| | | Market Snapshot
| Dow | 44938.31 | +16.04 | (0.04%) | | Nasdaq | 21171.47 | -142.10 | (-0.67%) | | SP 500 | 6395.78 | -15.59 | (-0.24%) | | 10-yr Note |
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| | NYSE | Adv 1295 | Dec 1412 | Vol 1.08 bln | | Nasdaq | Adv 2070 | Dec 2417 | Vol 7.84 bln |
Industry Watch
| Strong: Consumer Staples, Real Estate, Energy, Health Care, Materials, Financials, Utilities |
| | Weak: Information Technology, Communication Services, Consumer Discretionary, Industrials |
Moving the Market
Mega-cap stocks weigh the broader market down with continued underperformance
Mixed reactions to this morning's batch of retailers' earnings reports
Investor caution persists in front of Powell's Jackson Hole speech on Friday
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Defensive stocks advance as mega-caps weigh on the market
20-Aug-25 16:35 ET
Dow +16.04 at 44938.31, Nasdaq -142.10 at 21171.47, S&P -15.59 at 6395.78
[BRIEFING.COM] The stock market opened with mega-cap stocks and tech names suffering some notable losses, though steady improvement from morning lows saw the major averages finish significantly improved as those losses narrowed. The tech-heavy Nasdaq Composite (-0.6%) spent the entirety of the session in negative territory and closed with the biggest loss, while the S&P 500 (-0.1%) finished with a more modest loss. The DJIA (flat) made a push back to its baseline late in the session.
The consumer discretionary (-1.0%), information technology (-0.8%), and communication services (-0.5%) sectors closed in negative territory. The weakness in their mega-cap constituents weighed down the S&P 500 and Nasdaq Composite. The industrials sector (-0.1%) also finished just below its flatline.
At midday, Microsoft (MSFT 505.72, -4.05, -0.79%) was the only "Magnificent 7" name with a loss less than 1.0%. Meta Platforms (META 747.50, -3.98, -0.53%), and NVIDIA (NVDA 175.40, -0.24, -0.14%) would eventually see their losses pared, while Tesla (TSLA 323.90, -5.41, -1.64%), Apple (AAPL 226.01, -4.55, -1.97%), Alphabet (GOOG 200.19, -2.30, -1.14%), and Amazon (AMZN 223.81, -4.20, -1.84%) lagged.
NVIDIA's move was particularly impressive considering the stock was down as much as 3.5% in the late morning. At that point, the information technology sector was down 2.0%, and the PHLX Semiconductor Index (-0.7%) held a 3.0% loss.
Though much improved from earlier in the session, semiconductors still underperformed. Intel (INTC 23.54, -1.77, -6.99%) was the worst-performing stock in the S&P 500 after CNBC reported that the company is in conversations with investors, seeking to offer equity stakes for a discounted price.
The consumer staples (+0.8%) and health care (+0.6%) sectors were among the top-performing S&P 500 sectors, only bested by the energy sector (+0.9%), which was supported by crude oil futures settling $0.93 higher (+1.5%) at $62.70 per barrel.
The Vanguard Mega Cap Growth ETF retreated 0.7%, worse than its smaller-cap counterparts. The Russell 2000 (-0.3%) and S&P Mid Cap 400 (-0.3%) were down 0.3% and 0.4%, respectively, but also managed to work their way back from larger losses.
Relative strength in blue-chip stocks has helped the DJIA (flat week-to-date) outperform the S&P 500 (-0.8% week-to-date) and Nasdaq Composite (-2.1% week-to-date) so far this week.
Today's earnings reports resulted in stock-specific moves but had little effect on the broader market. TJX (TJX 138.24, +3.62, +2.69%) and Lowe's (LOW 257.10, +0.74, +0.29%) traded higher, while Target (TGT 98.69, -6.67, -6.33%) disappointed investors after posting a modest EPS beat but naming an in-house candidate, COO Michael Fiddelke, as the new CEO.
