smart Switches, along with a refreshed lineup of routers, wireless access points and industrial IoT devices. Importantly, Cisco noted that the launch of its new switches marks the beginning of a major multiyear refresh cycle opportunity for Cisco's large installed campus switching base.
- Quickly on tariffs, Cisco says there has been some clarity on tariffs, but it's still operating in a complex environment. Tariffs had only a small impact in Q4 and FY25. Cisco has not seen a lot of pull-forward of sales due to tariffs, which is pretty similar to what it said on its Q3 call. Also, its guidance assumes current tariffs remain in place through the end of FY26.
Overall, this was a solid end to FY25. The EPS/revenue upside was notably more modest that what we have seen from Cisco in recent quarters. And when you add in the modest guidance compared to upside guidance last quarter, we think this is why the stock reaction is pretty muted. Notably, Cisco does not seem overly worried about tariffs and there was not a lot of pull-forward sales. This tells us clients are still eager to build out their AI infrastructure even if the price is a bit higher. Finally, we think this report bodes well for Broadcom (AVGO, reports Sep 4), which is a key supplier to Cisco, and for peer Ciena (reports Sep 4).
Deere beats Q3 EPS but lowers FY25 guidance again, sending stock lower amid tariff pressures (DE)
Deere (DE) maintained its streak of surpassing EPS consensus expectations in Q3, but the beat was notably smaller than the prior quarter’s blowout EPS result. Additionally, the company trimmed the high end of its FY25 net income guidance to $4.75-$5.25 bln from $4.75-$5.50 bln, following a reduction in the low end last quarter, signaling caution amid persistent market challenges. The revision to DE’s FY25 net income guidance stems primarily from uncertainty in the agricultural sector, exacerbated by tariffs that have increased production costs and disrupted market dynamics.
Lower shipment volumes, driven by subdued demand due to lackluster crop prices and high used-equipment inventories, have prompted DE to proactively manage inventory by aligning production with retail demand. CEO John May emphasized disciplined execution, but external pressures like tariffs and fluctuating demand continue to weigh on the company’s outlook, particularly in its core agricultural segments.
- DE’s revenue declined for the eighth consecutive quarter on a yr/yr basis, falling 9% in Q3 to $10.36 bln. All three equipment segments -- Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry -- experienced revenue declines, driven by lower shipment volumes and unfavorable price realization.
- The Production & Precision Agriculture segment, DE’s largest, saw a significant 16% revenue drop to $4.27 bln, primarily due to lower shipment volumes and an unfavorable sales mix. Operating margin contracted sharply to 13.6% from 22.8% in the year-earlier quarter, reflecting the impact of reduced volumes and higher production costs, partly attributable to tariffs. DE continues to project a 15-20% net sales decline for this segment in FY25, consistent with prior guidance, as market demand remains soft amid high inventory levels and depressed commodity prices.
- In contrast, the Small Agriculture & Turf segment demonstrated relative resilience, with revenue declining just 1% to $3.03 bln, the smallest drop among DE’s segments. Operating margin held steady, slipping only 20 bps to 16.0%, supported by stable demand for smaller equipment and turf products, which are less sensitive to the broader agricultural downturn. DE improved its FY25 outlook for this segment, now expecting a 10% net sales decline compared to the prior 10-15% forecast, reflecting stronger-than-anticipated performance driven by targeted demand for compact equipment and DE’s focus on advanced technologies like See & Spray.
- The Construction & Forestry segment saw revenue decrease by 5% to $3.06 bln, a milder decline compared to recent quarters, though still challenged by high interest rates and tariff-related cost pressures. Operating margin fell significantly to 7.7% from 13.8%, driven by unfavorable price realization and higher production costs linked to tariffs. Despite the improvement in revenue decline, this segment continues to face headwinds from a cautious construction market and macroeconomic uncertainties, limiting its recovery potential.
DE’s smaller-than-expected EPS beat and the downward revision of FY25 net income guidance to $4.75-$5.25 bln have contributed to stock price weakness. Tariffs are notably impacting production costs and market uncertainty, particularly in the agricultural and construction sectors, clouding DE’s near-term outlook. While cost-cutting measures and technological innovation provide some stability, the company’s ability to navigate these headwinds will be critical for future performance.
CAVA Group under pressure after Q2 results last night, cut in FY25 comps weighing on shares
CAVA Group (CAVA -16%) is under heavy pressure today after releasing its Q2 results last night, trading to a new 52-wk low. This Mediterranean fast-casual restaurant chain reported a narrow EPS beat, while revenue missed expectations for just the second time since going public in mid-2023. CAVA revenue grew 20.3% yr/yr to $278 mln. Although CAVA reaffirmed its FY25 adjusted EBITDA and Restaurant-Level profit margin guidance, the bigger headline was a cut in FY25 comps to 4-6% from 6-8%.
- CAVA reported Q2 comps of +2.1%, primarily driven by price mix while traffic remained relatively flat yr/yr. Comps have been trending lower in recent quarters, and this is a pretty sharp deceleration from the +10.8% comp in Q1, and +21.2% in Q4. Despite the macroeconomic pressures, management noted that CAVA entered the second quarter with strong comp sale momentum, but as it moved through June it saw a deceleration, driven in part by the timing of its steak launch last year.
- Management also cited a "honeymoon effect" as another headwind to comp sales. Its 2024 class of stores exceeded expectations in its first year. Now included in the comp base, these stores are having an impact from a comp perspective.
- There are some positives in this report to point out. The company continues to expand quickly, opening 16 net new CAVA restaurants, a 16.7% increase yr/yr, and bringing its total restaurant count to 398. It also raised its FY25 net new restaurant openings to 68-70 from 64-68, marking the second consecutive quarter it has raised this metric. Additionally, despite a more modest comp increase, its Restaurant-Level profit increased 19.6% yr/yr to $73.3 mln, reflecting the strength of its operating model and its ability to generate attractive returns regardless of near-term sales volatility.
- Moving forward, management noted that comp sales regained momentum in the latter part of the quarter, reaccelerating as it exited Q2, and has so far continued into Q3. Additionally, CAVA does not have a high marketing spend as a percentage of revenue and has seen positive results from tests around its media mix model. It notes that it is something it can lean into if the macroeconomic headwinds persist.
Overall, while CAVA had some positives this quarter, the deceleration in comp growth and lowered FY25 comp guidance are weighing heavily on shares. Additionally, while comps showed a modest increase, it is worth noting that traffic was relatively flat, which has been the main driver of comp growth in past quarters. Traffic accounted for +7.5% in Q1 and +15.6% in Q4.
More generally, we were a bit nervous heading into this report given that CAVA sits on the upper end of the price scale in the fast-casual space. As pointed out in yesterday's preview, fast-casual chains with more expensive menu items than peers have struggled in Q2, most notably Sweetgreen (SG). While CAVA's results were more favorable than SG's, it is clear that higher priced names are feeling the impact of the macro environment where consumers are becoming increasingly value oriented.
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