Market Snapshot
| Dow | 45282.47 | -349.27 | (-0.77%) | | Nasdaq | 21447.90 | -47.24 | (-0.22%) | | SP 500 | 6439.32 | -27.59 | (-0.43%) | | 10-yr Note |
|
|
|
| | NYSE | Adv 879 | Dec 1855 | Vol 913.23 mln | | Nasdaq | Adv 1420 | Dec 3138 | Vol 8.48 bln |
Industry Watch
| Strong: Communication Services, Energy |
| | Weak: Consumer Staples, Health Care, Utilities, Industrials, Materials, Real Estate, Financials, Information Technology, Consumer Discretionary |
Moving the Market
Modest profit-taking following Friday's record-setting rally
Intel confirmed U.S. government will take a 9.9% stake in the company
Market anticipates NVIDIA's (NVDA) earnings report Wednesday after the close
|
Modest profit-taking after Friday's record highs
25-Aug-25 16:30 ET
Dow -349.27 at 45282.47, Nasdaq -47.24 at 21447.90, S&P -27.59 at 6439.32
[BRIEFING.COM] The stock market mostly retreated today following some expected profit-taking after Friday's record high levels, though strength in mega-cap and tech names kept losses in the major averages modest.
The tech-heavy Nasdaq Composite (-0.2%) had the best showing of the major averages, while the S&P 500 (-0.4%) and DJIA (-0.8%) closed lower.
Nine S&P 500 sectors finished in negative territory, with the defensive consumer staples (-1.6%), health care (-1.4%), and utilities (-1.2%) sectors posting the widest losses.
The consumer staples sector was weighed down additionally by Keurig Dr Pepper (KDP 31.10, -4.04, -11.48%), which faced pressure after unveiling plans to acquire JDE Peet's for €31.85 per share in cash, valuing the deal at €15.7 billion. Following the transaction, KDP plans to separate into two publicly traded entities: a North America-focused beverage company and the world's largest stand-alone coffee business.
Meanwhile, the communication services (+0.4%) and energy (+0.3%) sectors captured modest gains.
Strong performances from a handful of mega-cap stocks prevented further losses across the major averages, though mega-cap strength as a whole diminished throughout the day, with the Vanguard Mega Cap Growth ETF (-0.2%) finishing beneath its flatline.
Nonetheless, Alphabet (GOOG 209.16, +2.44, +1.18%) captured a fresh record high, NVIDIA (NVDA 179.81, +1.82, +1.02%) traded higher ahead of its earnings report on Wednesday afternoon, and Tesla (TSLA 346.60, +6.59, +1.94%) widened its double-digit month-to-date gains.
Outside of the S&P 500, there was a notable pullback in smaller cap stocks that surged on Friday as expectations for a September rate cut increased. The Russell 2000 shed 0.8%, and the S&P Mid Cap 400 retreated 0.6%.
Homebuilders, which also benefit from a lower interest rate environment, faced pressure. The iShares U.S. Home Construction ETF finished with a 1.2% loss today after advancing an impressive 5.6% on Friday.
Overall, the market drifted sideways as rate cut expectations held steady, leaving investors reluctant to make major moves.
U.S. Treasuries began the week on a slightly lower note, with shorter tenors displaying relative weakness, while the long end also started lower, but the 30-year bond eventually recovered its opening loss. There will be ample attention on Friday's PCE inflation report, which is likely to serve as the next key catalyst for rate cut expectations.
The 2-year note yield settled up four basis points to 3.73%, the 10-year note yield settled up two basis points to 4.28%, and the 30-year note yield finished unchanged at 4.89%.
- Nasdaq Composite: +11.1% YTD
- S&P 500: +9.5% YTD
- DJIA: +6.4% YTD
- Russell 2000: +4.9% YTD
- S&P Mid Cap 400: +3.5% YTD
Reviewing today's data:
- New home sales decreased 0.6% month-over-month in July to a seasonally adjusted annual rate of 652,000 units (Briefing.com consensus 630,000) from an upwardly revised 656,000 (from 627,000) in June. On a year-over-year basis, new home sales were down 8.2%.
- The key takeaway from the report is that the pace of sales was sluggish, owed in part to the upward revision for June. However, the affordability constraint associated with higher mortgage rates and a reduced supply of lower-priced homes was evident, as sales were lackluster month-over-month despite a drop in median and average selling prices.