While mega-caps and semiconductors underperformed, defensive stocks once again advanced, and value stocks exhibited relative strength versus growth stocks in front of Fed Chair Powell’s speech on Friday at the Jackson Hole Symposium.
Markets will be closely watching Fed Chair Powell's speech for any hint of a shift toward a more accommodative rate stance. Still, with another CPI and PPI report due ahead of the FOMC meeting, Powell may choose to remain cautious until that data are fully digested.
While stocks improved steadily throughout the afternoon, there was not much immediate reaction to the 14:00 ET release of the July FOMC minutes, which showed broad support for keeping the fed funds rate unchanged at 4.25% to 4.50%. Participants highlighted both inflation and employment risks, though most viewed upside inflation risk as more pressing.
Treasuries had their gains trimmed in response to the minutes, edging slightly higher for the day with shorter tenors leading the advance alongside the poor showing from stocks. The 2-year note yield settled down one basis point to 3.74%, and the 10-year note yield settled down one basis point to 4.30%.
- Nasdaq Composite: +9.6% YTD
- S&P 500: +8.7% YTD
- DJIA: +5.63 YTD
- Russell 2000: +1.8% YTD
- S&P Mid Cap 400: + 1.7% YTD
Reviewing today's data:
- The weekly MBA Mortgage Index fell 1.4% to follow last week's 10.9% jump. The Refinance Index fell 3.2% while the Purchase Index ticked up 0.1%.
Major averages ticking higher near session's end
20-Aug-25 15:25 ET
Dow +59.49 at 44981.76, Nasdaq -147.08 at 21166.49, S&P -12.75 at 6398.62
[BRIEFING.COM] As the market enters the final half hour of trading, the major averages are well improved from their session lows, though today's main trends are still prevalent.
Though considerably improved from earlier levels, the consumer discretionary (-1.2%), information technology (-1.1%), and communication services (-0.6%) sectors are the weakest-performing sectors due to their mega-cap constituents.
Meanwhile, the defensive consumer staples (+0.9%), health care (+0.6%), and utilities (+0.2%) sectors are among the S&P 500 sectors moving in a positive direction.
The energy sector (+1.1%) is the top performer, supported by crude oil futures settling $0.93 higher (+1.5%) at $62.70 per barrel.
Today featured a decent amount of corporate headlines that have triggered stock-specific moves, though none made a notable impact on the broader market. Hertz Global (HTZ 5.47, +0.27, +5.19%) made a nice move today after CNBC reported that the company will begin selling used cars on Amazon Autos. Carvana (CVNA 336.79, -7.45, -2.16%) traded lower.
The Wall Street Journal reports that North Korea has a previously unknown military base near the Chinese border that has long-range missile capabilities potentially capable of striking the U.S. mainland.
Rate cut expectations little changed by FOMC minutes
20-Aug-25 15:00 ET
Dow -31.23 at 44891.04, Nasdaq -217.68 at 21095.89, S&P -27.23 at 6384.14
[BRIEFING.COM] The S&P 500 (-0.4%), Nasdaq Composite (-0.9%), and DJIA (flat) trade slightly above their previous levels after digesting the July FOMC minutes.
The probability of a 25-basis point rate cut now stands at 82.9%, down slightly from 86.6% yesterday, according to the CME FedWatch tool.
Markets will be closely watching Fed Chair Powell's speech at Jackson Hole on Friday for any hint of a shift toward a more accommodative rate stance. Still, with another CPI and PPI report due ahead of the FOMC meeting, Powell may choose to remain cautious until that data is fully digested.
Fed Minutes highlight inflation risks, businesses managing tariff pressures
20-Aug-25 14:30 ET
Dow -86.72 at 44835.55, Nasdaq -245.71 at 21067.86, S&P -38.88 at 6372.49
[BRIEFING.COM] The major averages were mostly unchanged after the FOMC minutes showed broad support for keeping the fed funds rate at 4.25%–4.50%. Participants highlighted both inflation and employment risks, though most viewed upside inflation risk as more pressing. Some officials noted businesses may increasingly pass tariff costs to consumers, while others said firms are using strategies like supplier shifts, margin cuts, and automation to limit price hikes.
