Stocks Higher into Final Hour on AI Infrastructure Build-Out Optimism, Short-Covering, Technical Buying, Tech/Energy Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 51.0 +.4%
• BofA Private Credit Proxy Index 73.7 -.01% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .29 +2.0 basis points
• BofA Global Financial Stress Indicator -.20 +1.0 basis point
• European Financial Sector CDS Index 53.6 +.5%
• Emerging Market CDS Index 136.9 +.04%
• Israel Sovereign CDS 53.7 -.3%
• Bloomberg Global Trade Policy Uncertainty Index 1.2 +.1
• US Morning Consult Daily Consume Sentiment Index 90.5 +1.4

• Citi US Economic Surprise Index 25.0 +.7

• Citi Eurozone Economic Surprise Index 88.9 -1.0

• Citi Emerging Markets Economic Surprise Index 24.1 +.9
• S&P 500 Current Quarter EPS Growth Rate YoY(481 of 500 reporting) +52.2% +2.6 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 392.34 +.28:  Growth Rate +19.5% -13.7 percentage points, P/E 19.7 +.1
• S&P 500 Current Year Estimated Profit Margin 16.28% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +133.3% -5.1 percentage points
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 954.51 +1.23: Growth Rate +84.1% +.2 percentage point, P/E 19.5 +.3
• Bloomberg US Financial Conditions Index 1.25 +5.0 basis points
• US Yield Curve 44.0 basis points (2s/10s) unch.
• Bloomberg Industrial Metal Index 180.2 -.04%
• Dutch TTF Nat Gas(European benchmark) 68.1 euros/megawatt-hour +3.8%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 13.9 -.8% percentage point
• US Atlanta Fed GDPNow Q3 Forecast +4.6% unch.
• US 10-Year T-Note Yield 4.67% +2.0 basis points
• 1-Year TIPS Spread 2.06 +4.0 basis points

• Highest target rate probability for Oct. 28th FOMC meeting: 48.5% (+.6 percentage point) chance of 3.5%-3.75%. Highest target rate probability for Dec. 9th meeting: 45.3%(+.1 percentage point) chance of 3.75%-4.0%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -220 open in Japan 
• China A50 Futures: Indicating -53 open in China
• KOSPI 200 Futures: Indicating -20 open in South Korea 

• DAX Futures: Indicating +32 open in Germany

Portfolio:

• Higher: On gains in my tech sector longs
• Disclosed Trades: None
• Market Exposure: 100% net long

Bear Radar

Style Underperformer:

• Large-Cap Value -.2%

Sector Underperformers:

• 1) Restaurants -2.0% 2) Retail -1.7% 3) Computer Hardware -1.5%

Stocks Falling on Unusual Volume: 

• DLTR, TITN, URBN, NSSC, HPQ, BBY, MRNA, BZ, TREE, HMY, BURL, PAY, HRL, NEXA, REAX, HQY and BBW

Stocks With Unusual Put Option Activity:

• 1) HRL 2) AMBA 3) S 4) URBN 5) RBRK

Stocks With Most Negative News Mentions:

• 1) WEN 2) CCOI 3) TITN 4) HRL 5) LUCK

Sector ETFs With Most Negative Money Flow:

• 1) XLF 2) DRAM 3) XLI 4) XLK 5) GDX

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.8%

Sector Outperformers:

• 1) Software +7.3% 2) Cyber Security +7.1% 3) Oil Service +3.6%

Stocks Rising on Unusual Volume:

• OKTA, CRM, CRWD, PURR, OOMA, VEEV, SAIL, FIG, SRPT, TENB, FROG, MSTR, BRUN, RBRK, SNPS, S, SLS, TH, NEO, TEAM, KVYO, NTSK, ASST, NOW, NVDA, NTNX, MBUU, METC, REF, MARA, BTDR, MESO, BL, ESTC, ECO, DJT, BMNR, AYA, CRCL, CIFR, COIN, SAP, TYL, DG, ARCT, DT, BWLP, BOX, BWLP, CMBT, HP and RDVT

Stocks With Unusual Call Option Activity:

• 1) ANF 2) HONA 3) BMNU 4) DKS 5) VERA 

Stocks With Most Positive News Mentions:

• 1) NVDA 2) CRWD 3) CRM 4) OKTA 5) OOMA 

Sector ETFs With Most Positive Money Flow:

• 1) SOXX 2) XLE 3) MGNR 4) BKGI 5) BUG

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:

• (FRO)/2.74

After the Close: 

• None of note

Economic Releases 

9:45 am EST

• The MNI Chicago PMI for Aug. is estimated to rise to 57.9 versus 57.6 in July. 

