| | | Market Snapshot
| Dow | 44785.50 | -152.81 | (-0.34%) | | Nasdaq | 21098.92 | -72.55 | (-0.34%) | | SP 500 | 6370.17 | -25.61 | (-0.40%) | | 10-yr Note |
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| | NYSE | Adv 1158 | Dec 1561 | Vol 897.87 mln | | Nasdaq | Adv 2064 | Dec 2417 | Vol 6.54 bln |
Industry Watch
| Strong: Energy, Materials |
| | Weak: Consumer Staples, Consumer Discretionary, Financials, Real Estate, Information Technology, Communication Services, Utilities, Industrials, Health Care |
Moving the Market
Disappointing jobless claims data
Kansas City Fed President Schmid (FOMC voter) said in a CNBC interview that he is not in a hurry to cut rates
Rare EPS miss from Walmart (WMT) with looming tariff concerns
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Stocks fall on hawkish Fed rhetoric and weak data
21-Aug-25 16:25 ET
Dow -152.81 at 44785.50, Nasdaq -72.55 at 21098.92, S&P -25.61 at 6370.17
[BRIEFING.COM] The S&P 500 (-0.4%) closed lower for the fifth consecutive session today, and the Nasdaq Composite's (-0.3%) loss marks five retreats out of the past six sessions. While the DJIA (-0.3%) has weathered this week's mega-cap weakness better than its counterparts, it closed with a similar loss today, as losses were more broad-based.
The stock market retreated following some hawkish Fed speak that chipped away at rate cut expectations, while this morning's earnings reports and economic data also disappointed.
Kansas City Fed President Schmid (voting FOMC member) said in a CNBC interview that he is not in a hurry to cut rates, citing several key inflation readings that will come out between now and the September FOMC meeting. Cleveland Fed President Beth Hammack (non-voting FOMC member) stated in a Yahoo! Finance interview that she sees no imminent case for rate cuts, as inflation remains too high.
Today's economic data further stoked inflation concerns.
The Philadelphia Manufacturing Business Outlook Survey dropped to -0.3 in August (Briefing.com consensus: 9.0) from 15.9 in July, while the indexes for prices paid (66.8 from 58.8) and prices received (36.1 from 34.8) both went up versus July, reflecting an acceleration of price increases.
While the preliminary S&P U.S. Global Manufacturing PMI (53.3 from 49.8) showed a return to growth and the Services PMI (55.4 from 55.7) showed only a modest slowdown in the pace of expansion, it is worth noting that both PMI reports showed a sharp increase in input prices, which was attributed to tariffs.
Coupled with the rise in initial jobless claims (235,000 vs. Briefing.com consensus of 222,000) and continuing claims (up 30,000 to 1.972 million), today's data, in aggregate, tipped toward a stagflation environment.
The jump in initial and continuing claims is apt to keep economists' nonfarm payroll estimates in a soft growth zone, which could possibly lead to a more dovish tone in Fed Chair Powell's speech at Jackson Hole tomorrow, the market's most anticipated happening this week. However, with the July core CPI and July core PPI moving away from the Fed's two percent inflation target, and more inflation and employment data to come before the next FOMC meeting, Powell is likely to reiterate his "wait-and-see approach."
As it stands now, the probability of a 25-basis point rate cut at the September FOMC meeting is 73.6%, down from 82.4% yesterday and 92.1% a week ago, according to the CME FedWatch tool.
Today's retreat was broad-based, with nine S&P 500 sectors finishing in negative territory.
The consumer staples sector (-1.2%) posted the widest loss as Walmart's (WMT 97.96, -4.62, -4.50%) first earnings miss since May 2022 had a rippling effect throughout the sector. Walmart missed EPS expectations by $0.05 despite in-line revenues, citing increasing costs as the company replenishes inventory at post-tariff prices.
Mega-cap stocks faced pressure again today, though the declines were less severe than yesterday. Weakness in their largest components pulled the consumer discretionary (-0.7%), information technology (-0.4%), and communication services (-0.4%) sectors lower. The Vanguard Mega Cap Growth ETF (-0.4%) finished identically to the S&P 500 (-0.4%) and the S&P 500 Equal Weighted Index (-0.4%).