The minutes also underscored that longer-term inflation expectations remain anchored, though the persistence of above 2% inflation raises concern about slippage if tariff pressures linger. A few participants said the current rate may already be close to neutral, given overall financial conditions.
Treasury yields are a hair higher compared to pre-minutes, with the yield on the 10-yr down about one basis point at 4.295%.
Nasdaq sinks, gold rises on Fed uncertainty ahead of Jackson Hole
20-Aug-25 13:55 ET
Dow +9.05 at 44931.32, Nasdaq -176.57 at 21137.00, S&P -22.12 at 6389.25
[BRIEFING.COM] The tech-heavy Nasdaq Composite (-0.83%) is today's worst-performing major average, down about 175 points.
Gold futures settled $29.80 higher (+0.9%) at $3,388.50/oz, driven largely by renewed uncertainty ahead of key Fed signals. Market participants appear positioned for dovish cues, as traders await Fed Chair Powell's remarks at this week's Jackson Hole symposium and the release of the July FOMC minutes. Expectations of rate cuts, potentially starting as early as September, are underpinning the yellow metal, given its traditional attraction in low-rate environments amid economic uncertainty.
Meanwhile, the U.S. Dollar Index is down about -0.2% to $98.13.
Toll Brothers' Q3 earnings shine, but Net Orders miss hints at ongoing market pressures (TOL)
Toll Brothers (TOL), the leading U.S. luxury homebuilder, delivered a strong Q3 performance, surpassing EPS and revenue expectation and building upon its robust Q2 results. This follows D.R. Horton’s (DHI) better-than-expected Q3 earnings on July 22, signaling stabilization, if not slight improvement, in the new home construction market.
|However, TOL reported a 10% qtr/qtr decline in net orders to 2,388 units, missing analyst expectations, with net signed contract value flat at $2.41 bln. The company highlighted ongoing affordability pressures and uncertain economic conditions, which, combined with the net orders shortfall, suggest that TOL and peers like DHI and PulteGroup (PHM) may face challenges sustaining sales growth into 2026, despite a resilient luxury segment.
- In Q3, TOL delivered 2,959 homes, up 5% yr/yr, hitting the high end of its 2,800-3,000 unit guidance range, reflecting strong execution in a high-rate environment. For Q4, the company guided for 3,350 home deliveries at an average price of $970,000-$980,000, a 13% qtr/qtr increase, underscoring confidence in its pipeline. TOL has leaned on its diversified price points and geographic presence, particularly in affluent markets like St. Louis and Santa Fe, to sustain demand, with 24% of buyers using all-cash purchases and an average loan-to-value ratio of 70%.
- Like competitors, TOL has relied on incentives, averaging 7% of the sales price, to maintain momentum, though management emphasized strategic pricing discipline to balance pace and profitability.
- Adjusted home sales gross margin contracted to 27.5% in Q3 from 28.8% a year earlier, driven by elevated incentives and rising input costs, though it remains robust compared to industry peers due to TOL’s affluent customer base and premium pricing, with an average selling price of $973,320. The company’s focus on high-margin luxury and build-to-order homes (50% of units) helps mitigate margin pressure.
- TOL reaffirmed its FY25 adjusted gross margin guidance of 27.25%, signaling confidence in its ability to navigate cost inflation and incentive pressures through operational efficiency and a favorable product mix. Improved SG&A efficiency, at approximately 9% of revenue, further bolsters profitability despite macroeconomic headwinds.
TOL's Q3 upside, driven by strong deliveries, pricing power, and operational discipline, underscores its resilience in the luxury housing segment, bolstered by affluent buyers and strategic diversification. However, the 10% drop in net orders highlights persistent affordability and economic pressures, suggesting that the new home construction market, while stabilizing, remains challenging for sustained sales growth.
