Wall Street Sets New Records
On Wednesday, the S&P 500 closed up +0.24% at a new all-time high, while the Dow Jones Industrial Average gained +0.32% and the Nasdaq 100 added +0.17%, reaching a one-week peak. Software stocks led the rally, with MongoDB soaring more than +37% after beating earnings expectations and raising its 2026 EPS forecast.
Nvidia’s Weight on the Market
All eyes were on Nvidia ahead of its earnings release after the close. Over the past five years, the company has missed expectations only once, and investors anticipated another strong report. With a $4.4 trillion market cap and an 8.1% weighting in the S&P 500, Nvidia has a unique ability to sway the broader index.
Fed Policy and Bond Market Moves
The equity rally extended as Treasury yields reversed earlier gains. The 10-year yield slipped -2 bps to 4.24%, as traders priced in higher odds of a September Fed rate cut. New York Fed President John Williams commented that the U.S. economy is “slowing, not stalling” and signaled that lowering rates would be appropriate in the near future.
Futures now price an 88% chance of a -25 bp cut at the September FOMC meeting and a 51% chance of another cut in October.
Tariffs and Geopolitical Risks
Beyond monetary policy, tariffs remain a market risk. President Trump recently threatened new restrictions on semiconductors and extended tariffs on steel and aluminum to over 400 consumer goods. If enacted, U.S. average tariffs would rise to 15.2%, far above the 2.3% level seen in 2024.
Markets also watch for any progress in the Russia-Ukraine conflict, as well as fresh economic data. This week’s releases include revised Q2 GDP, personal income and spending, and the Fed’s preferred inflation gauge — the core PCE index.
Strong Earnings Season
Second-quarter earnings have significantly outperformed expectations. Aggregate S&P 500 profits rose +9.1% y/y compared to the +2.8% anticipated before the season. Over 82% of companies beat estimates, the strongest earnings season in four years.
Notable Stock Movers
- MongoDB (MDB) surged +37% on strong results and higher guidance.
- Kohl’s (KSS) jumped +23% after beating EPS estimates and raising its outlook.
- Atlassian (TEAM), Salesforce (CRM), Datadog (DDOG), Cloudflare (NET), and Snowflake (SNOW) gained between +2% and +4%.
- nCino (NCNO) rose +13% on strong subscription revenue.
- American Eagle (AEO) gained +8% on a new Travis Kelce brand collaboration.
- Okta (OKTA) edged up +1% after raising full-year guidance.
- On the downside, J.M. Smucker (SJM) fell -4% after missing revenue expectations, and SBA Communications (SBAC) dropped -4% after a downgrade from BofA.
Global Markets and Bonds
In Europe, the Euro Stoxx 50 rose +0.17%, while bond yields in Germany and the UK fell modestly. In Asia, Japan’s Nikkei 225 gained +0.30%, but China’s Shanghai Composite dropped -1.76%.
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Twitter: @BigStakeTrades