The Russell 2000 (+0.2%) outperformed, and the S&P Mid Cap 400 (-0.2) saw a modest loss
Meanwhile, the energy sector (+0.7%) was the top performer today, benefitting from oil futures settling the session $0.80 higher (+1.3%) at $63.50 per barrel. The materials sector (+0.3%) also captured a modest gain.
U.S. Treasuries retreated on Thursday, lifting yields toward their highest levels of the week. The 2-year note yield settled up five basis points to 3.79%, and the 10-year note yield settled up three basis points to 4.33%.
- Nasdaq Composite: +9.3% YTD
- S&P 500: +8.3% YTD
- DJIA: +5.3% YTD
- Russell 2000: +2.0% YTD
- S&P Mid Cap 400: +1.5% YTD
Reviewing today's data:
- Weekly Initial Claims 235K (Briefing.com consensus 222K); Prior 224K, Weekly Continuing Claims 1.972 mln; Prior was revised to 1.942 mln from 1.956 mln
- The key takeaway from the report is that it covers the period in which the survey for the August employment report is completed. The jump in initial and continuing claims is apt to keep economists' nonfarm payroll estimates in a soft growth zone.
- August Philadelphia Fed Index -0.3 (Briefing.com consensus 9.0); Prior 15.9
- August S&P Global U.S. Manufacturing PMI - Prelim 53.3; Prior 49.8
- August S&P Global U.S. Services PMI - Prelim 55.4; Prior 55.7
- July Existing Homes Sales 4.01 mln (Briefing.com consensus 3.92 mln); Prior 3.93 mln
- The key takeaway from the report is that a moderation in selling prices, coupled with an increase in inventory (the highest since May 2020), helped boost sales despite the persistence of higher mortgage rates.
- July Leading Indicators -0.1% (Briefing.com consensus -0.1%); Prior -0.3%
Major averages lower near finish amid declining sector strength
21-Aug-25 15:30 ET
Dow -145.17 at 44793.14, Nasdaq -61.03 at 21110.44, S&P -22.63 at 6373.15
[BRIEFING.COM] The major averages trade with moderate losses as the session nears its end.
Only the energy (+0.5%) and materials (+0.3%) sectors trade in positive territory, as the other nine S&P 500 sectors face losses ranging from 0.1% (health care) to 1.3% (consumer staples).
Reuters reports that the Trump administration is planning to use $2 billion in CHIPS Act funding for critical minerals projects.
Mega-cap names weigh on the market
21-Aug-25 14:55 ET
Dow -141.74 at 44796.57, Nasdaq -85.61 at 21085.86, S&P -24.20 at 6371.58
[BRIEFING.COM] The S&P 500 (-0.4%), Nasdaq Composite (-0.4%), and DJIA (-0.3%) are little changed from previous levels as the market approaches the final hour of trading.
The major averages have largely tracked with fluctuations in the information technology sector (-0.5%) today, with the sector, the S&P 500, and the Nasdaq Composite briefly entering positive territory around 10:30 ET before retreating.
As it currently stands, the technology sector is the worst-performing S&P 500 sector this week, posting a 3.1% loss. The communication services (-2.8% week-to-date) and consumer discretionary (-1.9% week-to-date) sectors are the other two sectors that have retreated this week. The Vanguard Mega Cap Growth ETF holds a week-to-date loss of 2.7%.
The other eight S&P 500 sectors hold modest gains ranging from 0.2% to 1.1%, highlighting the outsized effect the mega-cap names have on their respective sectors and the major averages.
S&P 500 slips; ENPH, LII, STX weigh while Paramount Skydance rallies
21-Aug-25 14:30 ET
Dow -134.32 at 44803.99, Nasdaq -84.21 at 21087.26, S&P -22.48 at 6373.30
[BRIEFING.COM] The S&P 500 (-0.35%) is in second place on Thursday afternoon, down about 22 points.
Briefly, S&P 500 constituents Enphase Energy (ENPH 34.32, -1.36, -3.81%), Lennox (LII 570.02, -19.05, -3.23%), and Seagate (STX 153.55, -4.85, -3.06%) dot the bottom of the standings. ENPH falls despite an upgrade to Hold at Jefferies this morning, while LII continues recent weakness and STX falls from recent all-time highs.
Meanwhile, Paramount Skydance (PSKY 15.91, +1.93, +13.81%) is firmly atop the standings despite a dearth of corporate news.