La-Z-Boy lower after Q1 EPS miss and Q2 guide down; macro headwinds are affecting its consumer (LZB)
La-Z-Boy (LZB -13%) is under pressure today after reporting its Q1 (Jul) results last night. This furniture retailer and manufacturer missed EPS estimates by its largest margin in 14 quarters. It also marked the company's second consecutive EPS miss following a streak of EPS beats. Revenue came in at the low range of its guidance of $490-510 mln, which was as expected given LZB's updated expectations on July 14. Revenue declined 0.7% yr/yr to $492 mln, its first decline in four quarters. Also, Q2 (Oct) revenue guidance of $510-530 mln was shy of expectations.
- While LZB delivered growth in its retail and wholesale segments, management noted that an increasingly challenged consumer and macroeconomic environment impacted store traffic and related same store sales. Furthermore, the combination of slower same store sales and investments in new store expansions pressured its adjusted operating margin, which came in at 4.8% compared to 9.4% in Q4 (Apr). Management noted that another headwind to industry traffic is that housing transactions continue to be near 30 year lows, and that it is exacerbated by an increasingly challenged consumer.
- The Retail segment reported a 2% yr/yr increase in delivered sales to $207 mln, driven primarily by new and acquired stores. This is a deceleration from the 8% growth seen in Q4, though Q1 is generally LZB's lowest sales and margin quarter of the year. Both total and same store written trends sequentially improved, with total written sales increasing 5%, offsetting the -4% decline in written same-store sales.
- Wholesale segment delivered sales increased 1% yr/yr to $353 mln, driven by growth in its core North America La-Z-Boy wholesale business and casegoods business, which more than offset the continued impact of customer transitions in its international wholesale business.
- Its Joybird segment remains a challenge. Delivered sales for the digitally native segment declined 20% yr/yr, a sharp deceleration from the 2% decline in Q4, while written sales decreased 14% yr/yr. As a result, the operating loss for the segment increased yr/yr. Encouragingly, management noted that trends did improve throughout the quarter, with continued strong performance in physical stores than online.
- LZB is expanding to benefit from the strength of its custom experience in its physical stores. The company recently announced an upcoming acquisition of a 15 store furniture galleries network in the Southeast region. The network currently drives roughly $80 mln in sales, which management noted will add an incremental $40 mln in sales on a consolidated basis.
Overall, this was a challenging quarter for LZB. Sales came in as expected, given that LZB announced it expected revenue to be at the low end of guidance on July 14. That said, the EPS miss was its largest in some time and the Q3 revenue guidance was below expectations. In fact, the midpoint of Q3 guidance reflects another modest yr/yr decline. With the downtrodden housing market and an increasingly challenged consumer clearly pressuring results, investors are stepping to the sidelines as they wait for signs of a turnaround.
Target sharply lower despite better-than-feared Q2 results, but insider CEO hire a letdown (TGT)
Target (TGT -9%) is sharply lower after reporting Q2 (Jul) results. But we think the bigger news is that Target has named its new CEO. Michael Fiddelke, who currently serves as COO will replace Brian Cornell, effective February 1. Cornell will become executive chair of the Board. We think investors are disappointed that Target chose a long time insider (20+ years at Target), when maybe an outsider to shake things up might have been a wiser choice.
- Let's start with the earnings. The retail giant bounced back from a miss in Q1 to report a modest EPS and revenue beat in Q2. Revenue fell 0.9% yr/yr to $25.21 bln, which was a bit better than expected. Also, after a big FY26 EPS guidance cut last quarter, it was good to see Target reaffirm FY26 adjusted EPS and revenue guidance at $7.00-9.00 and a low-single digit decline, respectively.