Major averages on the defensive near session's end
25-Aug-25 15:40 ET
Dow -314.19 at 45317.55, Nasdaq +10.98 at 21506.12, S&P -16.58 at 6450.33
[BRIEFING.COM] The Nasdaq Composite (+0.1%) now defends its flatline while the S&P 500 (-0.3%) and DJIA (-0.7%) trade lower.
Stocks unsurprisingly succumbed to some profit-taking after Friday's record high levels, with seven S&P 500 sectors poised to finish with a loss.
All of those seven sectors hold a loss of 0.5% or wider, with the consumer staples (-1.5%) and health care (-1.5%) sectors retreating the furthest.
Friday's rally followed increased expectations for a rate cut at the September FOMC meeting. The probability of a 25-basis point rate cut at the September FOMC meeting now stands at 82.2%, nearly identical to the 82.7% probability from one week ago, according to the CME FedWatch tool.
Sideways drift as market enters final hour of trade
25-Aug-25 15:00 ET
Dow -287.87 at 45343.87, Nasdaq +18.21 at 21513.35,
[BRIEFING.COM] The S&P 500 (-0.2%), Nasdaq Composite (+0.1%), and DJIA (-0.6%) are little changed from previous levels as the market enters the final hour of trading.
Sector strength has slightly improved, with the communication services (+0.6%), information technology (+0.3%), energy (+0.2%), and consumer discretionary (+0.1%) sectors holding on to modest gains, though breadth figures still reflect a day with stronger selling interest.
Decliners outpace advancers by a nearly 2-to-1 margin on the NYSE and Nasdaq.
The energy sector (+0.2%) benefits from crude oil futures settling today's session $1.11 higher (+1.7%) at $64.78 per barrel.
S&P 500 slips as Dexcom, Moderna, and CSX drag; Western Digital, Seagate buck trend with gains
25-Aug-25 14:30 ET
Dow -281.48 at 45350.26, Nasdaq +27.60 at 21522.74, S&P -10.85 at 6456.06
[BRIEFING.COM] The S&P 500 (-0.17%) is in second place on Monday afternoon, down now about 10 points.
Briefly, S&P 500 constituents Dexcom (DXCM 76.91, -5.35, -6.50%), Moderna (MRNA 25.81, -1.31, -4.83%) and CSX (CSX 32.89, -1.69, -4.89%) pepper the bottom of the standings. DXCM is down due in part to broad sector weakness in diabetes/insulin names (Tandem (TNDM 12.15, +0.22, +1.84%), Insulet (PODD 329.61, -1.16, -0.35%) also lower), while CSX slides as Warren Buffett's comments ruling out a rail acquisition, coupled with last week's CSX-BNSF partnership, deflate investor hopes for a takeover premium that had recently buoyed the stock.
Meanwhile, Western Digital (WDC 79.66, +2.69, +3.49%) is outperforming alongside peer Seagate (STX 164.35, +5.14, +3.23%) despite a dearth of corporate news.
Gold holds steady as trade policy uncertainty offsets Fed easing hopes
25-Aug-25 14:00 ET
Dow -251.37 at 45380.37, Nasdaq +46.22 at 21541.36, S&P -6.98 at 6459.93
[BRIEFING.COM] The Nasdaq Composite (+0.21%) is about 46 points higher with about two hours to go on Monday.
Gold futures settled $1.00 lower (flat) at $3,417.50/oz, likely reflecting a cautious market awaiting further clarity on U.S. tariff policy toward bullion imports -- particularly given earlier reports that 1-kg gold bars might face steep duties, which had previously upended futures-spot dynamics. At the same time, the metal remains buoyed by expectations of near-term Federal Reserve easing, following weaker-than-expected U.S. labor data. Thus, today's small move appears to reflect a consolidation around those dual influences of trade-policy uncertainty and interest-rate expectations.
Meanwhile, the U.S. Dollar Index is now up +0.6% to $98.25, holding losses of about -0.9% on the month.
Crescent Energy to acquire Vital Energy in $3.1 bln deal, boosting Permian Basin scale (CRGY)
After the close last Friday, Reuters reported that Crescent Energy (CRGY) was in advanced talks to acquire Vital Energy (VTLE), driving VTLE’s shares up 15% in after-hours trading as investors anticipated a premium valuation. The deal, officially announced on August 25, 2025, is an all-stock transaction valued at approximately $3.1 bln, inclusive of VTLE’s $2.4 bln net debt, offering VTLE shareholders a 15% premium to VTLE’s 30-day volume-weighted average price as of August 22. This acquisition, which bolsters CRGY’s position in the energy sector, aligns with its strategy of disciplined growth through acquisitions, though the market’s initial reaction reflects concerns over the deal’s structure and VTLE’s significant debt burden.