Gold slips as dollar strengthens, traders await Powell’s Jackson Hole speech
21-Aug-25 14:00 ET
Dow -149.49 at 44788.82, Nasdaq -74.69 at 21096.78, S&P -21.96 at 6373.82
[BRIEFING.COM] The Nasdaq Composite (-0.35%) is at the bottom of the major averages, but only just so, as a modest bump over the last half hour has the index down just 75 points vs. 159 at today's lows.
Gold futures settled $6.90 lower (-0.2%) at $3,381.60/oz, this as the U.S. dollar firmed after comments from the Kansas City Fed's Schmid stressing that policy needs to stay "modestly restrictive" to contain inflation, which made the yellow metal more expensive for overseas buyers. Traders are also holding back ahead of Fed Chair Jerome Powell's keynote at Jackson Hole, which could shift expectations on the timing of rate cuts.
Meanwhile, the U.S. Dollar Index is now up about +0.4% to $98.59.
Nordson beats Q3 expectations, boosts share repurchase program amid robust ATS performance (NDSN)
Nordson's (NDSN) 3Q25 earnings report is propelling the stock sharply higher as the industrial technology company surpassed EPS and revenue expectations while reaffirming its full-year sales and EPS guidance. Additionally, NDSN announced a new $500 mln share repurchase authorization, bringing its total repurchase capacity to approximately $800 mln, signaling confidence in its financial health and commitment to enhancing shareholder value through disciplined capital allocation.
- The company's 12% yr/yr revenue growth was driven by an 8% contribution from acquisitions, notably the May 2024 $800 mln acquisition of Atrion Corporation, a supplier of medical devices and components, which significantly boosted the Medical and Fluid Solutions segment. The Atrion acquisition contributed to a 31% sales increase in this segment, with reported sales reaching $219 mln, though organic growth was flat when including the contract manufacturing business slated for divestiture.
- Overall, NDSN's sales grew by 2%, underpinned by the company’s diversified portfolio and operational execution across its precision technology offerings. On that note, the Advanced Technology Solutions (ATS) segment emerged as the standout performer, with revenue climbing 17% to $171 mln. The strong growth in ATS was fueled by heightened demand for electronics dispense product lines, particularly for semiconductor packaging applications, where NDSN’s Spectrum S2 system has solidified its position as an industry standard.
- This demand reflects a rebound in electronics markets exiting a cyclical downturn, with NDSN capitalizing on its technological leadership and close-to-customer business model to capture market share. The segment’s operating profit rose by $11 mln to $37 mln, and its EBITDA margin expanded to 24%, up from 21% a year ago, demonstrating strong conversion on incremental sales and operational efficiencies.
- The ATS segment’s strength helped offset sluggishness in NDSN’s largest segment, Industrial Precision Solutions (IPS), which saw a 2% organic sales decline, with total sales remaining nearly flat yr/yr. The weakness in IPS was primarily driven by softer demand for polymer processing systems, impacted by cautious customer spending amid economic uncertainty and higher interest rates affecting capital-intensive projects. This was partially offset by growth in nonwovens, precision agriculture, and packaging product lines, but the segment’s performance reflects broader market challenges in industrial end markets, particularly in polymer processing applications.
- NDSN reaffirmed its FY25 guidance that was initially provided in December 2024 within its 4Q24 earnings report. Specifically, NDSN had guided for EPS of $9.70-$10.50 and sales of $2.75-$2.87 bln at that time. With a 5% sequential decline in backlog following a strong Q3, the company remains confident in achieving these targets, contingent on the completion of the medical contract manufacturing business divestiture in 4Q25, which is expected to streamline operations and enhance EBITDA margins in the Medical and Fluid Solutions segment.
NDSN’s 13% adjusted EPS growth, driven by exceptional performance in the ATS segment, underscores its ability to capitalize on high-growth electronics markets while navigating challenges in its IPS segment. The new $500 mln share repurchase program, combined with a healthy balance sheet and strategic divestiture, positions NDSN to enhance EPS growth and deliver long-term shareholder value.
