Stocks Rising into Final Hour on Declining Fed Rate-Hike Odds, Diminished War-Induced Inflation Fears, AI Infrastructure Build-Out Optimism, Tech/Financial Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 51.1 -.8%
• BofA Private Credit Proxy Index 73.6 -.5% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .29 -1.0 basis point
• BofA Global Financial Stress Indicator -.16 +4.0 basis points
• European Financial Sector CDS Index 54.0 -.3%
• Emerging Market CDS Index 140.9 -.2%
• Israel Sovereign CDS 55.4 -3.9%
• Bloomberg Global Trade Policy Uncertainty Index .7 -.2
• US Morning Consult Daily Consume Sentiment Index 91.1 +.3

• Citi US Economic Surprise Index 25.60 -1.3

• Citi Eurozone Economic Surprise Index 68.7 +.3

• Citi Emerging Markets Economic Surprise Index 26.1 +.5
• S&P 500 Current Quarter EPS Growth Rate YoY(451 of 500 reporting) +50.8% +.2 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 388.59 +.11:  Growth Rate +32.1% unch., P/E 19.9 -.1
• S&P 500 Current Year Estimated Profit Margin 16.24% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +138.4% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 944.76 +.34: Growth Rate +82.2% +.1 percentage point, P/E 19.6 -.1
• Bloomberg US Financial Conditions Index 1.29 -4.0 basis points
• US Yield Curve 48.25 basis points (2s/10s) +1.75 basis points
• Bloomberg Industrial Metal Index 180.6 -.3%
• Dutch TTF Nat Gas(European benchmark) 60.5 euros/megawatt-hour +3.0%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 14.7% +.9 percentage point
• US Atlanta Fed GDPNow Q3 Forecast +5.8% unch.
• US 10-Year T-Note Yield 4.68% -1.0 basis point
• 1-Year TIPS Spread 1.68 -7.0 basis points

• Highest target rate probability for Oct. 28th FOMC meeting: 45.3% (+7.4 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Dec. 9th meeting: 45.1%(+.8 percentage point) chance of 3.75%-4.0%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +1,020 open in Japan 
• China A50 Futures: Indicating +9 open in China
• KOSPI 200 Futures: Indicating +36 open in South Korea 

• DAX Futures: Indicating +100 open in Germany

Portfolio:

• Higher: On gains in my energy/financial/tech/biotech sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 100% net long

Bear Radar

Style Underperformer:

• Large-Cap Value -.1%

Sector Underperformers:

• 1) Computer Services -1.9% 2) Homebuilding -1.4% 3) Airlines -1.1%

Stocks Falling on Unusual Volume: 

• FRNM, PICS, BETA, PFGC, OPLN, HSHP, KEP, ETOR, SLN, ATEX, EYE, LQDA, FRVO and STRO

Stocks With Unusual Put Option Activity:

• 1) BIRK 2) LEN 3) IRM 4) XLY 5) UAMY

Stocks With Most Negative News Mentions:

• 1) NI 2) WRD 3) TE 4) DJT 5) GTM

Sector ETFs With Most Negative Money Flow:

• 1) SOXX 2) XLF 3) XLK 4) IGV 5) XLV

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Growth +1.2%

Sector Outperformers:

• 1) Lithography/Photonics +5.4% 2) Space +5.0% 3) Computer Hardware +4.8%

Stocks Rising on Unusual Volume:

• NBIS, EROC, ONT, SHAZ, CRWV, SMCI, ATRO, WYFI, PESI, LITE, HRB, CAVA, CIEN, BE, MRX, EAT, AEHR, QMCO, CBRS, REPL, VELO, NOK, HELP, COHR, IREN, SPCX, COHU, KTB, CLS, GMRS, AXTI, LASR, VSTS, MSGE, FIGR, VICR, JACK, HUBG, DFTX, YSS, OCUL, ORCL, CMPS, AAOI, MSGS, ELE, EMBJ, CLBK, EZPW, MLTX, EYPT, NN, BKD, MANU, BROS, CAKE, ARIS, NN, CIFR, KSPI and PSTL

Stocks With Unusual Call Option Activity:

• 1) GBTC 2) DGXX 3) VYM 4) UMC 5) NRGV 

Stocks With Most Positive News Mentions:

• 1) NBIS 2) SMCI 3) CRWV 4) LITE 5) CAVA

Sector ETFs With Most Positive Money Flow:

• 1) XLP 2) XLI 3) FDN 4) GDX 5) XBI

Charts: 