10:00 am EST

• Final Univ. of Mich. Consumer Sentiment readings for Aug. 
• Preliminary Benchmark Payrolls Revision for 2026. 

11:00 am EST

• The Kansas City Fed Services Activity Index for Aug.  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Warsh speaking at Jackson Hole, the US Baker Hughes rig count and the weekly CFTC speculative net positioning reports 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 -18.2% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 17.0 -.7
• 1 Sector Rising, 10 Sectors Declining
• 45.7% of Issues Advancing, 51.8% Declining 
• TRIN/Arms .94 -10.5%
• Non-Block Money Flow -$145.3M
  
• 41 New 52-Week Highs, 30 New Lows
• 60.1% (-1.2%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 59.0 -4.8

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 8.0% unch.
• Strait of Hormuz traffic returns to normal by September 30th 7.0% -5.0 percentage points
• Iran agrees to end enrichment of uranium by Sept. 30th 3.0% -1.0 percentage point
• Israel withdraws from Lebanon by September 30th 2.0% unch.
• US Invades Iran before 2027 13.0% -3.0 percentage points
• US announces end of Iranian blockade by September 30th 33.0% -5.0 percentage points

Other

• Bloomberg Global Risk-On/Risk-Off Index 126.4 +.9%
• Global Monitor Iran Instability Index 54.0 -9.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 90.0% unch.
• US High-Yield Tech Sector OAS Index 453.5 -4.5 basis points
• Bloomberg Cyclicals/Defensives Index 270.2 +.2%
• Morgan Stanley Growth vs Value Index 149.3 +.3%
• CNN Fear & Greed Index 59.0 (moved to GREED from NEUTRAL) +4.0
• 1-Day Vix 9.5 -26.1%
• Vix 14.5% -5.0%
• Total Put/Call .68 -18.1%

Thursday Watch

Around X:

• @Business

• Iran’s military said it reached a revenue-sharing agreement with Oman on the Strait of Hormuz. 
• Trump is pushing a legislative package to revive the domestic maritime industry as military operations in the Middle East highlight the vulnerability of international shipping.
• Trump signed an order easing tariffs on some ground beef imports, an effort to lower costs for consumers that has managed to rile ranchers and rural state Republicans before the November midterm elections.   
• Amazon will add an additional 2 million Nvidia graphics processing units to its data center fleet in the next two years. 
• Get up to speed on what's moving global markets. 
• Here’s what you need to know to start your day. 

• @ZeroHedge

• US Officials Reveal Reason For CIA Chief’s Surprise Moscow Visit. 
• Hormuz And The Law Of Diminishing Returns: When Leverage Burns. 
• Waste Of The Day: Deficit Could Surpass $2 Trillion. 
• *NVIDIA IN TALKS TO BUY HUGGING FACE FOR OVER $13B: INSIDER.
• *BANK OF KOREA RAISES POLICY RATE TO 3.00% FROM 2.75%.
• How Many $2,500 Foldable iPhones Will Apple Ship In Year One? IDC Has The Answer.            
• Activist Obama Judge Bends The Knee, Lifts Block On Trump's Mail-In Ballot Restrictions After USSC Ruling.
• Another Major Russian Refinery Up In Flames As Diesel Nears Historic Highs.
• Israel Developing Offensive Space Capabilities.
• Chinese Hackers Broke Into NASA, Federal Reserve, DOJ & Senate: FBI Announces.
• Don't Trust The Midterm Polls.
• TRUMP SIGNS ORDER TO BAN SOME FOREIGN ENERGY EQUIPMENT IN GRID. 
• US Universities Had Extensive Ties With Chinese Defense Research Labs, Air Force Study Finds. 
• 'Waiting For Jensen': Low Energy Day Sees Stocks, Bonds, & Gold Dip After Hot-flation & Russian Escalation.        