Coty under pressure after unexpected Q4 loss; 1HFY26 expected to be challenging (COTY)
Coty (COTY -19%) is under heavy pressure today after reporting its Q4 (Jun) results last night, trading to a new 3-year low. This cosmetics and fragrance company, with prestige and consumer brands in its portfolio such as Gucci, Calvin Klein, CoverGirl, and Rimmel, reported an EPS loss when analysts had expected a profit. Revenue came in above expectations at $1.25 bln, but declined 8.1% yr/yr, the company's third consecutive quarter of a decline and its steepest drop in 17 quarters. The company also announced several updates for its Prestige and Consumer Beauty lines and offered a cautious tone for the 1HFY26 with an improving 2HFY26.
- Its largest segment, Prestige, struggled in the quarter, particularly in the US, reflecting the ongoing challenges high price brands face in the current macro environment. Prestige revenue decreased 5% yr/yr on a reported basis and 7% on a LFL basis to $760.6 mln. Revenue was pressured by underperformance in the US relative to the broader Prestige beauty category, as well as by COTY intervening to right size retailer inventory levels to current demand trends. It was also impacted by declines in prestige makeup and skincare sales.
- Its Consumer Beauty segment did not fare much better, with revenue declining 12% on a reported and LFL basis to $491.8 mln. The decline was primarily driven by lower sales in color cosmetics and body care, with management noting ongoing weakness in the global mass color cosmetics market, particularly in the US.
- In terms of 1H26, management noted that the market backdrop remains complex, with macroeconomic and tariff uncertainty fueling cautious retailer ordering and a more promotional competitive environment. As a result, COTY is launching several innovations, with a multi-brand push into fragrance mists and expanding distribution across fragrances. COTY expects a gradual improvement in sales trends over the course of FY26 from Q4 levels and anticipates a LFL decline of 6% to 8% in 1Q26 and a LFL decline of 3% to 5% in 2Q26, with a return to LFL growth in 2H26.
- For Prestige, COTY is currently launching its new blockbuster Boss Bottled Beyond globally, coupled with a broader extension of the Hugo Boss brand into the US market. Notably, early sell-in and sell-out trends are tracking ahead of its FY24 blockbuster of Burberry Goddess. For Consumer Beauty, COTY is launching new innovations under key mass fragrance brands like Adidas, Nautica, Vera Wang and Bruno Banani. It is also rolling out new in-house developed fragrance lines, including its Origen collection, launched exclusively at Walmart, with additional launches across key retailers planned.
Overall, this was a difficult quarter for COTY. The unexpected EPS loss and another top-line decline are weighing heavily on shares. A challenged US consumer and cautious retailer behavior have added further pressure. While management remains optimistic about a rebound in 2HFY26, investors are stepping back for now, awaiting clearer signs of a turnaround.
Walmart lower on rare EPS miss, but solid guidance; playing offense by rolling back prices (WMT)
Walmart (WMT -4%) is heading lower after reporting Q2 (Jul) results this morning. In a surprise, the retail giant missed on EPS for the first time in three years as it grapples with tariff-related cost increases. Revenue rose 4.8% yr/yr (+5.6% CC) to $177.4 bln, which was better than guidance of +3.5-3.5% CC. After not providing next quarter guidance last time, it was good to see WMT resume guidance, including upside EPS guidance for Q3 (Oct). In another positive, WMT raised full year revenue guidance to +3.75-4.75% CC from +3-4% CC. WMT also raised its FY26 EPS outlook a bit.
- Its Walmart US segment performed well with comps (ex fuel) up +4.6%, roughly similar to recent comps of +4.5% in Q1 and +4.6% in Q4. Strong sales growth reflects share gains across key categories. When WMT reported last quarter, it flagged the potential for a higher level of markups on Walmart US inventory. WMT ultimately realized lower markups than anticipated and wound up using more Rollback pricing.
- Sam's Club US comps (ex fuel) were even more impressive, at +5.9%, however, that was down from +6.7% in Q1 and +6.8% in Q4. Sales were led by grocery and health & wellness with continued growth in general merchandise. Comps momentum was driven by higher units and continued strength in transactions. eCommerce sales were up 26% while membership income grew 7.6% with steady growth in member counts, renewal rates, and Plus members.
- WMT does not provide comps for its Walmart International segment, but sales jumped 5.5% (+10.5% CC) to $31.2 bln. Growth was led by China, Walmex, and Flipkart with transaction counts & unit volumes up across markets.