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (BSP)/.24
• (BIRK)/.76
• (FPS)/.24
• (LUNR)/-.09
• (JD)/5.61
• (SSYS)/.01
• (TPR)/1.28
• (WWW)/.38
• (YETI)/.54 

After the Close: 

• (AMAT)/3.40 

Economic Releases 

8:30 am EST

• Initial Jobless Claims for last week are estimated to rise to 202K versus 199K the prior week.
• Continuing Claims is estimated to fall to 1794K versus 1801K prior.
• PPI Final Demand MoM for July is estimated to rise +.2% versus a -.3% decline in June.
• PPI Ex Food and Energy MoM for July is estimated to rise +.3% versus a +.2% gain in June. 

Upcoming Splits

• (BYND) 1-for-30

Other Potential Market Movers

• The Fed's Barkin speaking, Fed's Hammack speaking, 30Y T-Bond auction, Fed's weekly balance sheet report, weekly EIA natural gas inventory report, (IDXX) investor day, (SNDK) investor day and the Oppenheimer Tech/Internet/Communications Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -17.3% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 15.2 +.7
• 8 Sectors Rising, 3 Sectors Declining
• 53.3% of Issues Advancing, 44.3% Declining 
• TRIN/Arms 1.53 +43.0%
• Non-Block Money Flow +$22.9M
  
• 77 New 52-Week Highs, 41 New Lows
• 60.2% (-.9%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 71.4 +.7

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 9.0% unch.
• Strait of Hormuz traffic returns to normal by August 31st 3.0% -2.0 percentage points
• Iran agrees to end enrichment of uranium by Sept. 30th 7.0% unch.
• Israel withdraws from Lebanon by August 31st 1.0% unch.
• US Invades Iran before 2027 19.0% +1.0 percentage point
• US announces end of Iranian blockade by August 31st 31.0% -12.0 percentage points

Other:

• Bloomberg Global Risk-On/Risk-Off Index 127.7 +.4%
• Global Monitor Iran Instability Index 62.0 -12.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 91.0% unch.
• US High-Yield Tech Sector OAS Index 465.5 -1.5 basis points
• Bloomberg Cyclicals/Defensives Index 272.2 -1.1%
• Morgan Stanley Growth vs Value Index 152.4 +1.4%
• CNN Fear & Greed Index 62.0 (GREED) unch.
• 1-Day Vix 7.9 -37.0%
• Vix 14.8% -3.2%
• Total Put/Call .82 +2.5%

Wednesday Watch

Around X:

• @Business

• The US now expects oil supply disruptions stemming from the US-Israel war with Iran to reach about 600,000 barrels per day through the end of 2027.
• A federal judge in Boston entered a nationwide order blocking the US Postal Service from carrying out President Donald Trump’s directives to overhaul mail-in voting policies before the November midterm elections. 
• SpaceX, Northrop Grumman and other companies developing space-based missile interceptors for President Donald Trump’s $185 billion Golden Dome successfully completed their first key tests. 
• Investors are betting the $5 billion AI music startup Suno will be the next Spotify, but it risks being an early bust. 
• The Securities and Exchange Commission is considering taking direct control of a controversial database that tracks trades across US equities and options markets after Citadel Securities won a lawsuit challenging its funding last year
  .
• The former chief financial officer of a Miami Beach hedge fund admitted he embezzled more than $3 million over four years at the firm, approving phony invoices and using corporate credit cards for adult entertainment and personal travel. 
• Systematic buyers are getting ready to load up on stocks again after a massive unwind, according to Citadel. 
• Scarcity and profit margin. 
• Memory-chip makers may have found a new defense against the inevitable cooling of their boom: giving more cash back to shareholders. 
• Here’s the latest news and analysis on the oil market. 
• Here’s what you need to know to start your day. 