- Same store comps for Q2 came in at -1.9% (in-store -3.2%; digital +4.3%), which was a bit better than street ests. It was also notably better than Q1's -3.8% (in-store -5.7%; digital +4.7%) and sales were notably stronger in June and July than May. Traffic and comp trends improved meaningfully from Q1, particularly in its stores. In addition, TGT saw improvements in quality measures related to store experience, including on-shelf availability and newness/innovation.
- A notable area of strength was in trading cards, where Target has been beefing up its offering, given the wide appeal to young fans and adult collector. Trading card sales are up nearly 70% YTD, driving hundreds of millions of dollars of incremental sales. Target also saw an incredible response to the launch of Nintendo Switch 2 and it's excited about 2H. Food and beverage categories grew slightly driven by newness and floral offerings, however, beauty sales were down slightly.
- In terms of Q3, Target is already well into back-to-school, which is Target's second largest seasonal moment of the year. Both back-to-school and back to college are off to encouraging starts. Guests are responding to value offerings, including essential school supplies, from $5 backpacks to $0.50 boxes of Crayola Crayons. TGT is also excited about its plans for Halloween and the Q4 holiday with lots of on-trend newness and value.
As we said in our preview, Briefing.com was cautious heading into this report. In terms of operations, we would characterize its Q2 report as better-than-feared. Target saw a notable sequential improvement in Q2 relative to Q1 in terms of comps and traffic. We also liked that June/July was stronger than May, which bodes well for Q3 and the important back-to-school season. We were also pleased to see Target reaffirm FY26 guidance, we were afraid another cut was possible.
We think the main reason for today's weakness is the decision to go with a long time insider as its new CEO. Target has been underperforming for years, with lackluster merchandise and out-of-stocks. Perhaps an outsider might have shaken things up more. On a final note, it was disappointing that TGT did not repurchase any shares in Q2. However, it mentioned on the call that it will support its dividend. With today's share price drop, the yield has climbed to 4.7%, which is pretty lofty. We think a cut there would not be the worst idea in the world and maybe spend more on share buybacks given the pullback in price.
Lowe's outshines Home Depot with Q2 earnings beat and upgraded FY26 revenue guidance (LOW)
Lowe’s (LOW) delivered a solid Q2 performance, outperforming expectations and contrasting with rival Home Depot’s (HD) shortfall from yesterday. LOW reported adjusted EPS of $4.33, surpassing consensus estimates, driven by comparable sales growth of +1.1%, slightly ahead of HD’s +1.0%. While HD missed EPS and revenue forecasts but reaffirmed its FY26 guidance, LOW raised its FY26 revenue outlook to $84.5-$85.5 bln from $83.5-$84.5 bln, maintaining its comparable sales guidance of flat to +1%.
- The $8.8 bln acquisition of Foundation Building Materials (FBM) marks a significant step in LOW’s Total Home Strategy, aimed at narrowing HD’s lead in the Pro segment. Following the $1.3 bln acquisition of Artisan Design Group this past June, FBM enhances LOW’s Pro offerings by expanding its distribution network and product portfolio, particularly in wallboard, metal framing, and suspended ceiling systems, which are critical for new home construction.
- The synergy between FBM and Artisan, a leader in interior finishes, strengthens LOW’s ability to capture planned Pro spending in high-growth markets. LOW expects the FBM deal to be accretive to adjusted EPS in the first full fiscal year post-closing, funded through cash reserves and a temporary suspension of share repurchases, signaling disciplined capital allocation to drive long-term growth.
- LOW’s comparable sales rebounded to +1.1% in Q2 from -1.7% in the prior quarter, reflecting strength across both DIY and Pro segments despite early-quarter weather challenges. Unlike HD, which noted softness in big-ticket items, LOW reported a +2.9% increase in average ticket (compared to HD’s +1.4%) and a +3.6% rise in transactions over $500, indicating robust demand for higher-value purchases. Positive comps were recorded in 9 of 14 product categories, with standout performances in appliances, building materials, and flooring, supported by strong in-stock positions and supply chain efficiency.