- Shares of CRGY are trading sharply lower, down nearly 5% in premarket trading on August 25, primarily due to the all-stock nature of the transaction, which involves issuing 1.9062 shares of Crescent Class A common stock for each VTLE share. This structure dilutes existing CRGY shareholders, who will own approximately 77% of the combined company, while VTLE shareholders will hold 23%. The issuance of new shares increases CRGY’s share count, potentially pressuring per-share metrics in the near term, and the assumption of VTLE’s $2.4 bln debt adds financial risk, contributing to investor skepticism despite the strategic merits of the deal.
- Strategically, the acquisition positions the combined entity as a top 10 independent U.S. energy producer, significantly enhancing CRGY's footprint in the Permian Basin, alongside its existing operations in the Eagle Ford and Uinta Basins. VTLE brings 265,306 largely contiguous net acres in the Permian, with 24,000 net acres in the Delaware Basin and 11,200 in the Midland Basin, complementing CRGY’s Texas and Rocky Mountain assets.
- The combined company is expected to achieve total production potential exceeding 400 MBoe/d, leveraging VTLE’s high-quality, low-risk inventory and CRGY’s expertise in scaling operations, particularly in the oil and condensate windows of the Eagle Ford and the high-value crude-producing Uinta Basin.
- Financially, CRGY projects the acquisition to be accretive across key metrics -- cash flow from operations (CFFO), free cash flow (FCF), and net asset value (NAV) per share -- with immediate annual synergies of $90-$100 mln and potential for further operating efficiencies. CRGY’s Q2 performance already demonstrated strength, with record production of 263 MBoe/d, generating $171 mln in free cash flow, supported by a 37.5% yr/yr revenue increase to $898 mln.
- VTLE’s Q2 production of 137.9 MBoe/d, near the high end of its 133.0-139.0 MBoe/d guidance, adds significant scale, enhancing CRGY’s cash flow profile. The company’s $1 bln non-core divestiture pipeline further strengthens its balance sheet, mitigating concerns over VTLE’s debt load. As of June 30, 2025, VTLE's long-term debt stood at $2.3 bln.
While CRGY’s shares face near-term pressure from the all-stock deal’s dilutive impact and VTLE’s debt assumption, the acquisition of VTLE is a strategic and financial fit, creating a scaled, free cash flow-focused operator with a robust Permian Basin presence. The deal’s projected synergies and accretion across key metrics, combined with CRGY’s strong operational momentum, position the combined company for long-term value creation, despite initial market headwinds.
Keurig Dr Pepper is hoping acquiring coffee giant and separating will perk up its fortunes (KDP)
There was some big M&A news in the beverage space this morning. Keurig Dr Pepper (KDP -8%) announced plans to acquire Amsterdam-based JDE Peet's for €31.85 per share in cash, a 20% premium to Friday's close, for a total equity value of €15.7 bln. The deal pairs KDP's Keurig single-serve coffee platform with JDE Peet's portfolio of beloved coffee brands. KDP forecasts $400 mln in cost synergies and that the deal will be immediately EPS accretive.
- And that's not all. After the acquisition closes, KDP plans to separate into two independent, yet to be named, US-listed publicly traded companies. This will create a growth-focused North America refreshment beverage company ("Beverage Co.") and the world's #1 pure-play coffee company ("Global Coffee Co.").
- Each business will have a distinct growth model and specific capital allocation priorities. CEO Tim Cofer will be CEO of "Beverage Co." and CFO Sudhanshu Priyadarshi to be CEO of "Global Coffee Co." upon separation.
- On the coffee side, it will be the number one global category pure play as its brings together Keurig's single-serve coffee platform with JDE Peet's portfolio, creating a global leader across all coffee segments and markets. JDE Peet's is so compelling to KDP because it owns iconic brands and is highly profitable with $11+ bln in annual sales and almost $2 bln in adjusted EBITDA. JDE Peet's is huge outside the US with leadership positions in 40 markets. However, its US business is largely limited to Peet's. Keurig sees an opportunity to boost its US presence, the largest coffee market in the world.
- On the beverage side, KDP envisions a growth-oriented, agile company. It's the largest flavored carbonated soft drink portfolio in the US, led by powerhouse $5 bln+ brand Dr Pepper and $1 bln+ brand Canada Dry, as well as iconic favorites like 7UP and A&W, and more than $3 bln in high-growth categories like energy and functional beverages.
