Market Update

The S&P 500 index closed on Wednesday with a modest gain of +0.24%, while the Dow Jones Industrial Average rose by +0.32%, and the Nasdaq 100 saw an increase of +0.17%. September e-mini S&P Futures edged up by +0.20%, and the e-mini Nasdaq futures climbed +0.13%.

After some early setbacks, the stock indices climbed higher, with the S&P 500 reaching a record high and the Nasdaq 100 recording its weekly peak. The market took a boost from strong software stocks, especially MongoDB, which surged over +37% after announcing a Q2 adjusted EPS that surpassed expectations and updated its 2026 EPS forecast positively.

There’s also a prevailing optimism surrounding Nvidia, expected to release impressive earnings results shortly. In the last five years, Nvidia has only missed its revenue targets once. As a component of the S&P 500, Nvidia, with a market cap of $4.4 trillion, holds substantial sway over the index.

The stock continued its upward trajectory into the afternoon as bond yields, which had initially risen, fell back, tempering expectations of an imminent interest rate cut by the Fed. The 10-year Treasury note yields dipped by 4.24% to -2 basis points.

Comments from New York Fed President Williams were slightly more assertive, indicating that while the US economy may be slowing, it isn’t stagnant. He expressed optimism about economic trends and noted that all FOMC meetings remain “live” as the interest rate situation evolves, hinting that adjustments may be necessary given the current policy stance.

In mortgage application news, the MBA reported a -0.5% decline for the week ending August 22nd, with the purchase mortgage subindex climbing +2.2% while the refinance subindex dropped by -3.5%. The average rate for a 30-year fixed mortgage increased slightly to 6.69% from 6.68% last week.

On tariffs, President Trump recently threatened to implement new tariffs and export restrictions targeting advanced technologies and semiconductors, in response to digital services taxes from other nations affecting American firms. Last week, he broadened tariffs on steel and aluminum to cover over 400 consumer goods, including motorcycles and auto parts, effective immediately, even including goods already in transit.

Earlier this month, Trump extended a ceasefire on tariffs with China for an additional 90 days until November. He had also announced a doubling of tariffs on imports from India due to oil purchases from Russia. If these tariffs come into effect, they could escalate from a prior rate of 13.3% to 15.2%.

This week, attention will be on the latest tariff developments and efforts to resolve the Ukraine-Russian conflict. On Thursday, an upward revision of the second quarter GDP to +3.1% is anticipated. Initial unemployment claims are expected to range from -5,000 to 230,000 per week. Personal spending and income for July are forecasted to rise by +0.3% and +0.4%, respectively. In addition, the Core PCE price index for July, which the Fed monitors closely, is expected to increase by +0.2% monthly and +2.9% yearly. The Chicago PMI for August is projected to drop to 46.5, and the final University of Michigan Consumer Sentiment Index for August is anticipated to hold steady at 58.6.

Federal funds futures suggest an 88% chance of a -25 basis point rate cut at the upcoming FOMC meeting on September 16-17, with a 51% probability for another similar cut in late October.

Revenue reports indicate that S&P 500 revenues increased +9.1% year-over-year in Q2, surpassing earlier expectations of +2.8%. As the earnings season wraps up, about 82% of companies exceeded profit projections, with over 95% of S&P 500 firms reporting their second quarter results.

International stock markets presented a mixed bag on Wednesday. The Euro Stoxx 50 managed a recovery from a two-week low, increasing by +0.17%. The Shanghai Composite in China fell by -1.76%, while Japan’s Nikkei 225 rose by +0.30%.

In the bond market, September T-notes gained +6.5 ticks on Wednesday, with 10-year T-note yields declining to -2.4 basis points. After initial declines, T-notes rose to a 1.5-week high when Fed President Williams suggested that decreasing rates might be appropriate under current policies. Initially, T-notes faced pressure from rising inflation expectations, fueled by low demand in a Treasury auction earlier in the day.

European government bond yields decreased on Wednesday, with Germany’s 10-year yield sinking to a 1.5-week low of 2.686%.

The German consumer trust survey unexpectedly dropped to a five-month low of -23.6, weaker than the predicted -21.5. The swap market reflects only a 3% chance that the ECB will cut rates by -25 basis points during its policy meeting on September 11th.

In US stocks, MongoDB significantly outperformed expectations with a Q2 adjusted EPS of $1.08, soaring over +37% following raised EPS forecasts for 2026. Meanwhile, Atlassian advanced by over +4% on the Nasdaq, and Salesforce increased by over +2% on the Dow. Other gainers included DataDog, CloudFlare, and Snowflake, all showing solid growth.

Kohl’s surged over +23% after reporting a strong Q2 EPS of $1.35, significantly above expectations, and raised its full-year EPS forecast. NCINO increased by +13%, aided by solid subscription revenue.

American Eagle Outfitters gained more than +8% after announcing a new collaboration, while Elanco and Dynatrace also saw modest rises following favorable reports and analyst upgrades. Conversely, JM Smucker dropped by over -4% after its sales fell short of expectations.

SBA Communications faced a decline of more than -4% after a downgrade by Bank of America, and Williams Sonoma fell by over -2% despite reporting better-than-expected second-quarter revenue. PayPal dropped nearly 1% amid concerns about fraudulent transactions disrupting its operations.

Upcoming revenue reports this week include major names such as Affirm Holdings, Autodesk, and Best Buy, among others.