- Not surprisingly, tariffs were a big topic on the call. WMT said the impact of tariffs has been gradual enough that any behavioral adjustments by the customer have been somewhat muted. However, as WMT replenishes inventory at post-tariff price levels, WMT has seen its costs increase each week, which it expects will continue into Q3-Q4. WMT is seeing more adjustments in middle and lower income households than higher income households.
- Nevertheless, WMT increased its Rollback pricing to 7,400 items from 5,400 last quarter. Its Rollback count in grocery was up 30% yr/yr. Customers are responding as WMT leans into value with more rollbacks. WMT says it's playing offense to keep prices as low as it can. Also, growth in higher margin businesses is allowing WMT to aggressively pursue share gains in the near term. Finally, back-to-school is usually an indicator of how the holidays will go, and WMT feels good about how it went.
We think the stock is mostly reacting to the surprise EPS miss. In fairness, Q2 was a rare time when WMT did not offer guidance and it was a weird quarter given the uncertainty and changes around tariff rates. So we think analysts were a bit in the dark. Another factor here is that Target (TGT) reported good operational results yesterday with a notable increase in traffic, so that raised expectations and made this miss even more surprising. Furthermore, it sounds like WMT is leaning into even more Rollback pricing in order to gain market share. There may be some concern this could impact margins in future quarters, but the guidance was pretty solid.
Meta Platforms halts AI hiring as soaring compensation costs threaten profits (META)
Meta Platforms’ (META) decision to freeze hiring in its artificial intelligence division, as reported by the Wall Street Journal, reflects growing concerns about escalating wage and stock-based compensation costs eroding profitability across the tech sector. The pause, which restricts both internal transfers and external hires without approval from Chief AI Officer Alexandr Wang, comes as analysts, including those at Morgan Stanley, warn that soaring stock-based compensation could dilute shareholder value if not paired with clear innovation gains. This move signals META’s intent to balance its aggressive AI investment strategy with fiscal discipline, particularly as investor scrutiny intensifies over the impact of such costs on shareholder returns in a volatile tech market.
- META has pursued an aggressive buildup of its Superintelligence team under Alexandr Wang, who joined from Scale AI in June 2025 as part of a $14.3 bln investment in the AI startup. The company has assembled a team of over 50 researchers and engineers, poaching talent from competitors like OpenAI, Google (GOOG) DeepMind, Apple (AAPL), xAI, and Anthropic with compensation packages often reaching tens of millions of dollars, including some nine-figure offers. High-profile recruits, such as former GitHub CEO Nat Friedman and Safe Superintelligence co-founder Daniel Gross, underscore META’s commitment to creating a “dream team” to advance its AI ambitions, particularly in developing next-generation models aimed at achieving superintelligence.
- On July 30, 2025, META reported robust Q2 results, surpassing revenue and EPS expectations, driven largely by AI-enhanced advertising tools. The company raised its FY25 expense guidance to $114–$118 bln from $113–$118 bln, signaling sustained investment in AI, with 2026 expense growth expected to outpace 2025. Additionally, META increased the low end of its FY25 capex guidance to $66–$72 bln from $64–$72 bln, with a significant portion allocated to META Superintelligence Labs under Wang’s leadership.
- This lab focuses on developing next-generation AI models, potentially integrating META’s open-source Llama framework with cutting-edge innovations to deliver highly personalized, intelligent user experiences across its social media, advertising, and emerging products like AI glasses, aiming to unlock new revenue streams and strengthen its ecosystem.
- The AI hiring freeze does not necessarily signal a significant pullback from META’s aggressive AI spending plans. Instead, it appears to be a strategic pause to optimize the organizational structure of Meta Superintelligence Labs, ensuring alignment with its long-term goal of achieving superintelligence. The company is likely to maintain substantial investments in AI infrastructure, such as data centers and compute resources, to support its ambitious vision of integrating advanced AI across its platforms, even as it temporarily halts talent acquisition to refine its operational framework.
META’s AI hiring freeze addresses investor concerns about escalating compensation costs, providing a breather to assess the integration of its high-caliber Superintelligence team. However, this pause should not be interpreted as a reduction in META’s overall commitment to AI, as its substantial capex and expense guidance underscore a continued focus on building industry-leading AI infrastructure and capabilities.
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.
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