Briefing.com is generally a fan when companies separate, especially when we do not see a lot of synergies between the segments, like we do here with coffee and carbonated soft drinks. We also suspect the recent 50% tariffs levied on Brazil were part of the calculation for this deal. Brazil is the world's largest producer and exporter of coffee, accounting for about 30--35% of the global coffee market. While the tariffs may be short term, KDP has warned of margin pressures in 2H. Growing in scale is a good way to combat this. Finally, KDP is sharply lower on the deal, we think investors are perhaps not thrilled about the pretty hefty premium being paid.
PDD Holdings beats Q2 expectations but grapples with shrinking margins amid fierce competition (PDD)
PDD Holdings (PDD), the China-based operator of Temu and Pinduoduo, delivered a top and bottom-line beat in Q2, but the company faces mounting challenges with non-GAAP net income declining 21% to RMB 27.75 bln. The sharp decline in profits reflects shrinking margins amid a sluggish Chinese economy, intense competition from Alibaba (BABA), JD.com (JD), and Amazon (AMZN), and tariff-related pressures. These headwinds, coupled with a 36% surge in costs of revenues to RMB 45.86 bln, driven by higher fulfillment, bandwidth, and payment processing fees, underscore the strain on profitability despite revenue outperformance.
- Furthermore, total operating expenses rose 5% to RMB 32.33 bln, primarily due to a 4.5% increase in sales and marketing expenses to RMB 27.21 bln. This uptick reflects PDD’s aggressive promotional efforts to enhance user experience and bolster merchant services, a strategic push to maintain market share in a fiercely competitive landscape. Ms. Jun Liu, VP of Finance, acknowledged that these sustained investments, while critical for long-term ecosystem health, are likely to continue pressuring short-term profitability as the company prioritizes growth and platform improvements over immediate margin recovery.
- Revenue growth decelerated to 7% from 10% in the prior quarter, with Ms. Jun Liu attributing the slowdown to intense competition in both domestic and international markets. Revenue from online marketing services, which includes advertising and promotional fees charged to merchants for visibility on Pinduoduo and Temu platforms, grew 13% to RMB 55.70 bln, down from 15% in Q1, signaling a moderation in this key revenue stream. These services are central to PDD’s monetization strategy, leveraging its vast user base and data-driven ad targeting to drive merchant sales, but the softening growth highlights competitive pressures and potential saturation in ad spend efficiency.
- To counter these challenges, PDD has shifted toward a fully-managed model, assuming greater control over product selection, pricing, and logistics to optimize its supply chain and maintain low prices. This strategy aims to sustain demand in a price-sensitive market by enhancing operational efficiency and leveraging PDD’s extensive supply chain network to streamline costs and delivery.
- While this pivot may help mitigate competitive and tariff-related pressures, it requires significant upfront investment, further straining margins in the near term as the company balances growth ambitions with cost discipline.
PDD faces a complex mix of headwinds -- macroeconomic sluggishness in China, fierce competition, and tariff uncertainties -- that are weighing heavily on both revenue growth and profitability. Despite these challenges, PDD’s robust supply chain network and the extended U.S.-China tariff truce provide some resilience, particularly for Temu’s international expansion. However, with ongoing investments likely to pressure margins and competitive dynamics showing no signs of easing, the near-term outlook remains cautious, tempering optimism for a swift recovery.
Ross Stores higher on Q2 results; tariffs a headwind, but back-to-school shows early strength (ROST)
Ross Stores (ROST +1%) is ticking higher today after reporting its Q2 (Jul) results last night. This off-price retailer reported EPS above expectations. EPS included an $0.11 negative impact from tariff-related costs, though that was less than expected. Revenue was in line with consensus estimates, growing 4.6% yr/yr to $5.53 bln. It was also nice to see ROST provide Q4 EPS and comp guidance, providing extra visibility towards the end of the year, after withdrawing its annual guidance in Q1 (Apr).
More generally, this is similar to what we saw in TJX's (TJX) Q2 report earlier in the week, as both retailers are benefitting from value-seeking consumers drawn to their lower prices.
- ROST saw a sequential improvement in sales trends relative to the first quarter, with a positive change in trend in nearly all major merchandise categories and most regions. As a result, Q2 comps came in at +2%, above the midpoint of its prior guidance of flat to +3%. Encouragingly, management noted sales rebounded sharply in July, primarily due to the early sales performance related to back-to-school season, which bodes well for Q3 (Oct).