- Profitability metrics underscored LOW’s operational strength, with adjusted EPS rising 5.6% yr/yr to $4.33, supported by a 23 bps increase in adjusted operating margin to 14.7%. Key drivers included disciplined cost management through the Perpetual Productivity Improvement initiative, enhanced digital capabilities boosting online sales, and a favorable mix of higher-margin Pro sales.
- Investments in Pro-focused tools, such as the MyLowe’s Pro Rewards program and extended aisle program for real-time inventory visibility, drove repeat purchases and operational efficiency. These factors, combined with supply chain readiness and strong seasonal category performance, mitigated pressures from weaker DIY spending and supported margin expansion.
LOW’s Q2 results reflect a stronger performance relative to HD, driven by positive comps, robust profitability, and strategic execution. The $8.8 bln acquisition of FBM, alongside the Artisan Design Group purchase, significantly bolsters LOW’s competitive positioning in the Pro segment, setting the stage for market share gains in the $1 trillion home improvement sector.
Nexstar-Tegna deal strengthens local TV position amid cord-cutting challenges (NXST)
On August 8, the Wall Street Journal reported that Nexstar Media Group (NXST) was in advanced talks to acquire Tegna (TGNA), triggering a surge in TGNA’s stock price, with shares soaring nearly 30% in mid-day trading. Today's announced buyout price of $22 per share, while only a 9% premium over TGNA’s closing price on August 18, represents a substantial 31% premium over the 30-day average stock price ending August 8, prior to the WSJ report.
- The all-cash transaction, valued at $6.2 bln including TGNA’s net debt, reflects a multiple of approximately 7.3x TGNA’s trailing 12-month adjusted EBITDA. This valuation appears reasonable, aligning with industry norms for media acquisitions and offering NXST a strategic opportunity to scale without overpaying. The deal, unanimously approved by TGNA’s board, is financed through a mix of new financing, cash on hand, and revolver borrowing capacity, with TGNA’s debt to be refinanced or assumed at closing.
- Strategically, the acquisition positions the combined entity to compete more effectively against Big Tech and legacy media giants amid ongoing cord-cutting trends. Upon closing, expected in 2H26, NXST and its partners will operate 265 full-power TV stations across 44 states, covering 132 of the nation’s 210 Designated Market Areas (DMAs) and reaching approximately 80% of U.S. TV households. The deal expands NXST’s footprint into key markets like Atlanta, Phoenix, Seattle, and Minneapolis, while strengthening its presence in nine of the top 10 DMAs and 41 of the top 50, enhancing its scale and influence in local broadcasting.
- Financially, the merger is poised to deliver significant benefits, with NXST projecting annual net synergies of approximately $300 mln through revenue enhancements and operating expense reductions, the majority expected within the first year post-closing. The combined entity will offer advertisers a broader, more competitive array of local and national broadcast advertising solutions, capitalizing on its expanded reach and diverse portfolio. NXST anticipates the deal will be more than 40% accretive to its standalone adjusted free cash flow in the first 12 months after closing, with plans to deploy excess cash flow to reduce leverage from an estimated 4x at closing to current levels by 2028.
- Despite the deal’s promise, risks remain, particularly around regulatory approval from the FCC given the scale of consolidation in the local TV sector. However, the Trump administration’s push for deregulation, led by FCC Chairman Brendan Carr, is likely to ease ownership restrictions, reducing anti-competitive concerns for a deal that does not involve major network owners. Public interest groups may raise objections about reduced local news diversity, but the regulatory environment appears favorable, increasing the likelihood of approval.
NXST’s $6.2 bln acquisition of TGNA offers compelling strategic and financial advantages, creating a leading local media company with unmatched scale and advertising potential. With high odds of regulatory approval under a deregulation-friendly administration, the deal positions NXST to drive significant shareholder value while navigating the evolving media landscape.
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