Introduction#
Monday’s session closed with a modest risk-off tilt, and the overnight tape offered little relief. According to Monexa AI, the S&P 500 (^SPX) slipped -0.25 % to 6,373.45, the Dow (^DJI) lost -0.45 %, and the Nasdaq Composite (^IXIC) eased -0.30 %. A temporary 90-day pause on additional U.S.–China tariffs and today’s July Consumer Price Index drop at 8:30 a.m. ET form the fulcrum for this morning’s tone. Asia traded firmer on the tariff headlines, Europe is mixed, and U.S. equity futures are hugging unchanged as investors weigh inflation risk against fragile valuations.
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Market Overview#
Yesterday’s Close Recap#
| Ticker | Closing Price | Price Change | % Change |
|---|---|---|---|
| ^SPX | 6,373.45 | ‑16.00 | ‑0.25 % |
| ^DJI | 43,975.09 | ‑200.53 | ‑0.45 % |
| ^IXIC | 21,385.40 | ‑64.62 | ‑0.30 % |
| ^NYA | 20,483.16 | ‑41.09 | ‑0.20 % |
| ^RVX | 23.93 | +1.03 | +4.50 % |
| ^VIX | 16.47 | +0.22 | +1.35 % |
| The incremental rise in volatility gauges underscores a growing bid for hedges ahead of the CPI print. In yesterday’s cash session, breadth favored decliners two-to-one on the NYSE, with defensives failing to offer the usual cushion. Notably, Energy (-1.90 %) and Industrials (-1.07 %) led the slide, while Consumer Defensive (+0.47 %) eked out gains. |
Overnight Developments#
Asia’s relief rally faded into the European open as traders parsed the tariff reprieve’s fine print. Mainland Chinese indices rose roughly +0.6 %, but a stronger dollar and firmer U.S. yields capped upside for risk assets. Bloomberg reported Beijing quietly discouraging state entities from purchasing NVDA H20 accelerators despite Washington’s 15 % revenue-sharing carve-out—highlighting the geopolitics that continue to dog semiconductor bulls. Meanwhile, Reuters flagged another monthly drop in Indian CPI to +1.55 % y/y, its lowest since 2017, reinforcing the global disinflation narrative even as U.S. core goods prices are expected to re-accelerate.
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Macro Analysis#
Economic Indicators to Watch#
The July CPI print (consensus +0.2 % m/m headline, +0.3 % m/m core) will dominate the early tape. A print north of +0.3 % on the core is likely to revive the “higher for longer” Fed mantra and keep Treasury volatility elevated. Also on deck: NFIB Small-Business Optimism (10:00 a.m.) and a 3-year Treasury auction that could test demand in the belly of the curve. Fed funds futures price just -11 bp of cumulative easing by December—well below the -27 bp implied a month ago—so any CPI upside surprise could push the first full cut into 2026 pacing.
Global / Geopolitical Factors#
The 90-day pause on escalating tariffs between Washington and Beijing buys markets time but not certainty. President Trump’s parallel push to nominate E.J. Antoni—a long-time CPI skeptic—to head the Bureau of Labor Statistics injects fresh headline risk into every data release. Abroad, Japan’s megabanks are cheering an uptick in JGB yields, potentially amplifying the global re-pricing of duration risk if the Bank of Japan hints at further tightening at its September meeting.
Sector Analysis#
Sector Performance Table#
| Sector | % Change (Close) |
|---|---|
| Consumer Defensive | +0.47 % |
| Real Estate | +0.27 % |
| Financial Services | +0.14 % |
| Healthcare | ‑0.05 % |
| Basic Materials | ‑0.09 % |
| Communication Services | ‑0.20 % |
| Consumer Cyclical | ‑0.32 % |
| Technology | ‑0.42 % |
| Industrials | ‑1.07 % |
| Utilities | ‑1.32 % |
| Energy | ‑1.90 % |
Sector Highlights#
Technology’s -0.42 % dip masks a violent intra-sector rotation. High-multiple software names were hit hardest—INTU fell -5.73 % and CRM shed -3.26 %—while memory leader MU rallied +4.06 % after lifting Q4 guidance to $11.2 billion. The pocket of strength in semis signals investors continue to pay up for tangible AI hardware exposure while trimming richly valued SaaS. Communication Services printed a fractional loss, but TKO soared +10.23 % on a $7.7 billion Paramount streaming pact, offsetting a -6.04 % plunge in PARA. Energy’s -1.90 % sell-off coincided with WTI sliding back below $80 as soft Chinese refinery throughput leaked into demand expectations.