- In particular, cosmetics was its best merchandise area, while the Southeast and Midwest were its strongest markets. Notably, comp sales at dd's DISCOUNTS were ahead of Ross Stores, highlighting consumer focus on value. That said, both chains saw growth in both traffic and basket size, with strong momentum exiting the quarter.
- For Q3 and Q4 (Jan), ROST sees comps of +2-3%. Management noted that it is looking toward the 2H25 with some cautious optimism, so there is some conservatism embedded in the guide. That said, they also noted that Q3 compares against a softer quarter last year than Q2, which could provide a relative tailwind.
- On the other hand, tariffs are proving to be a bit of a headwind. Its operating margin decreased 95 bps yr/yr to 11.5%, which included an approximate 90 bps negative impact from tariff related costs, while merchandise margin slipped 30 bps. Encouragingly, it does see tariff pressures easing in 2H25, with modest pressure in Q3, further mitigated in Q4, reflecting merchant progress and increased use of closeout deals.
Overall, this was a solid Q2 for ROST and continues the trend of what we saw with TJX earlier in the week. Investors are encouraged to see the sequential improvement from Q1, capped by a sharp rebound in July tied to early-back-to-school demand, which bodes well for Q3. Its Q3 revenue guidance of 5-7% growth (computes as $5.32-5.43 bln) sits above the mid-point of consensus estimates. Looking ahead, another off-price retailer, Burlington Stores (BURL), reports next week on Thursday.
NVIDIA halts H20 production amid China’s security concerns, eyes B30A launch to recover sales (NVDA)
NVIDIA (NVDA) has reportedly halted production of its H20 AI chip, specifically designed for the Chinese market to comply with stringent U.S. export controls, following security concerns raised by Beijing, according to The Information. The H20, less powerful than NVDA’s flagship AI chips, was a critical component of the company’s strategy to maintain its foothold in China. Recall that in mid-July, NVDA announced expectations to resume H20 sales to China after a U.S. export ban in April 2025 halted shipments, but no export licenses have been granted in the weeks since, leaving the company’s plans in limbo.
- The Chinese government, through its Cyberspace Administration of China, has expressed concerns over potential “backdoors” in the H20 chip that could enable remote access or control, prompting Beijing to instruct major tech firms like Tencent, ByteDance, and Alibaba (BABA) to suspend purchases pending a national security review. NVDA CEO Jensen Huang has firmly denied these allegations, stating in Taipei that “there are no backdoors” in the H20 and emphasizing that the chip is not intended for military or government infrastructure use.
- Prior to the April export restrictions, the H20 was a significant revenue driver in China, NVDA’s second-largest market. The company incurred a $4.5 bln charge in Q1 due to unsellable H20 inventory and was unable to ship $2.5 bln in produced chips, with projections of an additional $8 bln in lost H20 sales for Q2, highlighting the severe financial impact of the restrictions and the urgency of resuming sales.
- Also today, Huang revealed that NVDA is in discussions with U.S. authorities to secure export licenses for a new chip, the B30A, based on the company’s advanced Blackwell architecture, intended for AI data centers in China. The B30A, while more powerful than the H20, operates at approximately half the speed of NVDA’s top-tier B300 chips, aligning with U.S. export control requirements to limit China’s access to cutting-edge AI technology. This move signals NVDA's intent to adapt its offerings to navigate the complex regulatory landscape while addressing China’s demand for AI infrastructure, though the chip’s approval remains uncertain.
- The potential launch of the B30A could help offset the substantial revenue losses from the H20 by providing Chinese customers with a compliant, higher-performance alternative for AI workloads. However, significant uncertainties persist, including whether Chinese regulators will accept the B30A given ongoing security concerns and whether the U.S. will grant export licenses, especially as geopolitical tensions and U.S. proposals for chip location-tracking systems fuel skepticism in Beijing.
- The lack of clarity on the B30A’s bill of materials, production timeline, and regulatory approval adds further risk, potentially disrupting NVDA’s supply chain and customer commitments in China if delays or rejections occur.
NVDA's business in China remains in flux as security concerns and halted H20 production create headwinds, with the proposed B30A chip offering a potential lifeline contingent on regulatory approvals. This uncertainty casts a shadow over the company’s outlook as investors await its pivotal Q2 earnings report on August 27, which will likely provide further insight into the financial impact and strategic path forward.
|
