The S&P 500 Index ($SPX) (SPY) closed down by -0.02% on Wednesday, the Dow Jones Industrial Average ($DOWI) (DIA) closed down by -0.21%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up by +0.05%. E-mini S&P futures (ESU26) rose +0.02%, and September E-mini Nasdaq futures (NQU26) rose +0.08%.
Stock indices settled little changed on Wednesday. The broader market lacked direction on Wednesday ahead of Nvidia’s earnings results after the close. Wednesday’s US economic news was mixed for stocks. July capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, rose less than expected, but July personal spending and personal income rose more than expected.
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However, higher bond yields limited stock gains as Wednesday’s US inflation news showed inflation remained above the Fed’s 2% target, potentially leading to a Fed rate hike sometime this year. The Q2 core PCE price index was revised upward, and the July core PCE price index, the Fed's preferred inflation gauge, advanced in line with expectations. The 10-year T-note yield rose +2 bp to 4.66%.
Wednesday’s earnings results were mixed, with J M Smucker closing up more than +4% after reporting stronger-than-expected Q1 adjusted EPS and raising its 2027 adjusted EPS forecast.
However, Intuit closed down more than -3% after the company gave a full-year forecast for both adjusted earnings and revenue that was weaker than expected.
US MBA mortgage applications fell -1.0% in the week ended August 21, with the purchase mortgage sub-index down -0.3% and the refinancing mortgage sub-index down -2.0%. The average 30-year fixed-rate mortgage rose 1 bp to 6.78% from 6.77% in the prior week.
US July personal spending rose +0.2% m/m, stronger than expectations of +0.1% m/m. Also, July personal income rose +0.4% m/m, stronger than expectations of +0.2% m/m
The US July core PCE price index, the Fed's preferred inflation gauge, rose +0.2% m/m and +3.3% y/y, right on expectations.
US July capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, rose +0.2% m/m, weaker than expectations of +0.7% m/m, although June was revised upward to +1.7% m/m from the previously reported +1.2% m/m.
US Q2 GDP was left unrevised at 1.5% (q/q annualized), but Q2 personal consumption was revised upward to 3.4% from the previously reported 3.2%. Also, the Q2 core PCE price index was revised upward to 3.6% q/q from the previously reported 3.4% q/q.
The markets are eagerly awaiting earnings results from Nvidia after Wednesday’s close. Nvidia's results, considered the best barometer of AI spending, will help determine whether hyperscalers are still accelerating AI spending or becoming more disciplined. According to data compiled by Bloomberg, analysts project that Nvidia’s Q2 revenue will nearly double from a year ago, the fastest pace in two years. Markets will also focus on what CEO Huang has to say about capital spending by its biggest customers, future demand, and a raft of new financing deals involving Nvidia.
Oct WTI crude oil prices (CLV26) fell to a 1.5-week low on Wednesday after the Oman News Agency reported that Iranian Foreign Minister Abbas Araghchi and his Omani counterpart Badr Albusaidi discussed an initiative to establish a "temporary joint maritime corridor" aimed at resuming transit through the Strait of Hormuz. Crude prices have fallen more than -8% this week on signs of easing tensions in the Middle East and a partial resumption of crude supplies through the Strait of Hormuz. On Tuesday, The New York Times reported the US State Department is preparing to send US diplomats back to embassies in the Middle East that were evacuated before and during the war with Iran, suggesting that the Trump administration does not anticipate a return to all-out hostilities with Iran.
The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2. So far, earnings results have been positive, with 86% of the 469 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data.
The markets are discounting a 36% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.
Overseas stock markets settled higher on Wednesday. The Euro Stoxx 50 closed up +0.23%. China's Shanghai Composite closed up +0.59%. Japan's Nikkei-225 Stock Average closed up +0.62%.
Interest Rates
September 10-year T-notes (ZNU6) closed down by -6.5 ticks on Wednesday. The 10-year T-note yield rose +3.1 bp to 4.660%. T-notes moved lower Wednesday on stronger-than-expected US economic news on July personal spending and income. Also, an upward revision to the Q2 core PCE price index was bearish for T-notes.
On the positive side for T-notes, the July core PCE price index, the Fed's preferred inflation gauge, advanced in line with expectations, easing inflation fears. Also, decent demand for the Treasury’s $70 billion auction of 5-year T-notes was positive for T-notes, as the auction had a bid-to-cover ratio of 2.37, above the 10-auction average of 2.34.
European government bond yields moved higher on Wednesday. The 10-year German bund yield rebounded from a 1.5-week low of 3.185% and finished up +3.3 bp to 3.234%. The 10-year UK gilt yield rebounded from a 1.5-week low of 4.978% and finished up +4.3 bp to 5.031%.
ECB Executive Board member Isabel Schnabel said, "At the current policy rate, inflation is unlikely to return to target over the medium term, and therefore further tightening will be necessary."
Markets are discounting a 97% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.
US Stock Movers
Semtech (SMTC) closed up more than +10% after reporting Q2 adjusted EPS of 71 cents, better than the consensus of 61 cents, and forecasting Q3 adjusted EPS pf $1.02 to $1.08, stronger than the consensus of 73 cents.
Summit Therapeutics (SMMT) closed up more than +7% after reporting results from a late-stage trial of its ivonescimab for biliary tract cancer that significantly outperformed AstraZeneca’s durvalumab plus chemotherapy.
J M Smucker (SJM) closed up more than +4% after reporting Q1 adjusted EPS of $3.24, well above the consensus of $2.22, and raising its 2027 adjusted EPS forecast to $10.50 to $11.00 from a previous forecast of $9.75 to $10.25, stronger than the consensus of $10.05.
Williams Cos (WMB) closed up more than +4% after Morgan Stanley named the company a Top Pick on the AI infrastructure buildout.
Oracle (ORCL) closed up more than +3% after Citigroup opened a positive catalyst watch on the stock with a price target of $330.
Datadog (DDOG) closed up more than +2% after The Information reported that Palo Alto Networks CEO Arora had explored acquiring the company.
Spyre Therapeutics (SYRE) closed down more than -12% after announcing that a mid-stage trial of its experimental drug for rheumatoid arthritis fell short of the company’s internal bar.
Zoom Communications (ZM) closed down more than -6% after forecasting Q3 adjusted EPS of $1.46 to $1.48, below the consensus of $1.50.
Intuit (INTU) closed down more than -3% after forecasting 2027 adjusted EPS of $22.88 to $23.12, well below the consensus of $27.27, and forecasting 2027 revenue of $23.28 billion to $23.51 billion, weaker than the consensus of $23.82 billion.
GoDaddy (GDDY) closed down more than -4% after Wells Fargo Securities downgraded the stock to underweight from equal weight with a price target of $76.
Boston Scientific (BSX) closed down more than -3% after disclosing that it identified an ongoing, globally disruptive cybersecurity incident affecting certain information technology systems.
Nike (NKE) closed down more than -2% to lead losers in the Dow Jones Industrials after Truist Securities downgraded the stock to hold from buy.
Earnings Reports (8/27/2026)
Affirm Holdings Inc (AFRM), Autodesk Inc (ADSK), Best Buy Co Inc (BBY), Burlington Stores Inc (BURL), Dollar General Corp (DG), Dollar Tree Inc (DLTR), Elastic NV (ESTC), Forgent Power Solutions Inc (FPS), Gap Inc/The (GAP), Hormel Foods Corp (HRL), IREN Ltd (IREN), Marvell Technology Inc (MRVL), Rubrik Inc (RBRK), SentinelOne Inc (S), Ulta Beauty Inc (ULTA), Workday Inc (WDAY).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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