• @CNBC  

• CNBC Daily Open: Nvidia is selling more shovels than ever in the AI gold rush. 
• China industrial profit growth in July slumps to 7-month low of 11.2%. 
• Nvidia's 70% sales growth projection for 2028 wows analysts on earnings call.  
• Thursday's big stock stories: What’s likely to move the market in the next trading session.
• Salesforce CEO Marc Benioff says the ‘SaaSpocalypse’ is nonsense. Here's why.
• Stock futures rise as Nvidia shares jump 4% after earnings: Live updates.
• Stocks making the biggest moves after hours: Nvidia, Salesforce, CrowdStrike, Urban Outfitters and more.
• CrowdStrike pops 11% on record second quarter as 'Mythos moment' drives AI cyber wave.     
• Okta pops 15% after topping estimates as AI threat spikes demand for identity security. 

• @WallStEngine

• Nvidia $NVDA CEO on open vs. frontier AI models: “Nearly all open models run on Nvidia.” Jensen says open models have become foundational to nearly every AI startup and enterprise, allowing companies and countries to build their own proprietary, domain-specific AI. At the same time, frontier labs are seeing sales “skyrocketing,” “fantastic” margins and are generating profitable tokens, with growth primarily limited by available compute. Nvidia is “fairly certain” it is the only platform that runs every frontier model: “Both closed and open models are going to succeed. They’re both simultaneously driving our sales.”.  
• Nvidia $NVDA CEO on its ~70% FY28 growth outlook: “The unconstrained would be a lot higher.” Nvidia has secured significant supply but still needs “a lot more” capacity to meet demand. 
• $NVDA CFO on memory, supply and margins: “We are experiencing extreme pricing conditions in memory. The magnitude of the price increase has exceeded our prior expectations and is headed even higher into next year.” Nvidia expects supply to remain a bottleneck through at least the end of FY28. Gross margins: Q3: 74% ±50 bps. Q4: bottom at 71%-72%. FY28: settle around 72%-73% (Est. 74%). “As executed price increases take effect in Q1.” “Memory scarcity today is being driven in large part by the AI buildout itself... tighter memory supply is a symptom of the same demand surge that’s driving our own growth.” 
• $NVDA CFO ON NEOCLOUDS: Neocloud partners are expected to exit the year with 8 GW of installed capacity, up from roughly 3 GW at the end of 2025. Nvidia is also introducing a new financing structure where it provides take-or-pay commitments on a portion of capacity, helping lenders underwrite projects without Nvidia making loans. In return, Nvidia gets paid twice: once on the hardware sale, and again through a share of rental revenue above the guaranteed floor. Nvidia says this model could create billions in additional recurring revenue over the medium to long term. 
• $NVDA CFO: VERA CPU IS NOW IN FULL PRODUCTION, WITH SHIPMENTS ALREADY UNDERWAY TO LEAD PARTNERS. SEES APPROXIMATELY $20B IN TOTAL SERVER CPU DEMAND AND EXPECTS CPU REVENUE TO MORE THAN DOUBLE IN FY28. 

Night Trading 

• Asian equity indices are -.25% to +.75% on average. 
• Asia Ex-Japan Investment Grade CDS Index 66.75 unch. 
• China Sovereign CDS 35.0 -.25 basis point.
• China Iron Ore Spot 98.0 USD/Metric Tonne -.2%. 
• Crude Oil 81.60/bbl. -.8% 
• Gold 4,696.70 USD/t oz. +.94%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.35 -.01%.
• Bloomberg Emerging Markets Currency Index 34.41 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 126.6 -.2%.
• US 10-Year Yield 4.65% +1.0 basis point.
• Japan 30-Year Yield 4.07% -1.0 basis point.
• Volatility Index(VIX) futures 17.1 -.4%.
• Euro Stoxx 50 futures +.26%. 
• S&P 500 futures +.45%.
• NASDAQ 100 futures +.83%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon.  The Portfolio is 100% net long heading into the day.