• @ZeroHedge

• Mysterious Drone Threat Emerges At America's "Unsinkable Aircraft Carrier," Prompting Curfews.
• Massachusetts Legalizes Abortion Up To Birth As Liberals Cheer. 
• Trump Weighs Call for Capital Gains Tax Cuts as Midterm Boost.
• Rep. Alexandria Ocasio-Cortez splits from fiancé Riley Roberts. 
• California Orders NGO Serving As "Financial Backbone" For Singham-Linked Marxism Causes To Cease Operations.
• China's Teapot Refiners Poised to Ramp Up Iranian Oil Buying.
• Hegseth Pushes $1.5 Trillion Military Budget As Tribute To Lindsey Graham.
• Phoebe Gates & Co-Founder Caught In The Cookie Jar: Slack Logs Contradict Phia's '24-Hour Bug' BS.
• Putin Pardons Ailing Former US Marine After Years In Russian Prison. 
• The Diamond Crash Accelerates. 
• *ORACLE HAS DRAWN UP PLANS FOR A NEW ROUND OF LAYOFFS: INSIDER. *NEW ORACLE LAYOFFS WOULD TAKE PLACE THIS MONTH: INSIDER.
• Mideast Malaise & AI Angst Batter Big-Tech & Bitcoin; Bonds Bid On Bad Data, Shrug Off Oil's Gains.             

• @CNBC  

• CNBC Daily Open: Big Tech wants to tap Wall Street's big wallets. 
• Wednesday's big stock stories: What’s likely to move the market in the next trading session. 
• Stocks making the biggest moves after hours: Super Micro Computer, CoreWeave, H&R Block and more.  
• Stock futures are little changed ahead of Wednesday's big inflation report: Live updates. 
• Wednesday's big stock stories: What’s likely to move the market in the next trading session. 

• @WallStEngine

• COREWEAVE $CRWV Outlook: Raises FY26 Guide: Revenue: $12.4B-$13.2B (Est. $12.63B). Adj. Oper Income: $960M-$1.15B (Est. $893M). CapEx: $35B-$39B (Est. $33.3B). Active Power: >1.85GW; from prior >1.7GW. Year-End Annualized Run-Rate Revenue: $18.5B-$19.5B. Managed Inference ARR: $250M+ exiting 2026. Q3 Guide: Revenue: $3.45B-$3.60B (Est. $3.43B). Adj. Oper Income: $200M-$260M (Est. $264M). CapEx: $11.5B-$13.5B. Interest Expense: $860M-$940M. Oper Margin: Expanding sequentially, reaching low teens in Q4. 
• $CAVA GROUP Q2’26 EARNINGS HIGHLIGHTS. Revenue: $365.4M (Est. $361M) ; +31.3% YoY. EPS: $0.19 (Est. $0.18). Same Restaurant Sales: 9.0%. Restaurant-Level Profit Margin: 25.7%; -60 bps YoY. Affirms FY26 Guide: Adj. EBITDA: $181.0M-$191.0M (Est. $188M). Same Restaurant Sales: 4.5% to 6.5%. Restaurant-Level Profit Margin: 23.7% to 24.3%. Net New Restaurant Openings: 75-77. Pre-opening Costs: $22.0M-$22.5M. 
• SUPERMICRO $SMCI Q4’26 EARNINGS HIGHLIGHTS. Revenue: $11.1B (Est. $11.55B). Adj. EPS: $1.70 (Est. $0.96) ; +315% YoY. Gross Margin: 17.5%; +800 bps YoY. FY27 Guide: Revenue: $65B-$72B (Est. $52.5B).  
• LUMENTUM $LITE Q4’26 EARNINGS HIGHLIGHTS. Revenue: $1.01B (Est. $988M). Adj. EPS: $3.23 (Est. $2.97) ; +267% YoY. Adj. EBITDA: $406.4M. Q1 Guide: Revenue: $1.23B-$1.28B (Est. $1.16B). Adj. EPS: $4.05-$4.35 (Est. $3.61). Non-GAAP Operating Margin: 39.5%-40.5%. 

• @MerengoFS 

• $CSCO Earnings Preview. 
• $COHR Earnings Preview.
• $NBIS Earnings Preview.  

Night Trading 

• Asian equity indices are -.50% to +.75% on average. 
• Asia Ex-Japan Investment Grade CDS Index 68.5 +.25 basis point. 
• China Sovereign CDS 37.0 -.25 basis point.
• China Iron Ore Spot 95.90 USD/Metric Tonne +.1%. 
• Crude Oil 83.90/bbl. +.9% 
• Gold 4,449.50 USD/t oz. +.16%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.31 -.07%.
• Bloomberg Emerging Markets Currency Index 34.46 -.05%.
• Bloomberg Global Risk-On/Risk Off Index 127.5 +.3%.
• US 10-Year Yield 4.69% unch.
• Japan 30-Year Yield 3.99% +1.0 basis point.
• Volatility Index(VIX) futures 18.4 unch.
• Euro Stoxx 50 futures -.15%. 
• S&P 500 futures +.03%.
• NASDAQ 100 futures +.07%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by energy and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.