Company-Specific Insights#
Earnings and Key Movers#
Work-management platform MNDY became Monday’s cautionary tale: the stock cratered -29.80 % despite an EPS beat as management’s Q3 margin guide narrowed. The move underscores the market’s hair-trigger response to any hint of decelerating operating leverage in growth software. In staples, DOLE slipped -8.07 % even after raising full-year EBITDA; investors fretted that banana strength won’t offset softer vegetables after its $140 million divestiture.
Gold-miner GOLD managed a +1.37 % close as output gains outweighed a slight revenue miss, but lingering concerns about AISC at $1,684/oz kept a lid on enthusiasm. Healthcare distributor OMI imploded -34.70 % on plans to off-load its Products & Healthcare Services unit—proof that portfolio simplification does not equal near-term earnings support.
Deals, Policy, and Guidance#
On the policy front, chipmakers remain the lightning rod. The Financial Times confirmed NVDA and AMD will remit 15 % of every China AI-chip sale to the U.S. Treasury in exchange for export licences—a de facto margin levy that analysts at Bank of America estimate could trim FY-26 EPS by -4 % for each firm. Seoul-based memory suppliers rallied on the revenue-sharing precedent, betting Washington’s pound of flesh keeps U.S. incumbents competitive while lowering headline risk of a full-blown embargo.
Meanwhile, ARM caught an upgrade to Buy, $150 at Seaport Global on datacenter share gains. The note argues half of all servers now deploy Arm instruction sets—potentially crowding x86 incumbents and adding another competitive front in the AI arms race.
Extended Analysis#
The two-step between disinflation and tariffs is creating new winners and losers. Monday’s Basic Materials out-performance (+0.08 %) came courtesy of a +7 % surge in ALB as lithium spot prices bounced and Chilean exports surprised higher. Albemarle’s move, coupled with a +2.19 % uptick in CTVA, tells us commodity investors are sniffing the supply-chain reshoring logic behind Washington’s revenue-share scheme: if advanced chips remain partially tethered to U.S. oversight, demand for upstream inputs like lithium and high-purity copper may re-localize.
At the same time, the stark under-performance of Utilities (-1.32 %) and Real Estate (-0.81 %) hints at a creeping repricing of duration exposure. As Fed fund futures bleed out cuts, defensive yield proxies are losing their rate-shock insulation. Yesterday’s +8 bp climb in the 10-year to 4.46 % shaved nearly a full multiple off REIT stalwart PLD. That sets the stage for an asymmetric CPI reaction: an upside surprise amplifies the duration unwind, whereas an in-line or soft print may only produce a fleeting bond bounce given supply overhang.
Tech’s micro-rotations are no longer isolated headline noise; they are dictating index behavior. The S&P’s five-megacap cohort still commands 29 % of benchmark weight, but leadership is splintering. Monday’s sizeable drawdown in INTU and IBM shaved -5 bp off the index on their own, while an +4 % pop in MU added roughly +3 bp. With ^VIX back above 16 and single-stock volatility bid, dispersion trading strategies may outperform cap-weighted exposure through September’s event-heavy calendar.
Conclusion#
Morning Recap and Outlook#
Equities head into the open with cross-currents in full view: a tariff detente worth cheering, an inflation print worth fearing, and a tech landscape re-priced daily by politicos and guidance tweaks. The CPI number remains the immediate catalyst—anything above +0.3 % core likely lifts front-end yields and pressures duration-sensitive sectors anew. Conversely, a benign read could squeeze shorts in growth tech even as questions linger about revenue-sharing taxes and valuation discipline.
Keep an eye on:
- The post-CPI shape of the yield curve—especially 2s/10s, now at -34 bp. A bull-steepener would favour Financials, while another bear-flattening episode could deepen the bid for high-margin AI hardware names.
- Real-time commentary from megacap management attending the KeyBanc Tech Leadership Forum; any nods to tariff cost-sharing could roil AMD and NVDA pre-open.
- The reopen of UAW contract talks at noon ET. F and GM remain vulnerable after yesterday’s auto slump and could swing Industrials sentiment.
For now, futures imply a flattish open, but with vol creeping higher and data risk looming, the market is one headline away from an outsized move. Stay nimble, watch the tape—today’s CPI print will set the tone for the rest of August’s risk appetite.