Stock Market Update

Equity futures are modestly lower this morning after yesterday's session saw losses in the S&P 500 and Nasdaq Composite as mega-cap stocks and technology names faced considerable weakness.

A cohort of blue-chip stocks briefly pushed the DJIA to a new intraday high, but the index closed on its flatline for the day. 

Rate cut expectations remain at the forefront of the market's focus, with Fed Chair Powell's Friday Jackson Hole speech eagerly anticipated. While there are no consequential economic data releases today, the market will receive the FOMC Minutes for the July meeting at 14:00 ET. 

Politico reports that the White House is working to accelerate Stephan Miran's temporary Federal Reserve nomination in hopes that the candidate will be in place by the September FOMC meeting.

On the trade front, Treasury Secretary Scott Bessent said the status quo trade situation with China is "working pretty well," amid large tariff revenues, according to Bloomberg.

The market is also currently receiving a small but notable batch of earnings reports that includes several big box retailers. 

The MBA Mortgage Applications Index for the week ended August 16 decreased by -1.4%, down from a prior increase of 10.9%.

In corporate news:

• Estee Lauder (EL 83.40, -6.47, -7.2%) missed EPS expectations by $0.01, reported revenues in-line, and guided FY26 EPS below consensus. 
• Lowe's (LOW 263.25, +6.89, +2.69) beat EPS expectations by $0.09, reported revenues in-line, and guided FY26 EPS in-line with revenues above consensus. The company has also entered into a definitive agreement to acquire Foundation Building Materials for approximately $8.8 billion. 
• Target (TGT 94.95, -10.41, -9.9%) beat EPS expectations by $0.01, beat revenue expectations, and reaffirmed FY26 EPS and sales guidance. The company announced that its Board of Directors has unanimously elected Michael Fiddelke, chief operating officer, to succeed Brian Cornell as chief executive officer and become a member of its Board of Directors.
• Tesla (TSLA 328.30, -1.01, -0.3%) CEO Elon Musk is reversing on his plan to create a new political party. Musk instead wants to focus on his companies and support Vice President JD Vance for president in 2028, according to The Wall Street Journal. 
• TJX (TJX 139.51, +4.89, +3.6%) beat EPS expectations by $0.09, beat revenue expectations, and saw comparable sales increase 4%, which was above prior guidance. The company guided Q3 EPS below consensus but raised its FY26 EPS and comparable sales guidance. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note while Japan's Nikkei (-1.5%) widened its pullback from a record high. Japan's Nikkei: -1.5%, Hong Kong's Hang Seng: +0.2%, China's Shanghai Composite: +1.0%, India's Sensex: +0.3%, South Korea's Kospi: -0.7%, Australia's ASX All Ordinaries: UNCH.

In news:

• Japan's trade balance report for July showed a decrease in exports to all major trading partners.
• The People's Bank of China made no changes to its one-year and five-year loan prime rates, which was expected.
• The Reserve Bank of New Zealand lowered its official cash rate by 25 basis points to 3.00%, but a couple policymakers were in favor of a larger cut.
• Acting Governor Hawkesby said that the Kiwi economy stalled in Q2.
• Bank Indonesia unexpectedly lowered its policy rate by 25 basis points to 5.00%.

In economic data:

• Japan's July trade deficit JPY300 bln (expected deficit of JPY70 bln; last deficit of JPY250 bln). July Imports -7.5% yr/yr (expected -10.4%; last 0.3%) and Exports -2.6% yr/yr (expected -2.1%; last -0.5%). June Core Machinery Orders 3.0% m/m (expected -0.4%; last -0.6%); 7.6% yr/yr (expected 5.0%; last 4.4%)

Major European indices trade mostly lower. STOXX Europe 600: +0.2%, Germany's DAX: -0.4%, U.K.'s FTSE 100: +0.3%, France's CAC 40: +0.1%, Italy's FTSE MIB: -0.2%, Spain's IBEX 35: -0.3%.

In news:

• The U.K.'s inflation accelerated unexpectedly in July, putting some pressure on expectations for the next rate cut from the Bank of England.
• Separately, there was more speculation about the British government taxing sales of high-value properties to help plug a GBP40 bln budget gap.
• Central banks in Sweden and Iceland left their policy rates unchanged at 2.00% and 7.50%, respectively.

In economic data:

• Eurozone's July CPI 0.0% m/m, as expected (last 0.3%); 2.0% yr/yr, as expected (last 2.0%). July Core CPI -0.2% m/m, as expected (last 0.4%); 2.3% yr/yr, as expected (last 2.3%)
• Germany's July PPI -0.1% m/m (expected 0.1%; last 0.1%); -1.5% yr/yr (expected -1.3%; last -1.3%)
• U.K.'s July CPI 0.1% m/m (expected -0.1%; last 0.3%); 3.8% yr/yr (expected 3.7%; last 3.6%). July Core CPI 0.2% m/m (expected 0.1%; last 0.4%); 3.8% yr/yr (expected 3.7%; last 3.7%). July RPI 0.4% m/m (expected 0.1%; last 0.4%) and Core RPI 0.4% m/m (last 0.4%). July House Price Index 3.7% yr/yr (expected 4.0%; last 3.9%)